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How Do You Measure Thrift?

W. Edwards Deming, the American engineer and statistician that is credited with turning the Japanese industry from its post-WW2 ashes to its present-day quality-leadership is mistakenly quoted as having said "If You Can’t Measure It, You Can’t Manage It".

What he actually said was the exact opposite: "It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth".

A manager I mentor has a successful business but is not happy with the way things are. People are working hard, the business is profitable, but he feels that everything is fluid, there is no consistency and their monthly operational meetings are not as productive as they can be.

It turns out that although there are some overall targets, the line managers don’t have any KPI’s. Now, not everything is measurable, but running a business without any metrics is guaranteed to lead nowhere.

The tricky bit is to strike the right balance – putting KPI’s in place but not assuming that measuring will solve all your problems. In fact, measuring is a sharp instrument - properly used it is highly effective. It is dangerous, though, to wave is around.

So what is the "right" balance? Unfortunately there is no text-book solution. As guidelines:

  1. Anything that can be, should be measured.

  2. Think hard how to use the data. It is easy to turn it into a stick but holding people to account will only get you so far. Therefore, be careful how you present it, when, and to whom. It is definitely productive to have 1-2-1 operational meetings with the person involved, analysing the numbers and discussing how to improve them but is it appropriate sharing them in a general management meeting? If yes, in what way? How do you ensure it does not turn into a name-and-shame exercise?

  3. Identify what's measurable and what's not. The fact that something is not quantifiable does not mean you can ignore it, nor, as Deming said, that you can't manage it. Think of team spirit for example - not something you can scientifically measure but you can certainly sense it and manage it.

  4. Don't overdo it. Numbers are not the be-all/end-all element of the business and, as objective as they are, there are circumstances around them that you need to consider.

So make sure your KPI's are defined and assigned, watch them carefully on a regular basis and discuss them with the relevant people but remember - it's a sharp instrument so wield it carefully.

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