“D’oh!” – Change Metrics Screw-ups

“D’oh!” – Change Metrics Screw-ups

“If you can’t measure it you can’t manage it.”

By the time you lead change you’ve been slapped sick with this cliché.  

Many change leaders are managers, responsible for KPIs (key performance indicators). The phrase key performance indicators was coined by Art Schneiderman of Analog Devices in 1987, and popularized by David Norton and Robert Kaplan in their writings about the Balanced Scorecard.

The idea was a few simple measures across four perspectives:  financial, customer, internal operations, and innovation and learning. The intent was to encourage more metrics than just financial ones to operate the business in an integrated way. Unfortunately this has morphed into measuring everything all the time. Somehow the defining word ‘key” was lost, but now managers cringe at the letters K-P-I.

When managers hear about change metrics, the idea of being held accountable for more KPIs may not fall on receptive ears. Most organizations should reduce the number of metrics rather than increase them. 

Screw-up: piling on change KPIs without rationalizing other metrics.

Measuring change – Don’t rely on single lagging metrics

However, change must be measured; otherwise how would you know that you’d changed. Whether a business is improving,  or innovating, there is a before and after, a delta. 

Managers often talk about a single number, sales of $x, numbers of products shipped, or people trained. Even when managers talk in terms of ratios like return on capital employed (ROCE or earnings before interest and tax/ total assets-current liabilities ) or days sales in Inventory (DSI -products in inventory /daily product sales) it is a single number.

If you watch change leaders they talk in terms of two numbers, the delta. “$X sales last month vs. $Y sales this month and our DSI has moved from ninety days to fifty four days. Production isn’t keeping pace with the increase in sales and if we don’t improve we may face a stockout within six months.”

Successful change leaders talk trends. They understand that change is volatile, sometimes “two steps forward, one step back,” or even sometimes “one step forward two steps back,” but they keep focused on forward progress using overall trends to help.

Screw-up: focusing on a single metric at one point in time, “Profit is down!”

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