Mindful simplification

Today on Radio New Zealand National Sir Howard Davies, Director of the London School of Economics was asked “How do we recover from the recession?” Especially interesting to me was that he pointed to the blindness (astounding in hindsight) of banks and government advisors that got us into it. They were blind because they didn’t see the signals of impending “brutal audit”. Their KPIs effectively blinkered their vision.

I see this happening to one degree or another in pretty much every organisation I’ve owned, worked for or worked with.

I’m very critical of many KPI/performance measurement systems because they frequently erode collaboration, promote and perpetuate bad management behaviour, and blinker perception. On the other hand I’m also an enthusiast for intimacy with valid, relevant data.

I’m am enthusiast for simplification for focused action. On the other hand I’m also very critical of mindless compliance and groupthink that’s frequently the consequence of simplistic analysis, rules, procedures, and expectations.

Not surprisingly perhaps, some find it hard to figure “whose side I’m on”.

I’m an Edwards-Deming fan (kind of like being a member of a dead poets’ society). Deming’s lifelong passion was collaboration to achieve quality. Not in a fuzzy, feel-good sense but in a logical, objective sense: informed by valid, relevant data. A statistician, he understood how quality is determined by systems of thought, practice and organisation. Not individuals. He was very successful in Japan. His countrymen in USA have been very slow learners.

KPI systems are inevitably simplistic and biased: a selective abstract of reality based on a particular set of assumptions. So they inevitably distort or leave out potentially crucial aspects of complex reality.

The problem is how to collectively commit to a set of goals and performance measures yet remain mindful that that very commitment will blinker us to potentially crucial information.

This may not matter much in a predictable environment. But in an uncertain, fast-changing environment its a big issue. That’s because fast adaptation and innovation are triggered and driven by information from outside our normal frame of reference – our established KPIs.

Nimble organisations maintain clear purpose and operate simple strategies to achieve that, continually reviewing their KPIs for validity and relevance to that purpose. Statistically significant exceptions and failures are seized as opportunities for learning. Mindful, collaborative experimentation is a valued source of innovation.