We Need Appropriate Measurement for Appropriate Management

Confusion on Managing by Measuring

I believe there is some confusion today involving the place of measurement in business.  In a recent article (Productivity in a Networked Era) in Chief Learning Officer (also available at Jay’s blog), Jay Cross and Jon Husband addressed the need to change traditional ways of viewing return on investment in a networked learning environment where ideas and other intangible assets have become more important than physical assets.  Regarding this need to rethink the basis for investing in new forms of capital, this article is spot on.  However, I am concerned by some aspects of the discussion involving measurement such as:

. . . it (measurement) doesn’t apply to making judgment calls, strategic choices or disruptive innovations.  . . . Intuition, judgment and gut feelings guide these more important decisions.

I disagree!  The very idea of the need for science is that our “intuition, judgement and gut feelings” are just as likely to mislead and to encourage us to choose the wrong path.  Today, psychology is giving us more insight into how our non-conscious mind can lead us astray when we trust our “gut”.

Re-think how we measure, but do not abandon measurement

Again, I believe that Jon and Jay’s basic idea is valid, that most companies measurement methodology is keeping them from making appropriate investments, but part of the problem is managers limited understanding of measurement and the methods needed to develop and use data.  With the increasing complexity of networked environments (see Jon & Jay’s example of Cisco Systems’ large-scale adoption of social computing) and with the development of new forms of data visualization, using data has never been more important than it is today.  Jay and Jon’s conclusion “We should rethink and expand our methods for making judgments”, is also correct, but, I would not suggest doing this by abandoning measurement. The ability to use and understand data begins with an understanding how the data was collected, that is, with understanding the measurement processes involved.

A final thought: fast changing, intangible centric and knowledge intensive environments require knowledgeable and capable individuals.  In the past, this kind of thinking about measurement was reserved for academics, not business types, and it is true that typical academic communication styles are sometimes not appropriate, even for academics.  Simplification is a worthy communication goal, but the ideas we need cannot be dumbed down.  Complex issues, like understanding the meaning of data and the measurement processes by which it is obtained, must be an important capabilities throughout organizations if they wish to take advantage of opportunities in our current business environment.  I believe that measurement is crucial to management, but inappropriate measurement will lead to inappropriate management.