Home >  Blog >  Numbers matter

Numbers matter

Posted by Philip Smith on 9 August 2019

Until they don't.

We live in an age of numbers. From quarterly results, production efficiencies to the good old KPI's ( aka KBSI ).

The real question we have to ask is whether these numbers mean anything. Do they add value to our decisions or clarify a problem or provide better service to our customers or just what is the purpose of the numbers we seek.

By way of example Toyota management has an interesting approach to numbers and I will quote a short section from "How Toyota became #1" by David Magee, to illustrate the point.

"Jim Press recalls receiving some wisdom firsthand during a dinner at Dr. Shoichiro Toyoda's home in Japan. The company stock price had experienced a run-up earlier in the day: investors had apparently liked some Toyota-related news report or rumour."

"Making dinner conversation with Dr Toyoda, Press mentioned that he saw the closing stock price, assuming Dr. Toyoda was thrilled, as one of the company's larger shareholders."

His dinner partner responded quickly: " I do not watch the stock price. If I did, I might make bad decisions for the company" declared Dr. Toyoda definitively".

What is their focus and what do they believe - ?

The focus of measure should not be on numbers themselves, but on the things that contribute to them. All improvements that provide more value to workers will translate into better value for customers, ultimately improves the company   

For a long time production efficiencies were owned by cost accountants, then along came Eliyahu Goldratt with his theory of constraints ( 1984 ) and much like Toyota he provided an approach to continuous improvement. Implementing this new approach showed that what was previously measured added little or no value, in fact it often created some fairly large problems. 

Once you get your head around this theory you find it also applies to every other part of your organisation. The focus can then change to issues that can improve your organisation from Good to Great ( Jim Collins ).

Well, you might ask, what about KPI's, surely they are worth monitoring. Unfortunately many of these holy grail ideas contribute little, as they are often set up in an environment where the people are isolated from a broader organisational strategy. In addition they are frequently created by people who have absolutely no idea how this is supposed to work. 

Don't take my word for it, investigate a few adds on Seek and specifically read the listed KPI's.  If this is the best they can do, it would be beneficial to all, to not bother.

We should spend our efforts finding worthwhile things to measure, that will make a difference to the lives of the people who work for and with us, the rest will follow.

Philip SmithAuthor:Philip Smith
About: Philip specialises in getting projects and businesses that are not performing as well as expected, back on track.
Connect via:LinkedIn