The McKinsey maxim: “What you can measure you can manage.” HOKUM!

The McKinsey maxim: “What you can measure you can manage.” HOKUM!

In mid-18th century London, a mathematical prodigy called Jedediah Buxton was taken to see David Garrick perform in Shakespeare’s Richard III at the Drury Lane theatre. When asked whether he had enjoyed the play, his reply was that it contained 12,445 words. His analysis did seem to miss some significant things.

Modern-day businesses are built on an edifice of numbers. The rationalists with MBAs and CPAs continue to widen their numerical abstractions of how a business should be managed, imposing this worldview on executives until management has transmogrified into an art dominated by numbers, rather than adding value and serving the needs of flesh-and-blood human beings.

In the sixteenth century, a new word appeared in English dictionaries: pantometry, which means universal measurement. Ever since, man has been obsessed with counting things, from people and sheep to the amount of cars imported and the number of McDonald’s hamburgers served.

The famous quotation of Scottish mathematician and physicist Lord Kelvin (1824—1907) is inscribed—slightly inaccurately—in the stones of the Social Science Building at the University of Chicago:

“When you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind. … It may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the stage of science.”

The problem for the pantometrists is the same one facing businesspeople today: what should be measured? Facts and figures do not provide a context or reveal truth; we still need our imaginations and creativity. Lord Kelvin’s statement cannot be expressed in numbers, but that does not automatically make it “meagre and unsatisfactory.” If everything important has to be quantified to be comprehended, how are we to understand art, music, poetry, and literature –indeed, our own human feelings? Indeed, one could argue the more valuable something is, the more likely it cannot be quantified.

In a professional knowledge firm, it’s obvious that a judgment is far more important than a measurement, since the most successful characteristics of a professional cannot be measured.

How does one measure a doctor’s bedside manner? Communication and listening skills? Pride, passion, and professionalism? All of these have to be judged and inferred based on behavior and attitude. It’s more of an experience than a mere measurement. We kid ourselves if we think we can substitute measures for judgments, creating a sort of Greshman’s Law: Useless measures drive out good judgment.

You do not change your weight by having a more accurate scale, or by weighing yourself more frequently. Too many firms think by measuring a lagging indicator, they can affect its outcome. Yet, this is folly. This is the famous – I would say infamous – McKinsey maxim: What you can measure you can manage. This is not just nonsense; it’s nonsense on stilts.

A measurement only allows you to look backwards. The only way to peer into the future is with a theory, and if you tie measurements to a theory, then you have a method to predict, control, or prescribe the future. The problem with all accounting information, especially the financial statements, is that it’s a lagging indicator.

I once met a consultant in Las Vegas who argued with me that everything can be measured in a business, and should be, since that’s the only way to stay in control. I was baffled by his attitude, because we at VeraSage know that firms with more trust actually have less measurements, since their people do the right thing without micro-supervision.

So, I pressed him, and asked, “How do you measure the success of your marriage?” He gave an answer that still makes my head hurt when I think about it. I’m paraphrasing here (trust me, I wish I would have had a tape recorder to capture this answer since many of you will find it unbelievable – even I do to this day!):

“Well, actually, I do measure the state of my marriage. My wife and I have a prenuptial agreement, whereby for every year we are together, 20% of our individual assets will be put into community property. So, I guess you can say we are measuring the state of our marriage on an annual basis.”

I asked him, “So, does that mean after five years, you’ve achieved marital bliss?” He replied, “Yeah, I guess so.”

Not exactly Romeo and Juliet. But, what do you expect from a metric-mad consultant?

Not everything that counts can be measured, and not everything that can be measured counts, as Einstein said.

The United States of America’s Declaration of Independence reads: “Life, Liberty, and the Pursuit of Happiness.” These are not measurable goals. That doesn’t mean we cannot strive for them, and make progress towards them.

Professional knowledge firms of the future need more understanding, trust, and communication. To the extent they work on these processes, they will need even less measurement, since all who work there will do the right thing. To think you can control people with measures is to treat them like bags of cement you can manipulate at your will.

The most important things in life cannot be measured, and the more important they are, the less you can measure them. Rather than try to struggle against this basic truth, firm leaders should embrace it and unleash the potential of their knowledge workers. The McKinsey maxim is hokum.