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3 Principles to Positively Measure Sales Training Effectiveness

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It’s an article of faith in business that “if you can’t measure it, you can’t manage it.” The alternative phrasing is, “What gets measured gets managed.”

Nowhere are those mantras more repeated than in the fields of corporate sales and training. And at the intersection—the field of sales training—it’s beyond an article of faith; it’s more like The Book.

And yet, in my admittedly limited experience (serving mainly high-end, intangible, B2B businesses), I’ve noticed very curious things:

  • Learning and development organizations want to see precise, detailed performance metrics in their sales training programs, and they request evidence of such metrics from vendors’ past client engagements.
  • Those same companies do not themselves have such metrics for past training programs – and they balk at the opportunity to create them when offered.
  • Those companies feel guilty about this disparity.

They shouldn’t feel guilty. There’s a reason none of them actually produces the metrics they claim to want—because the metrics they want are the wrong metrics. Furthermore, the act of measuring them is harmful.

Companies for the most part end up doing the right thing despite their “best thinking.” Like Huckleberry Finn, who felt himself a sinner for having helped the slave Jim escape to freedom, learning and development departments are not sinners at all—they’re actually doing the right thing.

In this article, I’d like to congratulate them for their “failure” and point out an alternative to the wrong thinking they’ve been holding themselves accountable to.

The Heisenberg Principle of Training

In physics, the Heisenberg Principle says that at the sub-atomic level, the act of measuring either mass or velocity actually changes either the velocity or the mass. In other words, measuring affects measurement.

What’s true at the micro-level in physics is true at the higher-order level in business training—the training of skills in areas such as engagement, vulnerability, listening, trust, empathy, or constructive confrontation. In those areas, the act of measurement affects the thing being measured. That effect can be positive or negative.

It does matter that you measure. What also matters, however, is what you measure and how you measure it – and we think wrongly about each.

It goes wrong when we approach these higher-level human functions as if they were lower-level behavioral skills. We apply the same mindset to them that we successfully apply to learning a golf swing, developing a spreadsheet, or creating a daily exercise habit.

These higher-level arenas evaporate when we subject them to the relentless behavioral decomposition appropriate for lower-level skills. Consider an example:

You declare to your spouse your commitment to improving your marriage. Your spouse is happy to hear of this decision until, that is, you declare that “obviously” you need a baseline and a set of metrics to regularly track your improvement. Still, your spouse is a team player and grudgingly agrees to go along. You jointly assign a 79.0 basis (on a 100 scale) for your baseline quality of marriage.

All goes well the first week: you are mindful of taking out the garbage, looking away from your email when your spouse speaks to you, and asking “how are you?” at least once a day—until measurement time. You then ask your spouse to rate your progress at the end of week 1: “Do you think I’ve moved the needle from 79.0? Maybe up into the 80s, huh?”

At this point, your spouse declares the experiment over, suggesting that you don’t “get” the whole concept. Oops. And by the way, you just slipped below 79.

What went wrong? On one level, it trivializes marriage to describe it solely in terms of behavioral tics like taking the garbage out, even though in the long run there is clearly a correlation. Further, focusing on taking the garbage out suggests it’s a cause rather than an effect. Finally, the frequency of focus on such things forces attention away from the true causes and drivers—a mindful attitude.

And on a deeper level, treating measurement this way confuses ends and means. A good marriage should be rewarding on its own terms. The overlay of a report card raises ugly questions: From whom are you seeking approval? And approval of what? Why, after all, are you doing this in the first place? What does “success” at the scorecard add to success in the marriage?

Gamification, so useful in more plebeian aspects of life, is trivializing, even insulting, when applied to the game of life.

Want proof? Ask your spouse.

Errors in Training Measurement

Such measurement is also trivial when applied to higher-level sales training. It’s true that to be successfully trusted as a salesperson, you need to do a great job of listening, empathizing, telling the truth, collaborating, and focusing on client needs. And if you do all of those things, you will sell more.

But the higher sales come about because you focus on the relationship.  The sale should be a byproduct of a relationship – not the purpose or goal in itself, with the relationship solely a means to the sale. Focusing solely on the byproducts sends exactly the wrong message.

There are two errors you can make:

  • Measuring those improved sales every week (or very frequently). Doing so proves to everyone that you really don’t care about all of that empathy and trust stuff except insofar as it improves sales. Which means you’re a hypocrite. Which means they won’t trust you and won’t buy from you. Hello Heisenberg.
  • Measuring the constituent behaviors. If you break down “empathy” into various behaviors (looks deeply into client’s eyes, pauses 0.4 seconds before answering questions, uses phrases like ‘that’s got to be difficult’ at least once per paragraph, etc.), it proves to everyone that you don’t “get” empathy. You are just a mimic, and not a terribly good one at that. Which means they won’t trust you, and won’t buy from you. Hello Heisenberg, again.

Using Measurement Positively

Up until now I’ve been negative about the ways measurement is used—actually, the way we talk about it being used—because in fact, our better instincts take over and we don’t actually do these things often. But there are positive ways to measure. There are three principles:

  1. Pick long-term, big picture metrics. The best one for sales training is, of course, revenue—but measured over time. The right timeframe varies with the business, but less than quarterly is too much.

Other things you could measure—and there shouldn’t be too many—include account penetration, share of wallet, or cost of sales. Again, these should be looked at as trailing indicators of performance, avoiding any suggestion that they are short-term causal drivers to be tweaked. You don’t cause mindsets like trust by practicing tiny behaviors; you cause tiny behaviors by focusing on mindsets like trust.

  1. Substitute discussion for reports. If your only reason for metrics is to “manage” them, then everyone will intuit your bad faith—that you don’t really care about empathy, you care about winning the battle for being empathetic as soon and as profitably as possible, and you will ding anyone for not being empathetic.

Instead, have irregular but frequent open-ended discussions about the numbers. There’s nothing wrong with discussing listening techniques or examining pipeline status. Doing so is how we get better and should be the purpose of sales coaching. But by discussing rather than “reporting” and “evaluating,” you show that your purpose is indeed on the end game (engagement, trust, etc.) and not on scorecards.

  1. Publicize discussions as motivation, not metrics. If someone has a breakthrough in listening, use the process to celebrate and educate the organization. (Look at what Joe did, and how he did it!) This is using Heisenberg in a positive way—to publicize insights and to encourage.

The alternative—defining smaller and smaller behavioral details—whether you publicize it or not, sends the message that salespeople are being evaluated, not coached. It also says that the metrics matter, not the end purpose they’re intended to serve.

Learning and development people: stop thinking you need detailed behavioral metrics. Give yourself a break, give your vendors a break, and give your salespeople a break. Coach your staff, demand principled behavior from them, and hold them accountable. Don’t track them minutely and with an hourglass. Coach on details to get better, measure end results to show it’s all working, and communicate what’s important.

How Smart People Get Stupid

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Exhibit A. Google conducted a multi-year, multi-million dollar study called Project Aristotle to determine just what distinguishes successful teams from unsuccessful ones. Tons of data were examined, decades of research studied, multiple hypotheses explored.

The answer? Drum roll: successful team members display more sensitivity toward their colleagues, e.g. granting them equal talk time.

THAT’S IT!

If you find that a stunningly unsurprising flash of the obvious, you don’t understand how things work in business these days. Here’s the reaction of one Googler to that study:

“‘Just having data that proves to people that these things are worth paying attention to sometimes is the most important step in getting them to actually pay attention…I had research telling me that it was O.K. to follow my gut,’’ she said. ‘‘So that’s what I did. The data helped me feel safe enough to do what I thought was right.’’

I’m not picking on Google; they are not unique. (And they are, indeed, really smart). But let me restate what Exhibit A is really telling us:

Millions of years of evolution have brought humans incredibly complex and exquisitely tuned neurological systems, capable of instantly intuiting not just friend vs. foe, but parsing a spectacularly wide array of emotional messages being sent out by our fellow humans.

Yet the smartest of the smart among us have determined that you can’t trust that system – unless it’s backed up by years of technological research that couldn’t have been done even just ten years ago.  Fortunately, we have now been given permission by that research to ‘trust your gut.’

It’s a wonder the human race stumbled along without that study for so many years.

 

Exhibit B. We recently got a plaintive email from a genuinely perplexed  client.

He said:

I hear constantly that being authentic is crucial. But it’s hard to get a clear grasp on the idea. It’s especially hard to figure out how I can know (instead of just feeling or believing) that I am authentic – much less know that someone else is.

Absent knowing we’re authentic, can’t anyone believing they’re authentic just claim to be so? How could anyone prove otherwise?  And since we can’t really know authenticity, doesn’t that also mean we can’t measure it, so we can’t compare it across people or time or situations?

Hasn’t someone come up with a way of getting at authenticity by way of knowing, rather than feeling or believing? I’m struggling to know how I can know I’m authentic. I hope this makes some sense.

This person’s pain is real, and deep; I don’t want to appear insensitive by citing it as a cautionary example, we can all relate to the sentiment. Yet, contrary to their hope, the query makes no good sense at all. Instead, it represents the abandonment of commonsense.

Authenticity – to pick that particular example – speaks to an alignment of beliefs and feelings with the cognitive functions that our writer called “knowing.”  When we run across someone who accesses solely their cognitive talents, we don’t think of them as authentic – we think of them as Sheldon Cooper. They are inauthentic because they are presenting not their full selves, but only their frontal cortexes to others.

“Authentic” is what we feel instantly in our pre- and sub-conscious instinctive feelings about other people. It is the same kind of feeling we get when we jump away from the speeding car, recoil at the sight of a snake, or feel our hearts tug when a puppy wags its tail at us.

An Outbreak of Reductionism

This is hardly the first outbreak of hyper-rationalization. In the social sciences it has a name – physics envy. It is particularly virulent today in neuroscience, where some, having locating certain emotions in particular areas of the brain, claim to have “explained” those emotions. Description is by far the narrowest form of explanation – it’s more akin to translation.

But the disease affects business as well. We have no trouble smiling at the naiveté of Frederick Taylor and his stopwatch, measuring people like machines. Yet we are every bit as mechanical and naive today.

Today, it is an article of faith in many of our most successful companies that “management” is a matter of decomposing goals into a series of cascading behaviors which, properly measured and carefully matched to incentives, produce an internally consistent, humming machine. All you need is a dashboard, which is easily available in the form of widgets.

The manifestation of this belief system (codified in “if you can’t measure it you can’t manage it”) is the enormous investment in training, goal-setting, reporting, progress discussion, and performance reviews – all of them non-direct value-adding processes.  All of them are built around a behavioral view of meaningfulness, a pyramid view of behaviors, and a system for metrics and incentives.

Every training department knows to use the Skinnerian language (“attendees will learn the behaviors associated with mastering the skills of XYZ…and will be rated regularly thereafter on a four-point scale of Early, Maturing, Mature, and Master.”)

Petrification by Metrification

This is precisely the technique used decades ago by Harold Geneen, who believed in rolling up data from all his subsidiaries and managing by the numbers. Except Geneen was measuring profit margins, inventory turns and capital costs. (And it turned out it was Geneen’s outsized personality, not his system, that made it work).

Today’s managers are applying the Geneen model to manage things like trust, authenticity, ethics and vulnerability – with the same tools they apply to measuring click-through rates. There is a huge mismatch. Entire organizations – and not just Left-coast tech companies – are being managed by cascading goals and KPIs, each firm with its own acronym for the process.

This continued reduction of higher order human functions to behavioral minutiae, coupled with the rats-and-cheese-in-the-maze approach to incentives, succeeds only in hollowing out those functions. Try this thought experiment: How do you incent unselfishness?

In the words of ex-consultant and CEO Jim McCurry, all this leads to “petrification by metrification.”  You don’t get the genuine article, but a fossilized replica. It may look real, but it’s checkbox stuff.

Scaling the Soft Skills

George Burns once said, “The most important thing in life is sincerity; if you can fake that, you’ve got it made.”

Ironically, the management teams who try to apply Big Data techniques to rich, basic human interactions are swimming upstream. The right way to scale soft skills and sensitivity not only looks different than the way you incent car  salespeople, but it’s a lot cheaper and faster. It has to do with leading with values, engineering conversations, and role-modeling.

But that’s fodder for another blogpost.

 

 

 

Is Measurement the Enemy of Management?

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Growing up as a cub consultant, billable hours were without question the defining metric in the consulting industry. It seemed obvious therefore, that achieving success would be dependent on increasing my billable hours. I was hardly the only young consultant to come to this obvious conclusion.

Fortunately for me, I found a mentor who took me aside one day and explained that billable hours shouldn’t be seen as a goal; instead, I should see them as the outcome of the quality of my work. In other words, if my work was good, there would be no shortage of hours. From that perspective, billable hours were an indirect and lagging indicator of quality.

His message was loud and clear: I should worry less about my direct output metric, and focus more on the principles, behaviors, and attitudes with which I approached my work. It was, in retrospect, the most important lesson of my consulting career and one too few others are taught.

In that light, two recent blog posts caught my attention. One was by Charlie Green, in which he recounted a fable with a choice between trust and measurement.   Another was by Chris Brogan, extolling the virtues of a trust agent at LinkedIn. The coincident timing of these two posts, with my own experience, drove the title of this post.

Is it possible that, as my mentor warned, we have systemically driven a wedge between the practice of good management and the tools of measurement? Has the relationship between driver and driven been reversed? Has the metric become the goal in itself rather than the outcome it sought to measure? Has measurement become the enemy of management?

 Management and Measurement

Of course, good measurement should serve management. It has always been an important element of managing, it tells the good manager where to look although not what to do. There is nothing intrinsically that sets management at odds with measurement until the manager uses the metric as a substitute for judgment. How many companies established arbitrary targets for reductions in force in the recent recession rather than gaining a broad and deep understanding of where capacity could be reduced without damaging long-term capability?

 I’m beginning to fear however, that measurement is replacing management. Several pervasive and tectonic factors have driven the two apart. One is simply, for lack of a better term, the modularization of business. Business process reengineering, supposedly invented 25 years ago, has taught us to break businesses into many pieces, and to achieve full scale economies (hopefully at a global level) in each of them.

That kind of approach demands that each module fit neatly with the next, the same way that couplers enable railcars to effectively and efficiently hook up and create a train. The “couplers” of choice have almost always been metrics. If we can specify measurements that our suppliers must meet, then we can have the best of both worlds – customization and scale. The more modularized our businesses, the more we manage by measurement.

Question: Did the folks managing the Deepwater Horizon rig think about the revenues and profit BP would gain from a safe and successful well in the Gulf and conversely the risk of a disaster? Or did they think about the bonuses that would go along with meeting budget and timing expectations for getting the drilling done and the rig moved?

Of perhaps more direct importance is that we have simply become more short-term and reward driven in business then we were 100,000 years ago when I was a pup. My fellow consultants who obsessed about their billable hours may not have had as much long term success in their individual careers as those who paid attention to quality and long-term relationships, but it seems that they have won the measurement war. The true tragedy is that the measures that may have merit when looking at a large scale organization, may destroy trust and relationships at the individual level. Charlie wrote about the dangers of measurement focus as it relates to sales and client relationships in his February 2, Business Week article, Metrics: Overmeasuring Our Way to Management.

The dominant belief systems today in business include “maximize shareholder value,” “if you can’t measure it you can’t manage it,” and “what’s the net present monetized value of that.”  Finance is the driving function of today’s business world; in my day, that claim was held by the value producers. Too often we drive for the metric itself, forgetting that the metric is supposed to measure something bigger, deeper, more important and fundamental. To use the consulting analogy, we are all focused on monthly billable hours instead of value for the client. “Pay-for-performance” has become shorthand for lazy management. If you assume that the numbers are everything, then you don’t need to dig beneath the numbers to find out their drivers.

Actually, I suspect it goes deeper. “Pay-for-performance” is also an expression of lack of trust. It comes from an unwillingness to trust others to do the right thing in a business context; what we view as risk mitigation is in fact a form of management by asphyxiation. Managers throughout organizations know that it is the metrics that matter…the overall outcome is incidental. We have replaced “no pain, no gain” with “no risk, no loss” when it comes to developing managers and finding creative ways to add new value.

To go back to Chris Brogan’s trust agents, does your company know who its trust agents are? Does your organization support, value and reward its trust agents? These are the people who chose door number one in Charlie’s fable….choosing to have the highest level of trust while giving up the ability to have it measured. 

So a question for the readers: Has measurement become the enemy of management? Or can we have it both ways?

The Trust Reader Volume 4

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Greetings, and welcome to this month’s ebook, Volume 4 of the TrustReader. The TrustReader series announces the publication of new articles on the Trusted Advisor website.

This month, we lead with the effects over-measurement and value can have on a business. From the most recent Olympics, contest shows, and more we seem to be knee-deep in rating systems. But is it possible that the ever-growing need to rank our business practices and relationships can in fact be a deterrent?

The lead article explores this theme by looking directly at measurement itself. The other two articles reflect a similar theme; what we lose when we rely too much on abstract, quantified approaches to business.

In this edition of the Trust Reader Volume 4 we feature:

  • Metrics: Over-measuring Our Way to Management
  • Why Value Propositions are Overrated
  • The Point of Listening is Not What You Hear, But the Listening Itself

GET THE TRUST READER VOLUME 4 HERE

I welcome your comments, and hope your entry into Spring is as welcome as the warmer weather.

Metrics: Overmeasuring Our Way to Management

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Contrary to the popular saying (“if you can’t measure it, you can’t manage it”), the ability to manage is not dependent on the ability to measure. 

In fact, overmeasurement has some serious downsides.

TrustMatters readers have heard this theme before, but I’m happy to say this time it’s being published in the Management Channel at Businessweek.com. 

Read the full article at: Metrics: Overmeasuring Our Way to Management

And have a great Wednesday.
 

Are You a Trusted Twitterer?

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Measuring instrumentThose of you who love new social media and are measurement mavens, this blog’s for you.

Ever wonder how you’re doing on Twitter? Of course, you can’t miss the “followers” count at the top of your and everyone else’s twitter page. But, as you tell your fellow-twitterers, it’s not about the numbers. (Not that you’d turn down a doubling of your followership, of course…)

The urge to emulate former New York Mayor Ed Koch runs deep: “How’m I doin’?”

Well, courtesy of the Edelman PR agency  you can now measure your, well, your Tweetlevel. An interesting choice of words, because, well it’s hard to say just what’s being measured.

Measuring TweetLevel

Mechanically, you get a blended score of four attributes: Influence, Popularity, Engagement, and Trust. You can also get not only your own score, but the score of anyone else as well.

They tell you exactly how they compute each factor, and the total Tweetlevel. They also let you look under the hood, and and invite users to help improve the survey.

So let’s start by giving props. I’m no psychographic or statistics expert, but I’ve seen a few surveys, and this looks good. Note too that Edelman is perhaps the world’s leader in commercial trust measurement, authoring the Edelman Trust Barometer  for a decade now. CEO Richard Edelman builds conferences and speaking engagements around it. There are questions about any measurement of trust, but these guys are pros at doing trust surveys. It is a solid piece of work, and at the very least will raise good discussion questions.

Now for the fun.

Measuring Trust

Somebody hands you a ruler, the first thing you do is measure yourself. I clocked in at a TweetLevel of 43 (on a scale of 100). Higher than some, lower than others.

This blog is about trust, so that’s the one component on which I focused. My trust score was 39.9.

Now, just because I write about trust doesn’t mean I’m trusted. Oprah beats me. Her trust score is 64.5. OK, I can get with that.

Yet Oprah is surpassed by–Britney Spears! Spears sports a trust score of 68.7 Riddle me that one!

Now hold on to your hats; clocking in at third place, with a trust score of 95.7 is—Perez Hilton!  Of course. I should’ve seen it coming.

And hold on, in second place is—wait for it—John Mayer!  (In fairness, the NYTimes is number 5).

Why Measurement Mania is Death on Trust

It’s easy to lampoon surveys like this, but that’s only partly fair. The metrics for trust rely heavily on retweets, and on “via’s” (think of them as retweet derivatives, if you’re financially inclined). That’s not so crazy: number of citations is a decent metric for being ‘trusted’ in academia, for example.

I’ve written before  about measurement mania, the tendency in business these days to literally define management in terms of measurement (e.g. the silly phrase “if you can’t measure it you can’t manage it”). And I’ve written about the hazards of measuring trust in particular. 

The biggest problem comes not in the measurement, but in the subject matter.  So it is with trust. In the TweetLevel tool, trust is largely a function of how many people cite you. That’s perfectly reasonable. People definitely hang on Perez Hilton’s words a lot more than on mine.

But it does beg a huge trust question: trust Perez Hilton to do what? To say what? To behave how?  What is it that we trust about John Mayer–and is it the same thing as for which we’re trusting Oprah?

I trust my dog with my life–but not my ham sandwich. I trust Perez Hilton to tell me the straight poop in Hollywood–but not to show my daughter a night on the town. What is the object, the referent point, of the trust being measured?

Comparing trust metrics without defining the trust object is like comparing love metrics between a monastery and a brothel. By a perfectly obvious definition, the brothel gets a whole lotta lovin’ more than does the monastery.

In a sense, that’s right. And in another, ridiculous. Do we say a man with 5 marriages is ‘more loved’ than a man with one?  Is a parent with 5 kids more loved than a parent with one?  What is it that we’re measuring by using such metrics?

At this point, the numbers inevitably end up kind of looking like a popularity contest. There seems to be no referent point beyond the counting of incidents. Quality is overwhelmed by an onslaught of quantity. TweetLevel’s advice to increase trust scores is to get people to retweet you more. If everyone took this advice, Twitter would drown in derivative re-tweets. We’ve seen that movie before, on Wall Street.  It ends badly. 

On twitter, the mania to measure drives more empty-calorie retweets, which decreases original content, which ends in more retweet inflation as people try to game the game. 

It’s not that trust is ineffable, it’s just that it’s so contextual. Trust is a bit like obscenity; we know it when we see it, but that doesn’t mean we can easily define it, much less measure it. This is tail wagging the dog stuff.  The measurement system has a bad feedback loop to the content system; the mania for measurement ends up destroying the content it purports to measure.

Do You Want Meaning?  Or Measurement?

We can have meaning, or we can have precision. This is exactly the case in sub-atomic physics, where (as per Heisenberg) the act of measurement itself alters the thing being measured. It’s a perfect metaphor.

• You can say that you trust Perez Hilton to dish dirt, and Oprah to get real with you
• Or, you can say that Perez Hilton is 48.3% more trusted than Oprah
• But you can’t say one without rendering the other silly.

In accounting, there’s an age-old debate about how to define ‘profit.’ My finance prof Pearson Hunt said it the best: “Profit is–the bottom line of the income statement.” In other words: give it up; there is no one answer.

All you metrics mavens out there: when you get into the soft stuff, ask yourself: what is it you’re measuring? Is it the thing itself? Or is it some reflection of metrics in an infinite mirror? 
 

Realms of Trust and Manifestations of Trust

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Most would agree that trust is a hot topic just now.  That’s about the only thing agreed upon about trust, however.  We can’t even decide what it means.

I wrote a post last week called Trust, Trusting and Trustworthiness.  I suggested that much writing about trust confuses these three manifestations.

Think of that post as Managing Trust Part I — Trust Manifestations. Think of this as Managing Trust Part II — Trust Realms.

There are three trust realms in all: interpersonal trust, organizational/institutional trust, and social trust.

The realms of trust are well known to academic trust researchers, not so much to business people. They do make simple common sense, however.

1. Interpersonal trust

Interpersonal trust deals with one-on-one dynamics. Most of my work has focused in this area. It’s the stuff of relationships, selling, advisory businesses, and personal risk-taking.

2. Organizational and institutional trust

This form of trust covers a wide range of issues: the organizational environment conditioning interpersonal trust relationships, the trust of individuals in their organizations and institutions, and the nature of trust relationships between organizations themselves.

Surveys that measure “trust in government” can shift dramatically and quickly, with the election of an Obama, or the humbling of an SEC, for example. In these respects—speed and personalization—organizational trust resembles personal trust. But it also deals with organizational cultures and values—undeniably group phenomena.

3. Social trust

Social trust deals with the generalized beliefs individuals hold about “other people."  Think under what conditions you’re likely to lock your car doors. Unlike the other two realms, this trust doesn’t deal with people as individuals; also, it tends to change only glacially, perhaps across generations.

If we array the realms of trust against the manifestations of trust, as shown below, we can begin to have a structured conversation about trust.

Trust Realms and Trust Manifestations

Manifestation/Realm

 Trusting

Being trusted

State of Trust
Personal      
Organizational      
Social      

 Until then, we are going to have vague, or circular, or meaningless discussions about trust.

When Steven H.R. Covey talks about how trust affects speed and cost, he is largely talking about the manifestion dimension—the presence or absence of a state of trust. But is he talking about the state of personal trust? Or organizational? Or cultural/social?

Gatehouse, a UK communications consultancy, says “business is facing a massive and global crisis of trust right now.”  But what are they talking about?  Which manifestation?  Which realm?  Or are we descending into an inevitable and inescapable downward spiral of rampant anarchy? 

Do they mean that individuals are less trusting of business? Or that more businesses are untrustworthy? Or that the state of economic uncertainty has rendered the state of trust lower?

Paul Seaman’s review of the Edelman Trust Surveys (Would you trust a trust survey?) does a nice job of taking apart the apparent meaning of trust survey data.  A small example: trust in banks is down, trust in government is up: does that mean we want the government to take over banks?

These are not word games.  Intelligent policy formulation depends on being able to clearly define problems. For example:

• When is structural regulation preferable to greater enforcement?
• For what trust issues is transparency an appropriate remedy?
• Do we have any institutions that teach the personal manifestation of trusting?
• If you change personal and organizational trustworthiness, do you have to worry about social trust?

We’re entering a period where trust has gone viral; it’s got buzz. We’re about to see more survey data, telling us with greater and greater precision whether doctors are gaining on nurses in trust ratings, who has the most trusted brand name, and whether trust in Romanian economists went up or down in October. 

Watch out for conflicts of interest: who’s paying for a ranking of trustworthy companies?   What problem is being solved?  What issues are being addressed?

Get ready for many tales, full of sound and fury, signifying—well, just what? That is the question.

 

Day Trader Management

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The NYTimes’ Joseph Nocera  wrote Saturday about the closing of Neil Barsky’s hedge fund, Alston Capital.  Barsky, it seems, is one of the good guys. (The same issue has an article titled “Hedge Fund Manager Accused of Fraud,” just so we keep things in perspective).

One of the reasons Barsky left the hedge fund biz after seven years was:

[he was] “tired of the ways the business had changed. “When I first started in 1998, we used to send out quarterly numbers. Now investors want weekly numbers. Professor Louis Lowenstein” — the iconoclastic and recently deceased Columbia University business law professor — “has a great line in one of his books: ‘You manage what you measure.’ ”

I for one wouldn’t call it a ‘great line,’ but the practice has certainly become widespread—and we are generally the worse for it. Let me explain.

If Measurement is Good, How Much More Measurement is Better?

Nocera provides another example of change, in his fascinating book Good Guys and Bad Guys.  In the mid-1970s (not that long ago for some of us) investors couldn’t be dragged out of bank savings accounts into new-fangled money market funds. Too risky, doncha know.

Fast forward to 1987, the go-go ga-ga days when everyone was focused on—daily mutual fund prices. Awfully risque.

But it’s not just finance. MBA programs and systems consulting firms have been pushing a hot product for some years now. It’s sold as efficiency, liquidity, process outsourcing–but at its heart is Lowenstein’s ubiquitous link between measurement and management.  More measures, more frequent, more detailed: equals better management.

If you can measure it, you can manage it; if you can’t measure it, you can’t manage it; if you can’t manage it, it’s because you can’t measure it; and if you managed it, it’s because you measured it.

Every one of those statements is wrong. But business eats it up. And it’s easy to see why.

I just got an iPhone app that lets me check my QuickBooks account. Now, of course, I crave my receivables data updated instantly, constantly, 24-7. Because I can. And because more is better. Isn’t it?

A consultant friend was about to be hired to help improve engagement survey scores for an executive’s team.  He tells me::

“In no time, you heard middle management’s attitude evolve; ‘OK, this group is going to meet its goals; we are not going to be the ones lagging behind on these numbers. We will be able to show measurable improvement in engagement.’ And so they were about to turn ‘engagement’ into another meaningless exercise in meeting the numbers.”

The ubiquity of measurement inexorably leads people to mistake the measures themselves for the things they were intended to measure. It doesn’t have to be this way–but it too-often is.

Even Malcolm Gladwell feeds the measurement frenzy. In his current New Yorker article How David Beats Goliath, he cites Vitek Ranadive. Ranadive has made a career of turning un-integrated batch processes into aggregated real-time processes—faster, more data-rich, integrated. He suggests the problem with national economic policy is that the Fed has to wait weeks for data.  Presumably if the Fed worked with real-time data, we’d have better economic decisions. Call it day-trading national interest rate policy.

If Barsky thinks weekly investment numbers for his hedge fund are too short-term, let’s hook him up with Ranadive. Set up the databases right, and we could all be day-trading hedge funds! And of course, there’d be an app for that.

Management by Measurement Isn’t Just a Financial Disease

If MBMM—management by massive measurement—actually worked, day-traders would outperform Warren Buffett. I think they don’t.

The US mortgage industry morphed from a web of relationships (banks, bankers, home-owners) into a global impersonal market of short-term transactions. More liquid? Yes. More efficient? Yes. Lower cost of funds? Yes again.

But today’s meltdown arose precisely because replacing lengthy relationships with multiple transactions, substituting markets for relationships, and metrics for management leaves nothing but short term, impersonal money at the heart of business.  The saying on Wall Street became, "I’ll be gone, you’ll be gone–do the deal."  On Main Street, it translates as, "just tell me you’re going to meet next month’s metrics."  It’s seductive, and it’s addictive.  And not good for business.

When hooked up to its kissing cousin incentives, MBMM is a powerful drug.  As incentives critic Alfie Kohn says, "Incentives work.  They incent people to get more incentives."  Like I said, addictive.

There’s nothing inherently wrong with measuring. Or transactions. Or markets. They’re fine things.

But undiluted and without moderating influences, they become not just a bad deal; they can be a prime cause of ruining the whole deal.

 

 

Success – and Measuring Success

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How do you measure how much a loved one loves you?

Maybe by the flowers they send. Or the attention they pay to you. Or the look in their eyes when they talk to you, or their curiosity about what you’re doing lately.

You could, in fact, measure each one of those things. Some are easy, like flowers. Others, like curiosity, need decomposing into second-level indicators – how many questions they ask you, the operative pronoun in those questions. The point is, you could do it.

But would you?

Would you ever mistake the measure itself—roses, say—for the love they purport to measure? Of course not. It seems silly to equate the two; the poor sucker who does so is sadly self-deluded and likely unlucky in love.

Roses may be the measure of love–but are not love itself.

Now switch to business. How do you measure success in business? How about by the profits you make? After all, if you create great products that meet real needs in the marketplace and add real value in a customer-delighting manner—well, you’ll get rewarded for it, in the form of profits.

Profits are to business what roses are to love–measures.

So, would you ever mistake the measure—profits—for the success they purport to measure? Do profits really equal success?

Unlike love-and-roses, all too often our answer is ‘yes.’ Yes, we say, the whole point of business is to make profits. Success consists of making money. It seems silly, we say, to differentiate between the two–the poor sucker who does so is sadly self-deluded and likely to get fleeced by sharper competitors.

In amore, we know the difference between love itself and pale trailing indicators of its recent presence. But in business, we confuse the yardstick with length itself; we’ve lost the ability to distinguish maps from reality.

When did profit move from being a measure of success, to being iconized as success itself?

Thinking that the point of business is to make money is like thinking the point of living is to eat. Profit is a byproduct of doing great business—an indicator. Not a goal.

If all you focus on is roses, you’ll at least have flowers at the end of the day; but you’ll fail at love. In business, if all you focus on is profits, you won’t even get that. Because, simply, we don’t trust people who are only in it for the money.

Applying Business Best Practices to Relationships

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Metrics money managementI ran across a blog the other day singing the importance of relationships in business. Fair enough.

As I recall, it started by saying:

“Let’s start with some undeniable facts. What gets measured gets managed.” ‘Uh oh,’ I thought, ‘I’m gonna have to write about this one.’

All right, let’s trot out the whole set of logical fallacies.

1. If you can’t measure it, you can’t manage it
2. If you can measure it, you can manage it
3. If you can’t manage it, it’s because you’re not measuring it
4. If you can manage it, it’s because you are measuring it.

Not one of those is true.

First, there is management by fear and intimidation; by shared values; by guilt-tripping; by walking around; by praise; and so on. None of which require measurement.

Second, the act of measuring per se does nothing to cause “management” to happen.

Of course, just because something is illogical doesn’t mean people don’t assign meaning to it. But why do so many people insist so strongly on connecting management and measurement?

I can suggest two reasons.

Go back to “what gets measured, gets managed.” What that really means is, “I’m the kind of person who, when someone measures me, falls into line and behaves according to the desired metrics.”

This view is the choice of the one being measured; it’s not a trait of the measurer, nor an outcome of the act of measuring. It’s a rather passive choice by the measuree: it doesn’t require much thinking, and doesn’t invite challenge.

Which is exactly what most managers intend measurement to do: to communicate desires from boss to employee, in narrow, quantitative, often financial, terms.

But most of all, “what gets measured gets managed” reflects a belief that measurement is good, and that more measurement is better. Break it down to the elemental levels, let’s really manage this puppy.

Well, let’s test-drive that idea. Go ask your wife how you’re doing as a spouse (or reverse, etc.). On a scale of 1-10, please.

Now, that might get you into a pretty good conversation. It might even be so good that your actual performance as a spouse improves as a result.

Suppose further that you work in a company that believes “what gets measured gets managed,” and decide to apply this “obvious fact” to your home life as well. So you ask the wife the same question next month. Scale of 1-10 again, please.

Your spouse says, “didn’t we just have this conversation a few weeks ago?”

“Why, yes,” you say, “and it was really useful, and I want to be an even better spouse, so I figured I’d starting taking regular metrics readings so I can establish a benchmark performance level and track my improvement. I learned that technique at work. Do you think monthly reports on my spousal performance will be enough? Maybe I should ask you for weekly ratings?  And let’s be s ure to talk about rewards for achieving and exceeding my metrics.”

Now, if your spouse has any relationship skills, and any self-image to speak of, you’re gonna be sleeping on the sofa for a while.

And while explaining these new arrangements to you, you may hear something like, “and by the way, thanks for ruining that great conversation we had a few weeks ago, because now I see you never meant it, you were just in it for your own ego-gratification, and I feel like an idiot because I actually thought you might have cared, but now I see not only are you a jerk, but I deluded myself, and I now don’t even trust my own assessment skills, I was so far off in even thinking we had a good thing going, now I feel even worse, etc.”

This is the emotional equivalent of the Heisenberg Uncertainty Principle. You have just proven that the act of measurement can alter the thing being measured. (And by the way, who cares that you meant well, anyway?)

I have a friend who works at GE designing sophisticated fluid control measurement tools used in the oil industry. Crude oil doesn’t much care how often or how precisely you measure it. Unfortunately, spouses do.  As do people in general.

Which is why the unthinking, inane concatenations of measurement and management so often fail when applied to people.

Best practices aren’t universal. The management of capital and hydrocarbon resources doesn’t necessarily tell us much about the management of human “resources,” aka people.