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One of the things I discovered in my long career in distribution management is that the most successful use of measurements, the most successful result, comes from a thorough understanding of context. To really know the context, to get the client to develop the context, you ask a series of questions. Actually, just a repetition of the same question, "Why are you measuring?"
Why do we measure? To improve productivity.
Why do we want to improve productivity? To reduce headcount.
Why do we want to reduce headcount? To lower labor costs.
Why do we want to lower labor costs? To improve our profitability.
Why do we want to improve our profitability? To improve shareholder value.
Why do we want to improve shareholder value? Because it's what were supposed to do.
The example above is how many clients answer these questions. The fixation on profitability, as Drucker teaches us in "Principles of Management," is dangerous. It is one-dimensional to focus only on cost and not on any other way to build a sustainable business. That single-minded focus always goes to the classic, "improve shareholder value." Eventually, the final answer becomes, "because it's what we’re supposed to do." This is a rough context to build upon because it places all benefit upon some unreal group of people: "they and them." It's hard to develop a serious motivating context when the final segment of your reasoning is based on, "we’re supposed to."
Getting to the context is difficult. Measurement in and of itself is nothing more than putting a measurement tool on an item. If the collection of measurement over time—measuring the outcome of changing processes and behavior—does not have a strong strategic conclusion, the effort of measurement is really nothing more than masturbation.
What you must do is keep asking the question "Why?" But search for other paths, other alternatives, other reasons "Why."
So let's go through the example again with a different set of answers:
Why do we measure? To understand our performance.
Why do we want to understand our performance? So that we understand the success or failure of the changes we are making.
Why do we want to understand the success or failure of the changes we are making? So that we understand the cause and effect of the changes.
Why do we want to understand the cause and effect of the changes? So that we can figure out what is the best practice to use in our situation.
Why do you want to figure out what is the best practice to use in your situation? So that we can improve the quality of the operation.
Why do you want to improve the quality of the operation? So that we can build a sustainable operation that makes the customers happy.
With this different line of questioning, we get to what the true purpose of measuring for improvement should be—making the customers happy. And the outcome of making the customers happy is improved profitability, which is also an outcome of a sustainable operation. This is a context that people can get behind, a context that motivates.
My point is that there is no absolute right context. The context of what is truly powerful will be different for each organization, for each different time period, for each set of outside and inside influences. But the context must be motivating. For a context to motivate, it must mean more than just money. It must stir the soul.
The Foundation: Define the Victory