The corporate world is sick. It is obsessed with measuring everything and in the process understands nothing. I know. Like many so called leaders I have made my contribution to this malaise. Inventing Key Performance Indicators. My work is done.
OMD, or Obsessive Measurement Disorder isn’t my term or invention. It was first coined by Andrew Natsios* back in 2010 in an essay describing how aid agencies were seriously suffering from bureaucracy. In particular the emphasis on measurement which he pointed out was at odds with the fact that transformational programs are often the least measurable and involve elements of risk and uncertainty. My contention is that OMD has infected just about every major corporation. What gets measured gets done is the biggest single statement of corporate nonsense in the world. In my experience, what gets measured usually gets fiddled.
Now please don't misunderstand me. I am not against KPIs per se. If I am driving my car I find it quite helpful to have an idea of my speed - not just to have a rough idea of when I might arrive at my destination but also to avoid a plethora of speeding tickets. I don’t particularly need a rev counter but its quite nice to look at. Fuel level. Yes please. Oil pressure? Probably not. Water temperature - yes but on the other hand on the rare occasions my radiator has overheated the first sign was inevitably white smoke. Only then did I glance at the temp gauge - as if to confirm what was patently obvious. And that’s the thing. Ultimately I am better to focus on the road ahead and its accompanying hazards than being consumed by a plethora of instruments giving me loads of spurious KPIs.
What I am against is this corporate obsession with measuring everything and anything. At this point a bunch of 'pretend' leaders will rise up in horror at the suggestion that a plethora of KPIs is anything but essential. “My decisions are data driven”; “I lead with facts not emotion”; “I am detail oriented”. Oh dear.
Corporate KPIs have built within them a number of serious floors. What I call 'Fools Gold', 'Donor Feeding' and 'Don't forget the O rings'. But before I explain what these are, I want to remind you where all this obsession with KPIs comes from in the first place. It's not new.
Ever since the Industrial Revolution created significant large markets for cheaper goods produced by larger companies there has been a need for managers to organise the working day of other people. In particular, the production line concept, so famously and successfully introduced by Henry Ford, created a whole
new sub industry in the capturing of specific and highly detailed information regarding every minute step of the production process. By specialising labour to the lowest common denominator, the speed of production could be increased exponentially - so long as someone could measure and manage each individual step to optimise production.
Image by Steve Brandon from Pixabay
The corporation has never looked back. And it hasn’t really developed much either. Still applying the mass production techniques of the factory regardless of the nature of the work or for that matter the output required. Risks? No! Variation? Absolutely NOT! Don't disturb the mass production ethic.
Technology has also developed rapidly to meet an insatiable demand for the monitoring, data collection and analysis of (potentially) wayward employees. Just about everything can be captured in our digital age, including it seems our emails, our speech and even our images - all in the name of corporate control of course. Those poor managers trying to exert ‘control’ when Covid hit and people reconfigured to work from home - I almost feel sorry for them. Well…not quite. Even now we still have so many ‘leaders’ saying that people need to work in an office where they can be ‘managed’ and 'controlled'. They are soooo much less productive at home. So it is said. I have no doubt that in some cases that might be true. But not because of a lack of ‘control’; rather a lack of leadership. But that is another blog for another day.
Whatever the reasons, data is now everywhere and we are obsessed with it. For good or bad. But in reality, what is all this obsession with KPIs actually leading to?
Fools Gold.
You know the stuff. The things that glitter but are not real. Or even worse, are the opposite of what you think they are. Take sales for example. You need sales? Makes sense to have some sales KPIs right? Of course. But sooner or later the temptation to incentivise those KPIs comes along. Want to increase revenue? Then target and incentivise sales KPIs. Everyone does it. The trouble is that, by definition, a KPI targeting revenue is pretty one dimensional. And the problem there is it might just have consequences somewhere else that you didn’t foresee. In fact it's guaranteed. It always is. You targeted me to sell so I sold. Yeah, but I didn't mean sell like that!
In 1992 Hoover did just that. I remember the campaign so well. Hoover UK was under huge pressure from the corporate bosses in the USA, not unreasonably. The problem was that UK sales were struggling badly due to the ongoing financial crisis. People were just not buying vacuum cleaners. Or rather they were, but often from a new upstart. That upstart was called Dyson. So a sales campaign was initiated in the UK with one very simple aim - to sell more Hoovers. Afterall, that is what the bosses desperately wanted. Hoover’s British division partnered with a little-known airline JSI Travel to offer two free round-trip flights to New York for anyone who bought a Hoover product worth £100 or more (about $123 USD). Despite the fact that the free flights were deliberately hard to redeem, the campaign had a magnificent effect on Hoover sales. Sadly it almost bankrupted the company.*
Wrong KPIs? So how about some profitability KPIs. They are my favourite. What corporation would not want more profitability? Invent some suitable KPIs for the troops and incentivise people on them and hey presto - you will achieve your KPIs and get a totally unwanted result.
I found that out to the cost of my business. It was the global target of reducing the payroll that became the KPI of the year. It didn't matter that we are talking about KPI target that was applied to a global conglomerate with thousands of wildly different businesses, business models, financial circumstances, or stages of business development. Everyone had to achieve their payroll KPI. Even when it meant directly and significantly reducing profitability as a result. It was exactly the circumstance I found my business to be in. We were, until then, in an enviably unique position. We could add employees and almost immediately produce record profits, such was the market position my business unit was in. I tried reason. Nobody was interested, I tried emotion, even less so. Finally, at our annual conference, I made an impassioned speech highlighting the absurd consequences of hitting this KPI by showing exactly the decline in profitability that would ensue. Nobody was interested. The KPI had to be hit. We are employed just to obey orders. A bit like like the Final Solution. To this day I have never met a shareholder who would want to see a payroll target hit at the expense of significant profitability. Or an employee who would want to earn less money for the same reason. But that is what happened. Absurd. But understandable. Because KPIs are primarily around for one reason. To please the bosses.
Donor Feeding
Trust me….of all the reasons why KPIs are produced, by far the greatest is this one. Feeding the donor.
You would think that once a KPI has directly led to failures somewhere else in the system that people would be interested in reducing meaningless or distracting KPIs not increasing them. Sadly though the big corporation has an answer for that too. The ‘Balanced Scorecard”. It’s enough to send a shiver down any managers' spine.
Image by Martin Str from Pixabay
Years ago I was tasked with producing the infamous ‘Balanced Scorecard’ for our business unit. My boss had become acutely conscious that the parent company was on a mission - to ensure that the `UK had the best possible scorecards in the world. I suppose in the absence of tanks or missiles it's just another form of world domination. Anyway, the task fell to me. And I must say I delivered! I produced the most spectacular colourful set of KPIs all neatly divided into financials, employee metrics, customer data, and operational processes. In turn further arranged into leading and lagging indicators. Oh yeah Baby! I was on one! Never have you seen anything more sophisticated. I made sure it had different graphics, pie charts, bar charts, multi colours and a vast array of direct measurements all fitting into one very large handy printable wall chart albeit with the judicious use of absurdly small fonts where necessary. We soon got feedback from the board meeting from my bosses boss. “We have never seen anything so comprehensive. Its absolutely brilliant!”. Seriously. No joke. If my memory serves me correctly I think we used it twice before consigning it to the ‘forget’ draw. In any case, by then it had served its purpose. It had fed the bosses.
Ok so I admit. I am guilty of eating this stuff myself. Some years ago I decided with my leadership team that we needed a set of KPIs that we could use in our business reviews for each country. Standardisation - another corporate ailment - of KPIs would surely be far better than these interminable and ever increasing PowerPoint presentations. Just a small tip here by the way: Please, please, ensure your managers are swept clean of any rope, belts, razor blades or any other self harming devices before you make the announcement: “what we really need now is……a whole new KPI scorecard”.
Anyway, with the invaluable help of my able CFO we soon had something up and running. Of course to be developed. Work in progress so to speak. Each month we would get to fully review the latest scorecard. Each month we would refine and tweak the way the KPIs were devised. Until on one meeting my CRO, who tended to say very little but when he did speak have such stunning insights that people would reel back in amazement, said “so what, exactly, are these KPIs actually telling us?” Of course, nobody knew the answer to that humdinger. We had become the very KPI consuming monsters that we regularly complained about. Our employees were wasting their time in feeding us. In our defense, at least we had a collegiate open atmosphere that allowed us to laugh at ourselves, and respectfully admit defeat. After a couple more tries of course. And therein lies another problem. If you want a KPI you had better be crystal clear what exactly you do want, why you want it, and how on earth to get it. It isn’t as easy as it often sounds. Not least because it then requires an army of data analysts to produce the fancy KPIs, invariably in a form that nobody can actually understand anyway.
I am not saying that donor feeding is not without merit. Its an absurd merit of course but it does have the advantage that you can feed your boss completely useless data after which you have brief moments where you can get on with real work. Sometimes it can even get you promoted. People often say that people make decisions with emotion and then subsequently justify them with facts. I can't think of any better real example than my own.
Once when I was busy getting to grips with my role as operations director I experienced the very real benefit of what everyone in corporate management knows. You have to feed the boss with KPIs. Part of the perk of becoming a director is that it invariably includes a smart office. And with a smart office you get nice walls. Now the schoolboy error is to fill those walls with nice pictures. What you actually need to do is fill them with nice KPIs. Charts, pies, colours , statistics, maths, anything scientific looking that will impress. It doesn't need to actually mean anything at all just so long as it impresses your friends and colleagues. Better still print out something like Einstein's mathematical Theory of Relativity and stick that up.
Granted, I tried to make mine a bit more relevant. I had KPIs on resources, capacity utilisation, error rates, staffing, turnaround times. You name it, it was up there with fancy graphics, trends and colours. For all to see. Especially bosses. Now add in a visit from my bosses boss, the Global CEO. I didn’t know he was coming for a review. What I did know was that, by pure chance, on that glorious sunny Monday morning it was a perfect day to drive to work in my delicious 1965 E Type Jaguar Fixed Head Coupe 4.2 Litre, 6 cylinder, triple carburettor, in Gunmetal grey metallic paint. I parked it under the offices in the reserved parking space. It gleamed. It oozed sex appeal. The global CEO arrived. My boss later told me what happened. “Wow”, his boss exclaimed, as he saw my car “that’s beautiful. Who does it belong to?”. “It belongs to our Ops director” my boss answered. ”I must meet him” the global CEO said. The next day I was out visiting some offices somewhere. My office was therefore free and available for the big boss to use. He did, and came face to face with my impressive homage to science on my office walls. Ode to Einstein. Like a bizarre artwork in the Tate Gallery. That was it. He was hooked.
My boss called me later. “He wants to meet you…and offer you a new job in HQ. A big promotion” ”What?” I said, rather incredulous. ”Why?” ”He saw your car and then your office. He discussed the role he had in mind and of course I supported his idea. You are the perfect fit.” Basically this is what happened actually happened: he saw the car and wanted to meet the owner. He then saw the wall which, in his mind, justified his choice. People make their decisions based on emotion and then justify them with facts. The lesson learned? Never underestimate emotion in the decision making process. The jaguar E Type was the best investment in my career I ever made. Far better than an honours degree in Economics at a world class University.
Don't forget the 'O' rings.
If you are not careful then all these KPIs will lead you to exactly the wrong conclusion. The reason is obvious. KPIs by their very nature are simplifying reams of data to make something that is inherently complicated very very simple…..and average…..and standardised. The devil is in the detail. Well Mr/Ms Leader. You are detail oriented? Well get in there then. Good luck! Because somewhere in there might be just what you are looking for. It's just that its been averaged out in the production of your beloved KPI. With a bit of luck you might even find it in the detail before you get fired. Or die of old age.
Image by Andreas H. from Pixabay
We have all seen the pictures of NASA space control. If ever you want to see an example of a plethora of KPI’s all monitoring and alerting a whole team of expert space engineers and space flight controllers then you cant find anything better. Despite the KPIs at their finger tips and computer screens, tragically, on January 28 1986, the Space Shuttle Challenger broke apart 73 seconds into its flight, killing all seven crew members aboard. The spacecraft disintegrated 46,000 feet (14 km) above the Atlantic Ocean, off the coast of Cape Canaveral, Florida, at 11:39 a.m. EST (16:39 UTC). It was the first fatal accident involving an American spacecraft in flight.
How can that be? How can the most controlled, data driven, KPI managed, most advanced system in the world end in total catastrophic failure? The answer was as simple as the underlying part failure. The physical parts that failed were the primary and secondary O-ring seals in a joint in the shuttle's right solid rocket booster (SRB). The record-low temperatures of the launch had stiffened the rubber O-rings, reducing their ability to seal the joints leading to a catastrophic explosion of the external propellant tank.
The non engineering reasons were far simpler. And far more serious. The potentially catastrophic flaw in the O-rings had been known from test data since 1977, almost ten years earlier than that fateful day. Yet this information did not come to the attention of the decision making management in space control on January 28 1986. There was no KPI monitoring the O rings. Of course not. You cannot monitor everything. In addition the Rogers Commission, set up by Ronald Reagan to investigate the accident, criticized NASA's organizational culture and decision-making processes that had contributed to the accident. NASA managers disregarded engineers' warnings about the dangers of launching in cold temperatures and did not report these technical concerns to their superiors who would ultimately make the launch decision.
And therein lies the problem with KPIs. They give the human mind the illusion of a control that the human does not have. For despite every set of KPIs there will always be an O ring hidden away somewhere ready to create another catastrophic failure.
And before you say 'Ah but... what about flying on instruments, thats entirely relying on KPIs' - let me remind you of Air France flight 447. This flight, you will remember, crashed into the Atlantic in 2009 at night, in the dark, killing all 228 people on board. Pilots were flying entirely on instruments. The technical issue that started the catastrophic process was the icing of speed sensors. During the next 4 minutes the pilots struggled to control the aircraft as it lost wing lift, the issue only being correctly identified by the Captain as he was belatedly roused from his sleep by the flight crew. Tragically he realised that the two pilots were counteracting each other, one was correctly trying to point the nose down to regain speed and thereby lift but his actions were neutralised by the other pilots attempt to lift the nose. Neither had realised what the other was trying to do. Tragically by the time the Captain was summoned and realised what was happening, they had literally run out of airspace to regain control. Apart from technical improvements recommended by the subsequent enquiry one recommendation was stark in its assessment. That Pilots were increasingly relying on technical capability, instruments and electronic dashboard warnings - KPIs in other words. What they needed, the report stated, was to re engage with real fundamental flying skills.
Yes. Given a choice between someone obsessed with KPIs and someone who knows how to really fly a plane I will opt for the latter any day. The same goes for business leadership.
At this juncture let me just point out that I am not against data. Indeed its hard not to argue that data is the future. Let's be honest, if a youngster was starting out on a career choice now we could do a lot worse than recommend a career in data analysis. Companies ignore data at their peril. I suspect most of them still haven't even begun to properly harness the opportunities that data mining can bring. My argument is with pointless KPIs and our obsession with measurement for the sake of it.
These days we can monitor just about everything. And we usually do. We monitor steps, heart rate, pulse, …..and yet according to Mental Health Today* we are no more happy now than were were over 60 years ago before we could do all these things. When you are checking your smart watch for the upteenth time to review your percentage change in average steps this week compared to last have you ever asked yourself the question - 'do I have OMD?' Maybe you can get a smart watch app to check that for you too. I recommend no more KPIs than a set of bathroom scales. And willpower.
Personally I really do not want to know, as I'm sailing across the Irish Sea, that I am 5 minutes and 42 seconds away from my terminal heart attack. I do appreciate that this is a personal choice. There will be people out there who would want to follow that KPI. Maybe to say goodbye to a loved one. Or perhaps to erase their browsing history before their spouse inherits their laptop. But whatever your view on this I really do believe that we, as the human race, put far too much emphasis on all this measurement. Why? Because what I see is that in the process of measuring everything we are loosing touch with judgement. And by forgetting judgement we have become paralysed. We just cannot act. Its called 'Analysis Paralysis.'
Surrounding yourself with fancy KPIs and colourful charts and dials might get you promoted. It won't make you into a great leader. For that you need something else. Not least a vision for the future and the ability to inspire others to go for it. You won't find that in the latest computer printout. You won't find the courage to take a risk by looking at your balanced scorecard. And taking a timely decision will not be enhanced by being bombarded with reams of data points. By all means, use some KPIs. They might help you in planning. In setting budgets. Or even in avoiding speeding tickets. But never substitute them for your eyes, ears, and senses. Taking notice of your intuition, your feelings and emotion is not shameful. It is actually using all the data available and coming to your best effort of a conclusion. Above all don't fall into the trap of not seeing the wood for the data trees. You need ideas. And a compelling vision. Albert Einstein once said “I think it's not facts that matter, but ideas.” I for one agree with him.
In the end there is one overriding problem with KPIs. It makes you small minded. “I'm a detail person”. Well let me tell you; I don't care. Or rather I do. Because I want you to stop your obsession with detail. Even ‘O’ rings. That’s what you have a team of capable people for. And a leadership style that encourages getting to the real issues. Listen to your team. Encourage their input. Especially the quiet ones, who don't say too much. And you will find those 'O' rings. You won't find them on your scorecard.
As your employee what I want from you, the Leader, is the big picture. I want to know the dream. Our destination. Our purpose. If it is a choice between knowing that region x has a sales conversion rate of 2.36 less than region y or, alternatively, feeling a part of your big idea for the future then I know which one I choose.
By all means enjoy your KPIs. But don’t confuse that with leadership. To be a real leader you need to convey your picture - your crystal ball - the big and wonderful future world that explains our mutual purpose. Do that and KPIs might just become more meaningful.
© 2023 Andreas Swadlo
Would you like some help with Leadership issues? Do you need a leadership coach? Or some help with your business? If the answer is yes then get in touch. I won't be devising fancy colourful KPIs for you but I can give you some ideas for leadership direction and engagement. Whether you want to totally transform your business, start a new one or simply refine a winning team then let me know. I truly believe that leadership matters....and that great leadership can make a great difference.
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