Don’t Let Metrics Critics Undermine Your Business

Increasingly, the best strategies have the best metrics.

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Strategic Measurement

Strategic Measurement examines the role of key performance indicators (KPIs) as a leadership tool.
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The irresistible rise of data-driven, analytics-enriched digital instrumentation and decisions has provoked an intellectual backlash. Call it a counterrevolution. Those lucky employees who haven’t been automated into professional obsolescence instead find themselves enduring what economic historian Jerry Z. Muller calls the “tyranny of metrics.” Numbers rule their workplace lives, and there’s no escape.

“The problem is not measurement,” Muller declares, “but excessive measurement and inappropriate measurement — not metrics, but metric fixation.”

“Don’t Let Metrics Undermine Your Business,” warns Harvard Business Review’s September-October 2019 cover story: “Strategy is abstract by definition, but metrics give strategy form, allowing our minds to grasp it more readily. … The mental tendency to replace strategy with metrics can destroy company value.”

Anti-metrics admonitions even come from innovators who enjoyed success in no small part due to thoughtful key performance indicators. “If we live for KPIs, and do something just for the sake of KPIs, then Alibaba is finished,” declared CEO Daniel Zhang, who took over from now-retired company founder Jack Ma.

No doubt these fears and concerns are sincerely felt. However, they are wildly and measurably misplaced. Metric fixation is neither a root cause nor a reason for unhappy outcomes or defective cultures. The opposite is true: Organizations hurt themselves and their customers precisely because they don’t value metrics enough. Instead of treating measurement seriously or strategically, management defers or defaults to KPIs that inspire neither insight nor foresight. Leadership fails to understand the power and potential of metrics as an asset.

To be sure, not everything that counts can be counted and not everything that can be counted counts. But that cliché becomes less and less true as KPIs learn how to learn from greater volumes and varieties of data. Effective digital transformation invariably means measurement gets smarter, faster, and more adaptive. This challenges leaders to become both more strategic and sophisticated in their use of metrics. The evidence suggests few legacy leaderships have the cultural or quantitative strength to overcome these challenges. They lack the self-discipline and self-knowledge essential to making data-driven metrics work. Leadership, not measurement, is the problem.

Serious leaders from the most effective digital disruptors — Google, Amazon, Netflix, Tencent, and, yes, Alibaba — relentlessly fixate and focus on defining metrics and KPIs that inspire strategic success. Indeed, their KPIs are their strategy.

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Topics

Strategic Measurement

Strategic Measurement examines the role of key performance indicators (KPIs) as a leadership tool.
See All Articles in This Section

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