Technique 7.1: Measure the Right Things

Now that we understand what we are trying to create (content standard) and how we are going to create it (structured workflow), we are ready to develop a measurement model to assess how we are doing. We want to know how we are doing as individuals as well as teams. The approach described in the book The Balanced Scorecard by Norton and Kaplan is very helpful. It describes a number of important concepts that we have embraced in the KCS Performance Insight model.

• Link individual goals to departmental and organizational goals to help people see how their performance is related to the bigger picture.
• Look at performance from multiple points of view. The typical scorecard considers the key stakeholders: customers, employees, and the business.
• Distinguish leading indicators (activities) from lagging indicators (outcomes).

If we put goals on activities (leading indicators), we will get what we ask for. Activity by itself is not an indicator of value nor does it necessarily lead to the outcome we are after. For example, if we set a goal for each knowledge worker to create ten KCS articles per month, we will get ten articles a month. However, these articles are often created on the last few days of the month and they contain little or no valuable information (things like "fixed customer problem"). They were created to meet the goal, without consideration of the desired outcome. Goals on activities seldom generate the desired outcome. In fact, in a knowledge management environment, if we put goals on activities it will corrupt the knowledge base. It's not just that the useless articles are a waste of time - their presence in the knowledge base is actually damaging to the health of the whole KCS system. This is why the distinction between activities and outcomes is so important, and why we do not put goals on activities!

The outcome we want is articles that are findable and usable by a target audience. We need to do the "create" activity in the context of the outcome. This reinforces the KCS Principle of Create Value: work tasks, think big picture. The outcome needs to be the focus, not the activity.

Goals placed on activities will corrupt the knowledge base.

Putting goals on activities will:

• Create unwanted results
• Destroy the value of the measure as an indicator of behavior
• Distract people from the real objective
• Relieve people from using judgment
• Make leadership look dull
• Disenfranchise people

A very helpful concept from The Balanced Scorecard distinguishes performance drivers (motivators) from leading indicators (activities) from lagging indicators (outcomes). While each of these three elements is important, the role each plays in the measurement system is different. Making a distinction between them is crucial.

We need to pay attention to the trends of the activities and their correlation to the outcomes.

• Are the activity measures heading in the right direction?
• How rapidly are they changing?
• Do knowledge workers have timely visibility to their performance indicators?

While the distinction between activity and outcome measures is critical, it is sometimes hard to identify which indicators are activities (leading indicators) and which are outcomes (lagging). Helpful ways to test an indicator:

• Easy to measure and easy to manipulate or game — it is probably an activity (do not put a goal on it)
• Hard to measure and hard to manipulate — it is probably an outcome
• Only measurable after the fact (when the event completed)— it is probably an outcome

Whenever we are having a discussion about an indicator or measure, we must be clear as to whether it is an activity or an outcome.