Insight of the Week: Numbers Don't Lie, but People Sometimes Do

Measurement has become an obsession for many of us. Fitbit wrist trackers count our steps, our phones track everything from the calories we burn to the places we visit to the number of emails we check, and our social media accounts track endless retweets, likes and friend requests. We have become, by and large, a truly quantified society.
But new thinking from Stanford University Graduate School of Business points out a potential flaw in our never-ending tracking: what happens if we are putting too much emphasis on flawed metrics?
This week’s insight: Measuring tools, scoreboards, and analytics can be key to business performance, but concentrating too much on metrics—or emphasizing the wrong metrics in the first place—can actually hamper performance.
Research study: “The Power (and Risks) of Measurement in a Fitbit World” by Joel C. Peterson, Insight by Stanford Business, October 2015. https://www.gsb.stanford.edu/insights/power-risks-measurement-fitbit-world
What they did: Stanford business school professor Peterson looked at trends in analytics and data collection in different businesses and industries, including the popular net promoter score system used by many firms to manage profitability. This was an informal observation, not a rigorous survey, but he did come up with some insights.
What they found: Inspired by the use of his Fitbit to track his fitness level daily, Peterson looked at a variety of other metrics commonly used in the business world. His takeaway? If pressure is placed on employees to perform solely for the sake of metrics, they are more likely to “game” or cheat the system, especially when it comes to client feedback and surveys.
What this points to is that customer satisfaction surveys, which Peterson argues drive strategy in many companies, aren’t as foolproof as businesses may like. If employees are under too much pressure to meet standards, customers will ultimately feel that pressure, too, and might modify their answers to help employees meet benchmarks.
And Peterson also reminds that metrics and key performance indicators—while often yielding highly valuable insights—aren’t the end goal of a business. Ultimately, they are tools used to measure customer response to a product, a service or a marketing campaign, not the ultimate goal for employees to achieve. Manage solely by the numbers, Peterson argues, and you can lose the point of doing business at all.

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