“Vanity working on a weak head, produces every sort of mischief”
Jane Austin
Living in an Information Age, we can all relate to the need for more data to help us make decisions. Whether they’re in our personal lives or work, we all have aspects to our daily lives where we need to keep our fingers on the pulse of data to understand the changing world around us — how well are my savings growing? How are my children’s exam results? how well is my business performing in growing sales?
Key Performance Indicators have been used for decades to show the most important metrics for a given endeavour. And the use of dashboards to show them all in one place has become a valuable and easy way to facilitate decision making.
To a certain extent, you could say that we as a society have become dependent on KPIs and dashboards to bring a feeling of order to the multitude of constantly changing variables around us. Our general need for information to allow us to control the world around us is growing rapidly, and KPIs / dashboards facilitate this by presenting information consistently and thereby helping to point out areas that we need to apply more focus. Behaviourally we tend to look for areas that aren’t performing in a dashboard rather than a potential stand-out success. Sadly a dull Red shines brighter than the brightest shade of Green.
In our efforts to control the world around us, and our eagerness to make it better, we also apply targets. And it is in the confluence of these two topics (KPIs / Metrics and Targets) that something really interesting, unexpected and worrying happens…
That is, the enormous and hidden pitfall of Vanity Metrics and the consequential negative behaviours that accompany them. Despite the best of intentions of management and leaders across industries, there are far too many organisations and businesses falling foul. And we will likely see incidences of this fatal mistake continue to rise as we continue to grow into ourselves and our organisations in this Information Age.
So what is a Vanity Metric…
A Vanity Metric is a metric that makes the manager or function look good, but doesn’t demonstrate genuine performance that can be used for planning or strategy. They’re a really easy ‘go-to’ for managers to show that they’ve improved something. However whilst it may look impressive, they lack substance.
The best metrics outthere enable decision making. Why would you want a metric that doesn’t tell you anything? If you’re making a decision, you’d want data that allowed you to better understand a situation so that you can make the best decision possible. So it’s crucially important to review metrics to understand whether they can help shape a decision and/or garner a deeper understanding of your topic/business. For example:
Social media and the growing industry of influencers has created a small (but actually really big!) industry in click farms and fake followers. These farms aim to generate loads of ‘likes’ and ‘followers’ to create a false impression that an account has a massive followership and loads of engagement. But what’s the point in having thousands of followers if it results in a tiny amount of genuine customer engagement. Why not have a metric that looks at the ‘click-through’ of customers from the social media account to the business website or their engagement with the business’ sales portal? Then you’d know if you had hooked a valuable prospective customer.
It’s easy to buy followers or likes to vainly show growth, but that doesn’t mean anything will convert into sales. ‘Just measuring something’ and trying to use it to ‘push improvement’ can cloud your view from seeing what’s really happening.
History is littered with failed attempts…
… of creating far reaching systems of metrics and targets to drive improvement. Some of the biggest and best supported organisations in the world have failed miserably. Worse yet, they drive poor behaviours with unexpected and devastating consequences.
Here’s one of my favourite examples — watch just 8 minutes from 36:16–44:40.
Good isn’t it?! The Labour government set out a clear and laudable vision:
“to liberate Britain from the old class divisions, old structures, old prejudices, old ways of working and of doing things that will not do in this world of change” Tony Blair
But what became clear was that their system of metrics drove the wrong behaviours, where managers tried to game the system, and lead to solutions which added bureaucracy, oversight and auditing to try and control adherence to the metrics. Overall, leading to a worse outcome for the public service’s employees and the country as a whole.
Game the system? Surely not…
Kurt Lewin, a psychologist known as one of the modern pioneers of social organisation and applied psychology in the US, devised a heuristic formula which summarises human behaviour quite neatly:
B = f (P x E)
Behaviour equals a function of People multiplied by their Environment.
So, when you look at adjusting one element of a System (organisation, network, group, team etc) or their environment for operating, it’s crucially important to fully assess the potential impact of those changes on people’s behaviour.
Eli Goldratt, an Israeli physicist who became a business management guru, also neatly describes this in his well known quote
“Tell me how you measure me, and i will tell you how i will behave”
How do we solve the problem? What can we do to drive the right outcome AND the right behaviours?
There are leadership blogs and advice articles galore available on the internet. And clearly there are many opinions on how to drive outcomes and behaviours. From what i’ve described so far, i hope you would agree that a general axing of targets and highly prescriptive measures should happen quickly.
Wouldn’t it be great if teams had a goal to strive towards, and had a few key points along that way that they could achieve letting them know they were going in the right direction?
Objectives and Key Results were originally conceived by Andy Grove who introduced them at Intel, and later John Doerr took them to Google. The intention of OKRs is to provide teams with visibility of goals and to align and focus the effort of teams and individuals. In that, they set an objective to be strived towards and a number of key results along the way that ensure movement in the right direction. These Key Results are not milestone dates or time constraints, but are smaller achievements or sub-parts of the objective showing genuine progression towards a goal. A handy phrase i use to help me check OKRs is “I want X, and for that to be true i will have had to achieve Y and Z”.
For example:
Objective: To successfully launch a new product
Key Result 1: Build Minimum Viable Product
Key Result 2: Achieve a sign-up to trial ratio over 40%
Key Result 3: Achieve a trial to paid ratio over 60%
It’s important to remember, OKRs can still be gamed! In the wrong environment people and teams could look at these OKRs and try to treat them as Targets. That environmental influencer that would push people to treat them as targets, and a key constraint in most environments and systems, is a system constraint that dramatically affects behaviour and increases propensity to game the system — this is…
Performance Management
Individual Performance Management is used in nearly every organisation. Bonuses and Pay Reviews usually hinge on the outcome of an individual’s performance in a given period of time. Balanced Scorecards with measures and targets are the most common form of template for performance management.
So why are we surprised that the ingrained and natural behaviour of employees the world over is to ensure that they hit their objectives and target at all cost. Fear of missing a target and not getting a bonus or pay rise is quite an incentive. We’re not surprised by people’s behaviour when they’re scared of something, so why are we surprised of bad behaviours that are driven by fear of performance management reprisals for missing targets at work?
According to Maslow’s Hierarchy of Needs people will focus first on meeting their Physiological and Safety needs. So if they feel that these are under threat, for instance Performance Management processes diminishing their pay having missed a target, they will game the system to protect that core need. It’s also known as Mortgage Driven Development, where people will do what is necessary in order to pay their mortgage.
So no matter how much we try to strip out ineffective vanity metrics and targets from across our businesses, unless the performance management approach of the organisation shifts with it, whatever metric (KPI, OKR, Target or other) is adopted it will quickly be gamed and viewed used as a target for the purposes of ‘doing performance management’ well.
Similarly, in an Individual Performance Management environment linked with bonuses and pay, even the ability to personally develop becomes hindered. Feedback, genuine feedback, between colleagues becomes overshadowed by fear of negatively affecting the colleagues bonus/pay. Writing feedback about areas for colleagues to improve quickly become a focus of management and considered an area that the colleague is not performing compared to peers.
The combination of target driven individual performance management with target driven business objectives results in the wrong behaviours and a work force that is focused on doing whatever is necessary to achieve financial / remuneration safety rather than self-actualisation and genuine internalised support and engagement of a business vision.
Intrapreneurial Vested Interest
Organisations and leaders can better spend time understanding real business goals and objectives, look to strip out vanity metrics, set objectives and key results that teams can galvanise around. Adjust the performance management culture and outlook to ensure the holistic system is considered. Do this by reviewing an entire team’s performance, as a single entity rather than each individual, in achieving the Objectives and Results. Shift the organisation away from being one obsessed with outcomes. The organisation will naturally evolve and gather entrepreneurial behaviours amongst the work force. Encourage colleagues to have a vested interested in what they are delivering and approach the business as if it were their own. Allow Intrapreneurial Vested Interest.
Intrapreneurs are “dreamers who do. Those who take hands-on responsibility for creating innovation of any kind, within a business.” Gifford Pinchot
Galvanise senior execs towards a better responsibility, to remove blockers that stop the team from achieving their goal, whether those blockers are performance, procedural, behavioural or technical. Help the wider organisation to unlearn the dependence and urge to measure more stuff.
Concluded even more succinctly, here's what to do:
1. Invest time understanding real business value / objectives - get to the real root of WHY something matters
2. Strip out anything that sniffs of Vanity Metrics - if in doubt, get rid
3. Establish real OKRs
4. Unlearn the obsession with predefined / fixed outcomes - you can't define a perfect ending before you've started the journey, you'll learn too much along the way
5. Encourage Intrapreneurial Vested Interest