Blog: Simply Measuring

What could possibly be wrong with “efficiency”? Plenty.

9 September 2015

Last week I wrote that I will be writing TWOGs more bi-weekly, and revisiting some earlier ones in between. This is the first of those.

First posted October 10 2014

Efficiency is like motherhood. It gets us the greatest bang for the buck, to use an old military expression. Herbert Simon, winner of one of those non-Nobel prizes in economics, called efficiency a value-free, completely neutral concept. You decide what benefits you want; efficiency gets you them at the least possible cost. Who could possibly argue with that?

Me, for one.

I list below a couple of things that are efficient. Ask yourself what am I referring to—the first words that pop into your head.

A restaurant is efficient.

Did you think about speed of service? Most people do. Few think about the quality of the food. Is that the way you chose your restaurants?

Last week I wrote that I will be writing TWOGs more bi-weekly, and revisiting some earlier ones in between. This is the first of those.

First posted October 10 2014

Efficiency is like motherhood. It gets us the greatest bang for the buck, to use an old military expression. Herbert Simon, winner of one of those non-Nobel prizes in economics, called efficiency a value-free, completely neutral concept. You decide what benefits you want; efficiency gets you them at the least possible cost. Who could possibly argue with that?

Me, for one.

I list below a couple of things that are efficient. Ask yourself what am I referring to—the first words that pop into your head.

A restaurant is efficient.

Did you think about speed of service? Most people do. Few think about the quality of the food. Is that the way you chose your restaurants?

My house is efficient.

Energy consumption always comes out way ahead. Tell me: who ever bought a house for its energy consumption, compared with, say, its design, or its location?

What’s going on here? It’s quite obvious as soon as we realize it. When we hear the word efficiency we zero in―subconsciously―on the most measurable criteria, like speed of service or consumption of energy. Efficiency means measurable efficiency. That’s not neutral at all, since it favors what can best be measured. And herein lies the problem, in three respects:

  1. Because costs are usually easier to measure than benefits, efficiency often reduces to economy: cutting measurable costs at the expense of less measurable benefits. Think of all those governments that have cut the costs of health care or education while the quality of those services have deteriorated. (I defy anyone to come up with an adequate measure of what a child really learns in a classroom.) How about those CEOs who cut budgets for research so that they can earn bigger bonuses right away, or the student who found all sorts of ways to make an orchestra more efficient. This week, on the news in Canada, we are hearing about railroads that are determined to be more efficient, while overworked engineers are reporting that they have been falling asleep at the switch. Very efficient this.

  2. Because economic costs are typically easier to measure than social costs, efficiency can actually result in an escalation of social costs. Making a factory or a school more efficient is easy, so long as you don’t care about the air polluted or the minds turned off learning. I’ll bet the factory that collapsed in Bangladesh was very efficient.

  3. Because economic benefits are typically easier to measure than social benefits, efficiency drives us toward an economic mindset that can result in social degradation. In a nutshell, we are efficient when we eat fast food instead of good food.

So beware of efficiency, and of efficiency experts, as well as efficient education, heath care, and music, even efficient factories. Be careful too of balanced scorecards, because while including all kinds of criteria may be well intentioned, the dice are loaded in favor of those that can most easily be measured.

By the way, twitter is efficient. Only 140 characters!

References

Herbert A. Simon Administrative Behavior: Second Edition (Macmillan, 1957, page 14).

This TWOG derives from my article “A Note on the Dirty Word Efficiency”, Interfaces (October, 1982: 101-105)

© 2014 Henry Mintzberg

The Soft Underbelly of “Hard Data”

9 July 2015

What exactly are “hard data”? Rocks are hard, but data? Ink on paper or electrons in a “hard drive” are hardly hard. (Indeed, the latter are often called “soft copy.”)

If you must have a metaphor, try clouds in the sky. You can see them clearly from a distance, but up close they are obscure. You can poke your hand through them and feel nothing. “Hard” is the illusion of having turned something real into a number. That guy over there is not Simon, but 4.7 on some psychologist’s scale. The company didn’t just do well; it sold 49 trillion widgets. Isn’t that clear enough?

Soft data, in contrast, can be fuzzy, ambiguous, subjective—at least from a distance. They usually require judgment; like Simon, they can’t even be transmitted electronically. In fact, sometimes they are no more than gossip, hearsay, impression (for example, the rumor going around that most of those widgets are proving defective).

What exactly are “hard data”? Rocks are hard, but data? Ink on paper or electrons in a “hard drive” are hardly hard. (Indeed, the latter are often called “soft copy.”)

If you must have a metaphor, try clouds in the sky. You can see them clearly from a distance, but up close they are obscure. You can poke your hand through them and feel nothing. “Hard” is the illusion of having turned something real into a number. That guy over there is not Simon, but 4.7 on some psychologist’s scale. The company didn’t just do well; it sold 49 trillion widgets. Isn’t that clear enough?

Soft data, in contrast, can be fuzzy, ambiguous, subjective—at least from a distance. They usually require judgment; like Simon, they can’t even be transmitted electronically. In fact, sometimes they are no more than gossip, hearsay, impression (for example, the rumor going around that most of those widgets are proving defective).

So the dice are loaded. Hard data win every time, at least until they hit the mushy brains of us human beings, living in our soft societies. Hence we had better consider the soft underbelly of these hard data.

1. Hard data can be too general. Alone, they can even be sterile, if not impotent. “No matter what I told him,” complained one of the subjects of Kinsey’s famous study of sexual behavior in the human male, “he just looked at me straight in the eye and asked ‘How many times?”’1 A little bit of the nuance lost, no? (For starters, what exactly constitutes a “time”? And whose?)

Hard data may provide the basis for description, but often not for explanation. So the sales went up. Why? Because the market was expanding? (You can probably get a number on that.) Because a key competitor was doing dumb things? (No numbers on that, just more gossip.) Because our own management was brilliant?  (That’s objective! …says the management.) Or else because it lowered quality to cut the price? (Try to get the data on that.) All this suggests that we usually need soft data to explain what’s behind the hard numbers—for example, hearsay about what the competitor is doing, gossip about quality in our own factory.

2. Hard data can be too aggregated. How are these hard data presented? Not widget-by-widget. Usually all the widgets are added up to provide one number: total sales. Likewise with that quintessential bottom line: the whole company wrapped up in that one number. Think of all the life lost in that number, and all the reality. It is fine to see the forest from the trees…unless you are in the lumber business. Most managers are in the lumber business: they also need to know about the trees. Too much managing happens in a helicopter, where the trees look like a green carpet.

3. Much hard data arrives too late. Information takes time to “harden.” Don’t be fooled by the speed of those electrons racing around the Internet. Happenings first have to be recorded as “facts”—that can take time—and then aggregated into reports, which may have to await some predetermined schedule (like the end of a quarter). By then, fed up with the quality, the customers may have run off with the competitor. The gossip may have indicated this first, softly, and the grapevine may have carried it around, quickly. But in a world of hard data, that hardly counts.

4. Finally, a surprising amount of hard data is not reliable. They look good, all those definitive little numbers on a pretty screen. But where did they come from? Lift up the rock over hard data and have a look at what’s crawling underneath. “Public agencies are very keen on amassing statistics—they collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But what you just never forget is that every one of those figures comes in the first instance from the village watchman, who just puts down what he damn pleases.”2

And not only public agencies. Most organizations these days are obsessed with the numbers. Yet who goes back to find out what the watchmen put down, especially today when he is some kind of automaton? Or what some manager in search of a promotion put down? Have you ever met a number that could not be gamed—a reject count in a factory or a citation count in a university (just cite your own articles), let alone that quintessential “bottom line”? Moreover, even if the recorded facts were reliable in the first instance, something is always lost in the process of quantification. Numbers get rounded up, mistakes get made, nuances get lost.3  

All of this is not a plea for getting rid of hard data. That makes no more sense than getting rid of soft data. It is a plea to cease being mesmerized by the measures. We all know about using hard facts to check out the soft hunches. Well, how about using soft hunches to check out the hard facts (“eyeballing” the numbers)?

So what’s the bottom line? There’s an old joke that if you meet [someone from a country I can't mention], hit him in the face. He’ll know why. Well, if you meet a number, challenge it. You’ll find out why.

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© Henry Mintzberg 2015. In fact, I sketched out these ideas long ago, before the Internet descended upon us (Impediments to the Use of Management Information [monograph of the National Association of Accountants [U.S.] and Society of Industrial Accountants [Canada], 1975]) LINK, and revised them in various publications ever since. Related TWOGS include: “If you can’t measure it, you had better manage it”; “How National Happiness became gross”; “Downsizing as 21st Century bloodletting”; “Productive and Destructive Productivity”; and “What could possibly be wrong with efficiency? Plenty”.  

 

1 From A. Kaplan The Conduct of Inquiry (Chandler, 1964)

Attributed to Sir Josiah Stamp 1928, cited in Maltz, M. D. (1997) Bridging Gaps in Police Crime Data: Discussion Paper, BJS Fellow Program, Bureau of Justice Statistics.

3 In his account of “statistics and planning” in the British Air Ministry during World War II, Ely Devons wrote that the collection of such data was extremely difficult and subtle, demanding “a high degree of skill,” yet it “was treated . . . as inferior, degrading and routine work on which the most inefficient clerical staff could best be employed” (p. 134). Errors entered the data in all kinds of ways, even just treating months as normal although all included some holiday or other. “Figures were often merely a useful way of summing up judgment and guesswork.” Sometimes they were even “developed through ‘statistical bargaining.’ But ‘once a figure was put forward . . . no one was able by rational argument to demonstrate that it was wrong.” And when those figures were called “statistics,” they acquired the authority and sanctity of Holy Writ.” (E. Devons Planning in Practice: Essays in Aircraft Planning in War-time, Cambridge University Press, 1950:155)

 

How National Happiness became gross

25 June 2015

The tiny kingdom of Bhutan, wedged between Tibet and India, became famous for Gross National Happiness (GNH), thanks to its king. This was not your usual king.  Before voluntarily ceding power to democratic elections, he decreed an increase in the country’s forest cover, had every kid in the country learning English, and in 1972 introduced Gross National Happiness. GNH resonated with people around the world who were fed up with Gross National Product (GNP). As Robert Kennedy commented in a 1968 speech:

Gross National Product counts air pollution and cigarette advertising…. It counts the destruction of the redwood…and the television programs which glorify violence… Yet [it] does not allow for the health of our children, the quality of their education or the joy of their play. …it measures everything in short, except that which makes life worthwhile.1

The tiny kingdom of Bhutan, wedged between Tibet and India, became famous for Gross National Happiness (GNH), thanks to its king. This was not your usual king.  Before voluntarily ceding power to democratic elections, he decreed an increase in the country’s forest cover, had every kid in the country learning English, and in 1972 introduced Gross National Happiness. GNH resonated with people around the world who were fed up with Gross National Product (GNP). As Robert Kennedy commented in a 1968 speech:

Gross National Product counts air pollution and cigarette advertising…. It counts the destruction of the redwood…and the television programs which glorify violence… Yet [it] does not allow for the health of our children, the quality of their education or the joy of their play. …it measures everything in short, except that which makes life worthwhile.1

GNH stood on four “pillars”: Good Governance, Sustainable Development, Preservation and Promotion of Culture, and Environmental Conservation, elaborated in nine “domains”, including health, education, psychological wellbeing, and community vitality.  

I was curious about this GNH, and being a fan of mountains, I visited Bhutan, in 2006. Two things struck me in discussions with a number of the country’s knowledgeable people. First, they had no idea how to measure much of GNH, and second, this did not matter because the country seemed to be behaving true to its precepts. As a BBC reporter put it, GNH had become “a way of life” in Bhutan—a poor country where life seemed to be rather pleasant.

Not long after, the technocrats descended on Bhutan, to fix GNH. After all, if the Bhutanese didn’t measure GNH, how could they possibly manage it?2 Soon each of the nine domains had “its own weighted and un-weighted GNH index...analyzed using...72 indicators.... Mathematical formulas have even been developed to reduce happiness to its tiniest component parts”3 One survey, which took 5-6 hours to complete, “included about 750 variables.”4 All this sure took care of gross, but how about happiness?

Critics, especially in the economics profession, have challenged the subjective judgments of GNH. (For the objective judgments of GNP, reread the Kennedy quote.) “Economics professor Deirdre McCloskey criticizes such measurements as unscientific…making the analogy that society could not ‘base physics on asking people whether today was 'hot, nice, or cold’’’.”5 If only education, culture, and wellbeing were as measurable as the temperature. (The scientific pretentions of economists have been referred to as “physics envy”.) It’s tough to tell who have been the greater threat to GNH: friends who want to measure it or enemies who want to eradicate it.

Not long after all this measuring, in 2013, Tshering Tobgay, who had studied with economist Michael Porter of the Harvard Business School, became prime minister. He soon claimed that GNH has “distracted [some people] from the real business at hand”: “The bottom line is that we have to work harder” (italics added). What the current king of Bhutan describes as “development with values”, including “kindness, equality, and humanity”6, the current prime minister finds “very difficult”, in fact “complicating stuff for me.”7 Which stuff—happiness? Or measurement?

F. Scott Fitzgerald claimed that “"The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function." Tshering Tobgay was one of the people I met when I visited Bhutan. I don’t recall him waxing eloquent about GNH, but he certainly seemed to be intelligent. So maybe the problem is that even first-rate intelligence can’t handle three ideas at the same time that seem to be opposing—in this case, economics, happiness, and measurement. But why not cut the measurement, and keep the happiness?  

The retired king of Bhutan with his four wives, all sisters

The retired king of Bhutan with his four wives, all sisters.

© Henry Mintzberg 2015  HM teaches in impm.org, a masters program for functioning managers who can hold two important ideas in mind at the same time.

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www.jfklibrary.org

2 See the TWOG “If you can’t measure it, you’d better manage it.” Others related to this topic include “Can the World Economic Forum deal with the world’s social problems?” and “There is no Nobel Prize in economics…and why that matters.”

3 Mydans, S. (2009, May 6) Recalculating Happiness in a Himalayan Kingdom. Thim- phu Journal. Retrieved from nytimes.com

4 Gross National Happiness, 2010 Survey www.grossnationalhappiness.com

5  wikipedia.org  accessed 23 June 2015

http://www.gnhcentrebhutan.org/what-is-gnh/

7 Quoting from The Telegraph, “Bhutan’s ‘Gross National Happiness’ masks problems, says new prime minister”, 2 August 2013, and Gardiner Harris, “Index of Happiness? Bhutan’s new leader prefers more concrete goals”, New York Times, 4 October 2013.