Legendary management consultant Peter Drucker famously said these words 40 years ago, and they are equally appropriate today. However in the world of “big data,” companies face a challenge that Mr. Drucker might not have predicted. Too many things are measured. It is impractical to make intelligent management decisions based upon all available data, and virtually impossible to make every metric a strategic priority worthy of improvement. Random sampling can result in inaccurate analysis and attempts to manually observe trends are beyond the capability of the human mind.
The first challenge is deciding on what to measure. Readers of business literature, and fans of Brad Pitt, will remember the lessons of Moneyball. For over a century, baseball managers were using the wrong metrics to make management decisions. Moneyball tells the story of a small group of naysayers who opted to take a step back, and evaluate whether the numbers they relied most heavily on, were appropriate. Take the case of Babe Ruth. He is widely regarded as the best hitter in baseball history. Yet if one were to apply the most commonly used metric to evaluate hitters, batting average, he would rank as tenth in history. The problem lies in the metric. Batting average is number of hits divided by times at bat. Like many business metrics, it is an oversimplification used by humans with limited ability to process large numbers. It gives equal weight to a home run as it does to a single. But when evaluated based on the metric proposed in Moneyball, the “slugging percentage,” The Babe jumps to number one by a large margin. Slugging percentage gives more credit for doubles, triples, and home runs; than to singles, and subsequently changes the result of the analysis. For over 100 years, baseball was using the wrong metric. They needed to include more measurements, for a combined and more accurate view.
Businesses have tried to move this idea from theory into practice with the Scorecard. A business scorecard takes multiple measurements, and rolls them up into a combined metric that can be analyzed and acted upon. Much like how a slugging percentage improves upon batting average, a scorecard gives a “consolidated version of the truth.” These outputs, the results of several metrics or points in time, are called “key performance indicators,” or KPIs. By having access to KPIs, managers can test and tweak strategies, analyze the results, refine their strategy, and repeat. Taking this a step further, is the balanced scorecard. Much like how the “slugging percentage” incorporates multiple metrics, the “balanced scorecard” typically measures items from four categories:
- Financial: encourages the identification of a few relevant high-level financial measures.
- Customer: encourages the identification of measures that answer the question “How do customers see us?”
- Internal business processes: encourages the identification of measures that answer the question “What must we excel at?”
- Learning and growth: encourages the identification of measures that answer the question “How can we continue to improve and create value?”
Using a combination of these metrics, managers can make informed business decisions, and work to improve things that have the greatest net effect. Over time business operations streamline, productivity increases, and the results can be seen on the bottom line.
Again however, the nuances of the real world make the theory less than perfect. Even when managers know what to measure, and have the ability to do so, the second challenge lies in how to improve. The most difficult items to improve are often complicated by the human factor. In the contact center, this is especially true. Using KPIs generated by scorecards, managers can identify items, and individuals, worthy of improvement. Contact centers routinely use coaching (an application and process where individual interaction and teaching is documented and trackable,) as the first step towards improvement. Unfortunately as the saying goes, “individual results may vary.” Performance improvement from coaching ranges from widely successful, to completely ineffective, and everywhere in between. The problem is that the coaching is often not connected to the KPI in any strategic fashion, and the coaching itself is almost never measured.
The key is to connect the dots between scorecards (measurement) and coaching (improvement.) An “out of range KPI” can now be used to automatically assign a coaching session. Even better, the coach’s skills can also be measured. Scorecards can look at the change in performance of all agents coached, and identify the better coaches. Since “what gets measured gets improved,” this creates a cycle of continuous improvement. Hopefully both Peter Drucker and Brad Pitt would agree.