Sometimes ideas follow me around like a stray puppy, barking for attention and demanding to be fed. At the moment, the puppy’s name is measurement, our obsession with it, and more particularly, what we measure . Because what we measure determines what gets done and if we measure the wrong things, then we end up doing the wrong things.
I think measurement is addictive; so addictive in fact that we end up paying more attention to the process and recording of data and less to what it is we are measuring.
Consider businesses. Here’s a screen shot of how Government do it.
Pretty much what we would expect. The big businesses, representing just over half of one percent of the total number of business capture just over half the turnover and the small ones, representing just over eighty percent, get around fifteen percent. I can sense Vilfredo Pareto smiling benignly and saying “told you so”.
What interests me more are the businesses in the middle – the seventeen percent who get the remaining thirty three percent. The “SME’s” lauded by government as the backbone of the economy, but largely ignored because they don’t have the revolving doors and comfortable, undemanding non executive sinecures of big business. SME’s are the Tommy Atkins of the business world:
O it’s Tommy this, an’ Tommy that, an’ ” Tommy, go away ” ; But it’s “Thank you, Mister Atkins,” when the band begins to playRudyard Kipling
Sandwiched between the large businesses (who make money through scale (if they make things) or by “bottom trawling” in the tides of money (if they are in services) and the independent self employed and micro businesses, they are neither fish nor fowl. Big enough to need overhead, too small to scale. A third of them fail within two years of starting, and half fail within five years.
So much for the easy measurement, but what if we judged them differently, through a lens where data fears to go? What if we could find some sort of industrial scanner, and assess the different energies in these different businesses?
I don’t, unfortunately, have one – but let me speculate on what I might find if I did:
- Big companies have “comfortable” energy. Powered by business models, business processes, automation and established networks, and with leadership that is a long way from where the action happens. They hum along efficiently and nicely enough until, inevitably they hit a bump in the road that their comfortable energy leaves them unfit for. They either get bailed out or bought, and continue to hum along a little until eventually, like a Kodak, or a Debenhams, or a Jaeger they find that the humming just stops.
- Small companies have “frantic” energy. That visceral sensation, difficult to describe, understood by anone who has run a small business. Making payroll is a constant adventure, as banks leave you to their algorithms, “talent” (another story) drives right by and your customers are the ones with the switching power. Life is a constant battle. It’s the frantic energy that keeps these businesses going until they either make it to the middle, or they find themselves the bug, not the windscreen. Twenty percent fail in the first year and the majority fail within five.
- SME have “waving not drowning” energy. They have reached the point where they can no longer meet in the Pub, where they are big enough to need plans and policies, and have to pay attention to regulatory compliance (and how we love GDPR). Banks are keen to lend and provide “help”. Recruitment is a challenge as we run out of those we know to bring on board. It is however exciting, and at this size, lucrative when it’s going well and even moreso if the big companies start approaching waving money as they try to capture the energy they lack.
Let’s extend this a little by making some assumptions and create basic archetypes in order to develop a basis for curiosity.
- Big companies are populated largely by professional leaders and managers, and staffed by people who are happy to work for someone else.
- Small companies are mainly self employed individuals or very small groups making a living more than developing a scalable business.
- SME are led by founders/owners who are close to where the action is, possess and personify the skills and capabilities that the business is founded on, and are realising a personal vision of some sort. It’s difficult to go back, and scary moving forward. In many ways it’s a transformative, liminal space.
Should we use the same measures for each of these archetypes?
Financially they may well be similar, but with different priorities – cash flow critical for the small businesses, earnings trends for the large, and revenue and margin growth for SME.
But what about culture, attitudes and dispositions? Small businesses will be defined by individual personalities, whilst large ones will be somwhere between what is written in the PR statements and on wall posters, and the lived reality as they host a steady stream of leaders, managers and operators defined and constrained by processes and protocols as they pass through on the way to their next career move.
SME are different, as personalities meet processes and learn to live together. Some will have absorbed the dogma of “scale” and follow the path set for them by consultants and “best practice” and end up in an ongoing challenge as they tack between who they really are, and who they are required to be in order to keep their stakeholders happy. They battle to get past the five year point and sustainable independence, and either fall by the wayside, or get bought.
My love is for what is now left. Artisanal Businesses. Those for whom how they do what they do defines them far more than marketing claims or aspirations of becoming a Unicorn. Those whose work is a vocation, and who value beauty more than balance sheets, people more than profit and for whom meaning and purpose are central, not something to be talked about in workshops. The sort of people who pick up “Do Build” before “solutions” books. People who recruit and train those that work for them for who they are and their potential more than their qualifications, availability and price and pay more attention to joy and laughter than social media.
In other words, things that can be sensed more than measured, and which connect more than qualify. Things that are useful and kind ahead of efficient and cheap.
Because in a world of data, machine learning and artificial intelligence, if we can measure it, we can replicate it and automate it.
Which is great if all you want to do is make money, rather than create something memorable that someone you will never meet will be grateful for.
Measure (V) from Old French mesurer “measure; moderate, curb”etmyonline
I think the origin of the word sums up its limitations well. Despite the quote attributed to Peter Drucker that “only what gets measured gets managed” (he never actually said that, but it’s passed into managememt folklore nonetheless.)
Over half a century ago, V.F. Ridgeway published a paper which can be summarised as
“What gets measured gets managed — even when it’s pointless to measure and manage it, and even if it harms the purpose of the organisation to do so”.
Measurement is analytical and defensive. As the old saying goes, nobody ever made a pig grow by measuring it. Measurement is about management, and management is about stability and predictability.
Measure by all means, but recognise the power and responsibility that goes with what you cannot measure.
Management depends on focus and detail. Leadership and future progress depends on imagination, courage and judgement.
We need both, and right now, when we are in the midst of epochal change leadership matters more.