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Measurement is necessary, but not sufficient to produce change

August 29, 2013 by Chris Petersen — Owner, IMS

Every once in a while you need to be "gobsmacked." I think I first used the British slang gobsmacked in a 2010 blog, and I've been waiting for an appropriate time to use it again. Gobsmacked refers to a time when you're utterly astonished or amazed to the point of being speechless. Said another way, it's one of those moments when you slap your forehead and say … "Well Duh!" After teaching and preaching measurement for decades, I was gobsmacked when a good friend, Mick Zangari, shared his metaphor about measuring the cow.

From measurement sampling to real time performance dashboards

While working on talent selection with the founders of what became Gallup, it was my fortune to meet a dynamic consultant and speaker by the name of Mick Zangari. Over a recent dinner, Mick and I struck up a conversation on how the science of measurement gave birth to the "age of accountability" in business. With the advent of technology, companies no longer wanted to wait for quarterly financials. Managers became obsessed with measuring all kinds of performance and "leading indicators." And, measurement extended well beyond financial metrics and business performance.

The science of measurement was employed to create sophisticated surveys to reliably select talent. Employees were given MBOs, with increasing emphasis on measurable objectives and performance scorecards. Employees were also given satisfaction surveys, which grew into "360s" providing feedback on both employee performance and company culture. Consumer satisfaction surveys grew into NSAT scores. In the last couple of decades, everything became increasingly "measurable."

With the advent of computers and the ability to track amazing amounts of data, metrics permeated the business world. In many ways, the act of measuring performance has become an obsession, almost an end in itself. With today's IT systems, it is now possible to produce hourly measurement … even "real time" tracking dashboards.

Measurement is a requirement, and a foundation

For me to criticize measurement would almost constitute blasphemy. For the past three decades, I have focused my career on how to reliably measure results that count on the bottom line. Businesses and individuals simply cannot improve if you can't measure changes in critical outcomes. In working with retail clients today, I still start with the same measurement caveats I started with 3 decades ago.

Measurement caveats for improving results that count:

• You can't aim without measureable targets
• You won't improve if you don't keep score
• You can't manage it if you can't measure it
• What gets measured gets done
• What pays off gets done first

There is absolutely nothing wrong with continued focus on metrics and measurement! I'm a staunch advocate that measurement is absolutely essential for improving results outcomes. Ok then, if measurement is good, why not do more of it? Why not increase the frequency of measurement to daily, or even hourly? Does inspecting more often lead to better results?

Prepare to be gobsmacked by a cow …

It seems like the best "deep thinking" occurs over food and drink. After finishing our meal and partaking of a fine port, my friend Mick and I were comparing recent consulting experiences. Both of us reflected on how measurement in some companies is almost out of control, to the point where it has become an end and not the means. All too often when executives don't like the "numbers", the request goes out for follow-up measurement. When things aren't going as planned, there is a belief that if measured more frequently, performance will get better. That's when Mick gobsmacked me with a metaphor I shall never forget …

You can’t fatten the cow by simply weighing it every day.

Well … duh! How simple, elegant and memorable. Even if you measure the cow every hour it will not change anything that will change the end result – her weight gain. In fact, if you have her trotting on and off the scale hourly, her weight is likely to go down. To fatten the cow, someone must become the change agent developing insights on those behaviors and variables that cause cows to gain weight.

Retailers don't lack measurement … they lack insights on what works 

The metrics for retail survival and profitability are pretty clear cut. Where it is online or in store, retailers have to drive traffic. Retailers must convert traffic to sales. To be more profitable, retailers must attach accessories and services in the shopping cart. Like the cow, retailers can measure traffic, conversion and market basket daily or even hourly. Hourly measurement of these retail results is no more likely to make them grow than putting the cow on the scale more frequently.

Retailers don't lack the ability to measure results that count. They lack the focus, creativity, investments and commitment to develop the insights on how to change the consumer experience. It is the retail shopping environment and staff behaviors which change the consumer experience, with results in purchase outcomes. To profitably grow sales requires developing insights beyond just measuring the desired outcomes.

The most powerful word and tool in retail today is TEST!

To test something means you develop hypotheses. Testing requires systematically changing variables that might impact outcomes … and THEN measurement of the outcomes to see what worked where. Logical hypotheses would indicate that diet and nutrition variables would change the cow's weight, not the act of measurement to see what worked.

Many bricks and mortar stores continue to repeat the old models and behaviors of the past. In a panic, they often try measuring even more metrics, and/or creating more frequent measurement on performance dashboards. Putting their "cows" (aka stores) on the scale more often will not change outcomes.

At the end of the day, if retailers don't test to develop insights on how to impact their consumers' experience, they won't change their results that count.

About Chris Petersen

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