It has always been assumed that the use of metrics is one of the more convincing indicators that business management is approaching maturity. There is an alternative view, however, which is that measurement is used because there is some mileage in it, and it is easier than being serious about understanding management.
This is all encapsulated in the famous consultant’s dictum that if you can’t measure you can’t manage. This in turn seems to derive from a remark by Lord Kelvin:
When you can measure what you are talking about and can express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, our knowledge is of a meagre and unsatisfactory kind.
Now Lord Kelvin was one of the truly giant figures of science, so he probably shouldn’t be contradicted without good reason. But there is another figure, altogether more relevant to management and business in general and, unusually for that field, of equal standing even to Kelvin. This is John Maynard Keynes, who not only invented large chunks of twentieth century economics and shaped how the world worked for half a century but was also a great authority on statistical methods. So his opinion is certainly worth considering. And while his opinion does not contradict Kelvin’s, it certainly undermines quite a lot of modern business measurement programmes.
Am I right in thinking that … the statistical method … essentially depends on … having furnished, not merely a list of the significant causes, which is correct so far as it goes, but a complete list? For example, suppose three factors are taken into account, it is not enough that these should be in fact verae causae [true causes]; there must be no other significant factor. If there is a further factor, not taken account of, then the method is not able to discover the relative quantitative importance of the first three.
If so, this means that the method is only applicable where [one] is able to provide beforehand a correct and indubitably complete analysis of the significant factors. The method is neither one of discovery nor of criticism.
In other words, measurement is only valid where the underlying model of what you’re measuring is:
… and probably a lot of other things beginning with ‘C’.
Now, I’d like to think that modern management and business systems were based on a clear conceptual framework, but my sense of humour is not quite so surreal. It is true that areas like manufacturing, logistics and mass commodities measurement is alive and very healthy, but I suspect that that is mostly because these areas are closer to technology than business. But as far as the day-to-day management of less mechanical things – such as people and projects – is concerned, it is simply contrary to the management culture of most companies to manage in the objective terms that measurement either assumes or supports.
I think I can honestly say that every people- or project-based company I have ever worked in was racked with opportunism, pragmatism (no, not a good thing, especially in this context) and the horizons of a whelk. In fact the entire history of management often seems to consist of one insight/revolution/fad after another.
This is completely anathema to the entire ethos of measurement, and the persistence of this attitude strongly implies that:
- We don’t really know how business and management work – otherwise we would not let consultants sell us a new toy every ten minutes.
- We don’t really care how business and management work – otherwise we have recognised how pointless much of what management does really is decades ago, anda come up with more intelligent models.
- The widespread introduction of measurement and metrics isn’t noticeably improving our understanding of either.
Certainly we are nowhere near the point where Kelvin’s advice (which was pretty weak on a few other things) can be sensibly applied.
But does it matter? Not much, as it happens. You only have to go back to the source of the ‘if you can’t measure you can’t manage’ philosophy to see why. Lord Kelvin was a physicist. He studied atoms. In particular he studied how things move and use energy when you bash them about. As I have argued elsewhere, as a model for anything except physics, physics fluctuates between the unhelpful and the disastrous, and other people who have taken Lord Kelvin’s views a bit too seriously whilst he was banging on about non-physical matters seem to have come unstuck. Even Charles Darwin was seriously disturbed by Lord Kelvin’s ignorant but highly effective assault on evolutionary theory, which was based solely on a model of matter that left out radioactivity and which I have written about in more detail elsewhere. But this was a perfect example of perfectly accurate numbers leading to completely spurious conclusions because the underlying model was wrong.
But metrics are a limited (though not useless) basis for managing business for a different reason. As far as intelligent beings are concerned, metrics make sense only if you can assume that the basis on which they act is not changed by the fact of being measured. But we know from a dozen different sources that this is exactly what is not true about human beings. Indeed, it cannot be, for the simple reason that human beings are not atoms. Rather, as conscious beings, if they become aware that they are being watched, this fact alone is enough to create a new ‘factor’ in the ‘system’, and so to undermine the very assumption that the observers know what they are looking at!
Take, for example, the well-known Hawthorne Effect. Between 1924 and 1932, experiments observed workers’ performance as they changed various conditions – lighting, group incentives, and so on. They found that it was not the changes themselves that caused increases in performance so much as the workers’ consciousness that they were being watched (as demonstrated by the constantly changing conditions). In other words, measuring their performance changed their performance.
Hence another well-known phenomenon in business and management, which also tends to undermine measurement, namely the fact that people tend to manage so as to optimise what they are being measured on. Again, the Hawthorne Effect – the system is changed by the fact of being measured.
Is this a problem for management? Yes – if you think that human beings are simply assets you buy and sell and will do as they are told in a completely mechanical manner. And in some businesses, perhaps what the organisation needs really are such drones. It must be a very crude, basic industry if it is.
Yet we should still celebrate the fact that human beings are never so lifeless that they can be expected to behave like things instead of people. For this simply ignores where the real ‘value’ in employing intelligent beings comes from – from their insight, their creativity, their enthusiasm, their combination of love of doing great things with the uniquely human quality of responsibility to do it properly.
When we can reduce that to numbers, we will be either gods or in big, big trouble.