Monday, October 25, 2010

What Will We Do With the Answer?

"I'd like to know how many customers are wearing blue today?"

I don't think I've ever been asked to research the answer to that particular question, but it's been close. I've been asked many questions like it that are meaningless. They are meaningless because the question has little to do with the business. They are also meaningless because the answer will not cause us to anything different.

"What will we do with the answer? What will we do differently if we find out that 30% of our customers are wearing blue today? Or what if the answer is 90%, will that make a difference to the decision we're trying to make?"

In my career, I've tracked a lot of data for corporate metrics. Some of it was just for information sake; I just wanted to know. If that was the case, then I tracked it myself and didn't burden anyone else with meaningless efforts. Most of the time, the metrics were meaningful to the organization's performance. Sometimes they are a waste of time or lead us to believe the wrong things. In a Lean Thinking class, I helped develop that was one of the "wastes" to be reduced or eliminated: irrelevant or misleading metrics.

Efficiency is one measurement that is used universally, and nearly universally meaningless. It will take many forms, such as time spent/standard time to be spent. It could look like average calls/hour, customers served/hour, parts/hours, tons/hour or whatever. The measurement however tells you almost nothing about how well the organization, department, team or individual is doing. The inputs to the measurement are hardly ever questioned. "Where did the standard come from?" "What is the normal inflow of calls or customers?" "What is the demand for the parts or tons in any given hour?"

Rarely do people ask what organizational results will occur if the metric shows improvement. What if efficiency increases? Do costs really (and I mean, really) decrease? Are customers really better served?

When it comes to efficiency, this metric often leads to poor results: too much work-in-process inventory, too many customers pushed out the door or off the phone before their situation is resolved, too many mistakes because people miss something obvious.

Having the wrong metric can be the worst waste in the Lean lexicon. Wasted time is spent collecting the data, transforming it into information, finding and fixing mistakes, discussing the results, planning to address a change to the results...and so on. Then when the results show improvement, it's a waste that it didn't really make the company any more secure, innovative or profitable.

For some different thinking on metrics see Dean Spitzer's book Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success

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