I’m stumped by today’s addiction to measuring everything. It causes two very real business problems. First, not everything can be placed in a neat, soothing numeric box. Second, metrics are easy to finagle.
“Whenever reward is tied to measured performance, metric fixation invites gaming,” writes Jerry Z. Muller in The Tyranny of Metrics.
Expertise used to mean amassing knowledge in a specific field. Now, however, the accountants and “measurers” have taken over (and don’t get me started on how my favorite sport – baseball – has been hijacked by the statheads).
How have we allowed this to happen? My speculation is that we now have so much artificial capacity to crunch numbers that we feel compelled to use it.
As Muller writes, “(N)umbers are valued precisely because they replace reliance on the subjective, experienced-based judgments of those in power.” Does this mean today’s corporate and association decision-makers are dumber than ever? Not likely. But it does mean that much of their license to think – to arrive at strategic, analytical judgments – has been stripped. If we judge everything strictly by the numbers, who needs the C-suite? Just pray to a black box oracle instead.
Some corporate CEOs agree. “I don’t like making decisions with analytics,” says Nvidia CEO Jensen Huang, as quoted in Adam Bryant’s The Corner Office “I actually like making decisions with intuition. I like to validate the decision with analytics.”
Our metric-centric business climate means that non-financial and intrinsic factors are ignored. Did your chamber’s chief communications officer just place your CEO on the evening news? Sorry, there’s no number attached, so we can’t factor that in. Has your association’s chief technology officer just made an important connection with a potential partner after speaking on a panel, a situation that could result in an enhanced reputation? Tough, there’s no numerical value there.
The point is metrics are a poor and unreliable substitute for C-suite judgment. Moreover, they divert resources from long-term goals, which explains our tragic fixation with quarterly results as opposed to more meaningful long-range performance (to say nothing of other goals in the realms of reputation, social responsibility, and public policy).
One financial expert with whom I discussed this topic told me in no uncertain terms that he can compute reputational damage by noting the market valuation lost after a crisis. While I by no means claim fiscal expertise, I believe that market valuation – and the stock markets’ capricious mood swings – are poor yardsticks of the economy and of individual companies, to say nothing of its failure to serve as a valid reputation barometer.
Do you remember the phrase “voodoo economics” from a long-ago presidential campaign? That’s my view of such measurement attempts. Futility reigns. The solution? Trust the executives who have demonstrated wisdom and experience in making decisions on such matters.
This article is an excerpt adapted from Ed Barks’ book, A+ Strategies for C-Suite Communications: Turning Today’s Leaders into Tomorrow’s Influencers.
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