Living by numbers (and be careful what you measure)

A recent issue of Wired, entitled Living by Numbers, includes several great articles on better living (and working) through data.  Turns out that people eat better, exercise harder and work more efficiently when they set goals and measure their progress.

Why does it work?  One idea is borrowed from Sociology’s Hawthorne effect–people change their behavior—often for the better—when they are being observed.  Probably a better explanation is that our brains are wired to receive feedback.

If we haven’t set goals and aren’t measuring our progress, then we lose our ability to stay focused and perform effectively.  Sort of like trying to drive a car under the speed limit with a broken speedometer.

If your professional speedometer is broken, get it fixed.  When you and your team know what the goals are and how you are doing against them, you will have a much easier time figuring out what is working and what needs to change.

Be careful what you measure

Ironically, editor Chris Anderson argues against managing with numbers in his article It’s Time to Manage for Abundance.  He uses very real and relevant examples where artificial scarcity turns out to be counterproductive.

Cases in point – the “full” voicemail inbox (the average iPod can store 100,000 of them) and the IT department harassing employees to delete files because the company is running out of storage room (Anderson’s children have twice as much storage on their home PCs than his entire staff has at the office.)

The real point that Anderson is trying to make is that, too often, we end up measuring and managing against the wrong things.  Why would you make your entire staff spend an afternoon deleting old files when you can supply them with a one-terabyte desktop hard drive for under $100?  How valuable is your time?  Your team’s time?

Another example of measurement gone wrong is the time wasted by computers posing as customer service departments.  The journey into the interactive voice response labyrinth always begin the same way – “your call is important to us…”  Really?  At this point, we’ve all been trained never to call a big company unless we have a unique question or issue that cannot be solved online or by punching responses into the dial pad.  Yet companies insist on wasting our time because they are measuring and managing against a short-sighted set of call center metrics.

Worshiping the wrong data can be very costly in the long run.  The Forbes article Too Smart for its Own Good answers the question – What does a company look like when it’s run by consultants? Ebay.

According to the story, the consultants running Ebay hired their former employer, McKinsey, to answer a crucial question: Is Google a threat?  After months of data mining the consultants concluded: not really.  Today, eBay has to write a monthly check for 15% of its traffic via Google’s paid search results.

Start with the end in mind

So what should you measure and what should you avoid?

Start by defining success.  Where do you want to be six months or a year from now?  What is a realistic goal?  What results would cause you to close up shop and go home?

Start with those metrics and then work backwards.  Let’s say you want to land ten new accounts by next year.  How many proposals will you need to make to close ten? How many propects will you need to identify and meet with to get to that level of proposals?

Don’t forget to put time regulators against your milestones.  If you want to be in your customer’s budget for next year, then you need to be in front of the decision makers before planning season kicks off this year.  Other factors enter into the timing equation.

Approval processes, priorities of other departments and availability of your own resources all play a role in the pace of your progress.  Be realistic, build in enough time to accomodate the other factors and get started on the long lead items sooner rather than later.

Setting goals, measuring progress and assessing results are critical to success.  However, measuring the wrong things can lead you astray and even cost you real money.  The best way to figure what to measure is to start by defining success and then work backwards to identify the key drivers and milestones. Focusing on anything else is distracting and possibly counterproductive.