I wrote, The Number Are, Well, Just Numbers. It stirred up a lot of discussion and one observation from Gordon Hogg, was both amusing and illuminating:
“It’s the Cobra Effect! India’s colonial governor put a bounty on cobras to stop snake bites. Dead cobras came in but snake bites persisted. People started breeding cobras to kill for the bounty.”
I don’t know it it’s a true story, but it points out the unintended consequences of some of the metrics we put in place. We have to think about, “What behaviors are we driving–are those the behaviors we really want to drive?”
Too often, we blindly put in place numbers, without understanding how our people will achieve the numbers. Any sales person will try to figure these out–often gaming the system.
For example, a client thought: “If we do more proposals, we’ll close more deals.” He put in place a metric for the number of proposals the sales people needed to do. In could make sense, the logic being, the more opportunities we compete in, the more deals we have the opportunity to win, even if we win the same share (It’s the more times at bat argument.)
The problem was, sales people couldn’t find enough qualified deals to make their proposal goal. But under pressure to make the goal, they started sending out unsolicited proposals to prospects. Pretty soon, all the sales people were making the weekly proposal goal, but the business results weren’t improving.
The answer was, the manager thought, “More proposals…..” You know what happened.
Or the weekly/daily telephone calls goal. Another client had a goal in place. Over time, the people started achieving the daily call goal, but the results (booking more meetings) weren’t being achieved. Again, management, wasn’t looking at the underlying issues—what behaviors were they driving, were those the behaviors they wanted to drive, would they produce the outcomes necessary, if not, why not, was there another metric that would be more effective to drive the outcomes needed…..
Or the pipeline coverage model—We know if the win rate is 33%, our pipelines have to have 3 times the number of opportunities necessary to make the number. When people are struggling to make their numbers, often, managers react—“You need more in the pipeline, you need 4X, 5X, 6X…. coverage!” But the results don’t improve. What happens is sales people driven to get the coverage, cast wider nets, they get more into their pipelines, but the quality is poorer, as a result the win rates decline, pipeline coverage demands increase, ….. and the organization is in a death spiral because managers are fixated on a metric but not understanding the behaviors the metric drives, or whether it’s even the right metric in the first place.
Number and metrics are important. But we can’t implement them blindly. We have to assess the behaviors they will drive, the outcomes they create, whether we are measuring the right things, or the “what’s, why’s, how’s” of what we are measuring.
Really good article David. I’ve been in several corporate situations where the focus on numbers was so intense that the things that really made the business grow (and kept customers happy) were lost in the reporting. Sometimes, the right 3-4 KPIs are all that is necessary to guide activity and results.
Thanks Christopher!