When you’re designing a business system for a client, you’re often wrapped up in the logic of information flows from A to B, and back again. That’s important, of course, but you’ve also got to step back and think about what a system is really for, and what will motivate its users to use it well.
These are four principles I always try to bear in mind:
- Only things that are measurable are manageable
Business systems are about control, indeed, almost as much about preventing people from doing things (except in the right way) as about enabling them. That’s because, to measure the right things with systems, you have to do the right things.
Apart from statutory considerations, business systems are about measurement so that management can exercise control. So you must be very aware of what measurements are of the greatest importance to management. Broad, reliable indicators are often more important than confusing detail. What are the priorities for the business? Stock level management, production quality, sales analysis, product gross margin? You can’t measure everything, so make sure that you understand the priorities and that they can be served by the design you put forward.
- Information is only useful and worth preparing if it affects the decisions you make.
Once you know what you’re going to measure with a system, you’ve got make sure that those measurements (stock levels, gross margins, sales data), are clearly and economically presented.
Often people will ask you for an elaborate report containing vast arrays of irrelevant data. Usually this is because they had this report in their previous system. Always ask: What will this make you do? Or, what did you do with this in the past? How will this change your life, or the lives of others?’ Ask these questions about each data item on the page.
‘I just like to know it,’ is never a good answer. ‘Nice to have,’ simply isn’t acceptable.
Managers are wasting their time if they are looking at data that make no difference.
- No process will work if it isn’t to the advantage of those who should execute it.
There’s no point in asking people to put data into a computer unless they get something out of it. Your measurements will be useless if they are wrong.
And it’s better to motivate with carrot rather than stick. Reward is always a better management tool than the avoidance of punishment.
When users on whom you rely for accurate information obtain no personal benefit from a system, then you won’t be able to rely on what they do. It’s no good designing a beautiful, logically perfect system if there’s no motivation driving it. You must try to find carrots, and only occasionally resort to sticks. Money often works, but it’s the crudest of levers.
Remind yourself that, if you are rewarding efficiency, economy, timeliness and accuracy, you’ve got to be able to measure performance impartially.
Only as a last resort should you punish.
- Motivational measurements work only if they fall largely within the control of those whom they are designed to motivate
Profit drives the shareholders of a company and usually its directors, but others are driven by different goals at different levels. A director of quality cannot be ‘measured’ by profit, rather than by production quality. A director of safety in an oil refinery must never be ‘measured’ by profit. So in a well-run organisation motivation must be aligned with the goals and the scope of control of each manager. And you must make sure that measurement and reporting serve these goals.
There’s no point, for example, in rewarding a consultant for the amount of client work that he or she does, if he or she has no involvement in obtaining the work, or is allocated to client- and non-client-work without any say in the matter.
Good system design is not a game with logic and data, but with real people.
I think these four principles come to reinforce a basic idea about management, way too often forgotten by way too many people: mangement is NOT an exact science. Modern management has (or should have) to do with numbers and mathematics and finances and exact measurements just as much as it has to do with psychology, sociology, social psychology and human behaviour in general but also with philosophy. Given the large sets of data available today and the speed with which these data change, not having good systems in place would make efficient management almost impossible. However, having good systems in place but not being able to read “behind” the numbers, as accurate as they may be, could potentially turn the managerial decisions into small (or big) disasters.
Hence, I totally agree that understanding the philosophy behind a system (what is its purpose, how will it be used and by whom, how is it going to work, what benefit will or should it bring to its users) is vital before starting designing it. But more than this, clients as well need to understand that the system itself will only be a tool and not a solution to their managerial problems and need to know how and for what they can use this tool. Unfortunately I’ve seen quite a few top managers looking at systems as magic pills rather than tools.
After all a good chef needs best tools in the kitchen. But using them wrongly might get him chopping off his fingers. Nobody wants that, isn’t it?
Ales, thanks. Some very good points. I agree, management is never a science, and there is no one way of managing companies and managing people.
Thoughts on Measuring and Managing Professional Services Organisations – Adam Bager