Cut Through Cluttered Minds To Lead More Effectively: Design And Use Better Measurements And Metric

Improving the measurements and the standards of performance (metrics) a leader uses

is one of those areas where many peoples' eyes glaze over, their eyelids start to close, and they feel an uncontrollable need to yawn. For many, even watching grass grow has to be more exciting than improving measurements and metrics!

By just describing just two benefits, I believe that measurement- and metrics-induced sleepiness can be quickly turned into razor-sharp, alert interest: Improving measurements and metrics rapidly increases profits and makes leading an organization to succeed much easier.

Let me explain why the two benefits occur. Almost everyone would like to do a better job at work. Organizations that are sloppy in selecting and applying measurements and metrics often mislead their people with signals that encourage some of what the organizations' leaders don't want, while discouraging part of what the leaders want.

Use better metrics to change the signals that are received by employees, and you can favorably shift behavior. Adjust the signals well, and the need is eliminated for most correcting, coaching, explaining, and redirecting. Leaders also hold their jobs longer because it's easier to keep their promises.

Here's a common example of using the wrong measurements and metrics: A beverage company produced dozens of different brands in many sizes. Hoping to earn more money, the company's leaders gave their salespeople quotas for how many beverage cases to sell in total. Substantial bonuses were paid for meeting or exceeding the quotas.

The good news was that the salespeople almost always met their quotas. The bad news was that they mostly met their quotas by selling more of the products that lost money or broke even. The company's leaders were discouraged that profit growth was always slower than its robust sales growth.

After realizing their mistake, leaders changed the quotas so that case sales of highly profitable products counted for a lot more than did case sales of less profitable, break-even, and unprofitable products. Profit growth soon increased to be faster than revenue growth.

By this change in the sales quotas, improved metrics brought the intentions of the leaders and the actions of the salespeople into closer alignment.

It's an old lesson, but an important one: People respond to what you pay them to do. Be sure you are paying them to do the things that are most helpful for your organization's purposes.

Once the right metrics are in place, almost anyone can succeed as a leader in achieving profitable growth. Without appropriate metrics, few people have the skill, insight, and sensitivity to lead their organizations to perform well.

The long-term performance of most organizations is pretty unimpressive, often lagging behind the average of the whole economy. In explaining why such lags occur, many experts point to the scarcity of high-performing leaders. I prefer to point instead to the scarcity of relevant metrics in low-performing organizations.

While boards of directors will pay a king's ransom to hire the right leader, few boards will ask leaders to spend a little time and money to improve their organizations' metrics. What a waste!

For many decades, I have had the privilege of working as a strategy consultant and author concerning how to make improvements that deliver complementary, exponential benefit breakthroughs. In the course my work, I'm continually struck that simply measuring the right things makes it much easier to accomplish breakthroughs.

If profits are to be improved, you need to know which of the profit-increasing factors you can influence. If cash flow is to be enhanced, what shifts in behavior would expand cash flow?

If satisfying unhappy customers is critical to earning more profits and having more cash flow, what do unhappy customers need more and less of? How can employees and suppliers be encouraged to meet those needs?

Because most companies want to be more profitable and most nonprofit organizations don't have enough resources to accomplish their goals, budget metrics to restrain unnecessary resource use are often quite well developed.

The rest of an organization's activities may not have equally appropriate metrics, as we saw with the beverage company's initial sales quotas.

If you look outside of effective, metric-directed organizations, you may find that there are few, if any, metrics in place. As a result, opportunities are missed.

Here's an example. Have you ever been driving in a hilly area when there was a lot of traffic? Sure you have.

I'll bet that you sometimes found yourself stuck behind a slow-moving truck, wishing you could get into a faster-moving lane. Until traffic thinned out or a driver in another lane took pity on you, you probably couldn't make a lane change to get around the truck.

How might delays due to slow trucks be measured so that communities might establish better traffic patterns? A good place to start is by seeing what life is like without the slow trucks.

That's exactly what Los Angeles, California, did in 1984 during the summer Olympics held there. Anticipating "impossible" traffic conditions due to adding lots of visitors to the usual "rush hour" gridlock on the city's freeways, trucks were banned during most daylight hours.

The result astonished nearly everyone. The freeways were as clear of traffic during the day as if there were suddenly twice as many roads. Even with the increased number of visitors going from one event site to another, traffic was almost always moving at or above the speed limit . . . even during the busiest times.

I was often reminded of that lesson while visiting my daughter at her college. The approach to her college included thirty uphill miles on an interstate highway.

If you reached to that stretch of road before 2:30 p.m. on a Friday afternoon, you would whiz through in less than 30 minutes. If you arrived just a few minutes later, you could spend two hours crawling through that thirty-mile stretch.

The time differential occurred because at some point so many lanes were congested with trucks going less than 10 miles per hour that too many passenger vehicles were concentrated in the remaining lanes, and the speed in the "truck-free" lane dropped from over 60 miles per hour to less than 20 miles per hour.

If you do not ban all trucks during certain times, how can you measure their effect on a road, the people who travel on the road, and those who live and work nearby? If you are like me, that question seems to be interesting, but daunting, to answer.

I have a surprisingly simple solution for you. Ask an expert in truck traffic measurements and metrics to help you. I happen to know one, Dr. Kim Hassall, who graduated with a Ph.D. in Logistics Productivity from Rushmore University. Let me tell you a little about him.

While many people who work on improving logistics productivity have been satisfied with the traditional ways to consider freight traffic, Dr. Hassall has fearlessly stepped forward to develop improved measurements that have become standards in his home country of Australia.

Rather than just consider how well a logistics system is delivering what is needed, he developed a way to measure how fragile the delivery system is so that the likelihood of potential problems could be anticipated and avoided.

Instead of ignoring the effects that truck transportation have on those who aren't in the trucks, Dr. Hassall created measures of how exposed a community is to the freight moving through it. As a result, communities can more intelligently set standards for how logistics are accomplished so that the quality of life is enhanced.

Passenger vehicle drivers usually don't realize that a high percentage of the time the trucks that uncomfortably hem them in are either empty or near-empty.

Organize deliveries more efficiently, and you take a lot of trucks off the road during busy times, a result that's good for shippers, drivers, and everyone else in the vicinity. Dr. Hassall's physical freight productivity indices contribute to this desirable result by helping shippers learn to transfer more goods in fewer miles driven.

He takes pleasure in having created the measurements that assist so many organizations to employ metrics that make better use of scarce resources while making life better for those who are affected by logistical activities.

Not surprisingly, he authors a publication, subscribed to by more than two hundred organizations, that delivers improved data on freight costs.

Dr. Hassall also has an active consulting practice for helping clients to apply the measurements as proof of improved operations, often after restructuring their commercial fleets and freight networks. These metrics can also assist them to price and organize their services to gain more profitable business.

He is also proud of being a pioneer in educating entrepreneurial logistics managers. Beginning in 2002, he created a master's in management program for the University of Melbourne that during its first three years educated more students than any other new master's programs in the university's history.

His accomplishments don't stop there. Dr. Hassall has also done pioneering work in rethinking the roles of postal services and how to accomplish their logistics in more effective ways.

As a result of his measurement- and metrics-related work, he has had the pleasure of being involved in many global organizations and activities, enriching the quality of his life in many ways.

Who would have thought that measuring things in new ways could be so important? Perhaps it is time that you began working on finding and using better measurements. This important field offers immense potential for professional growth, success, and recognition.

As fascinating as his career has been, I was curious to know if Dr. Hassall had considered any alternatives. I was surprised to learn that he has been a professional chess player for many years who has enjoyed more than usual success.

As a teenager, he managed a draw with a former correspondence world champion, Cecil Purdy. Eighteen years later, he played former world champion Boris Spassky for several hours, a match that also ended in a draw.

Dr. Hassall was quick to add that someone could be at the top of her or his game in developing measurements and metrics without ever having seen a chessboard. I was glad to learn that my poor chess playing doesn't disqualify me from being successful in improving measurements and metrics.

Keep in mind that someone who has already enjoyed a successful professional career could easily accomplish more by developing and applying improved measurements and metrics.

Are you feeling more awake now to the opportunities that more effective measurements and metrics can bring to your career?

by: Donald Mitchell

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