Businesses are measuring everything these days. There is a prevailing philosophy that something can’t be made ‘better’ unless it’s measured to establish a benchmark. This sounds reasonable, and there is a grain of truth in it, but it’s not always necessary to establish metrics to achieve improvement.
First, let’s consider why this trend has has become so pervasive. We tend accept as true, stories which contain a component we know, or believe to be, true. We know from being in business that record keeping is important. We like to see graphs, pictures, that demonstrate improvement. We all like the bar chart showing ever increasing sales. Since we measure sales and like to see the graphs, we crave similar, easy to digest, pictures of other aspects of our businesses.
Somethings, however, are very difficult to measure quantitatively. Here’s where we slip off track. Let’s say we want to improve customer service. So, we set up a satisfaction survey. Satisfaction is a pretty subjective term. Don’t misunderstand me. I believe it can be a good idea to measure customer satisfaction but it’s not the place to start when you know you have a service problem.
When you recognize a problem, you start by trying to correct the problem and this can be done without starting a measurement routine. For example, if you are getting complaints about your service, start by correcting your service. Then measure. How do you know if you have a problem without measuring? Come on, you know. You know if you’re having more product failures than you should. You can look and see the problem. Is the repair department backed up with service work? Does it take days or weeks to return a working product to your customers? You know. If you don’t know, your service people know. Ask them.
It costs money to set up and gather measurements. The irony I most often see is that solutions to common business problems are usually cheaper to implement than the costs associated with measuring the problems. I’ve seen companies spend thousands of dollars measuring problems that could be fixed with a few hundred dollars of training. This happens because it’s easier to measure a problem than it is to solve a problem.
One company I worked with experienced a lot damage loss in shipping their product to their customers. There was so much shipping damage, the carrier refused to pay damage claims. The company set up a measurement — a complex spreadsheet complete with graphs — to determine a percentage of goods damaged in shipment. After 3 months, they had their numbers. The loss was staggering. They concluded it was time to get tough with their shipper. Another two months went by. No improvement. They called me in. It took me 30 minutes to see the problem and come up with workable solution. As you’ve probably guessed by now, the company was not adequately packing the goods for shipment. It was obvious. No measuring necessary. I also noticed a huge stack of cardboard ready to be picked up by the recyclers. The scrap generated about $50 a month. Big deal. Using the scrap cardboard to better pack the outgoing goods cut the shipping damage by 90%. And the few items that were damaged, were also covered by the shipping insurance because the carrier agreed the goods were properly packaged.
How did I arrive at 90% without measurements? Okay, maybe it was 92%, maybe 89%. Does that really matter? The fact remains, the problem went from very serious to nearly eliminated. That took less than an hour to solve after 5 months of measuring. If the company wanted continuous improvement, they could start a measurement program after the experiment with the scrap cardboard.
Start with observation. Then collaborate on solutions. Only then, if you must, start measuring. And be sure you are measuring something of value.
Chris Reich, Author of TeachU’s Business Talk Blog