The Bean Counter’s Blind Spot

Lesson learned: Be careful what you measure and how you measure it.
Category: Project objectives / Decision making.

The following post is a “Lesson Learned” that comes from the analysis of the failed projects documented in the “Catalogue of Catastrophe” or from the experiences the editorial team have had working with clients around the world. The post is published here to spark discussion and help individuals and organizations think about what it takes to improve project success rates.

I can’t help thinking that the financial measures and metrics some organizations use to run their businesses are causing them serious harm (for an example see the Boeing 787 project). By focusing on narrow measurements some organizations have lost sight of the broader context from which organizational performance is shaped. A disconnect between the measurements used and the full reality of the situation can be the breeding ground in which organizational problems are born.

Having worked in a number of organizations in which spreadsheets were the primary tool for decision-making I’m aware of how much damage a narrow perspective on cost account can have. An organization I worked for long ago was primarily  focused on billable hours and raw revenue. As the organizations senior leader’s chased bonuses, anything that didn’t show up in the spreadsheet was simply ignored.

In contrast, it was refreshing to have visited a number of companies in which technical excellence and quality are still the central themes around which everyone is focused. By continually developing the organization’s skills and striving to eliminate the waste that poor quality and rework embody, such organizations recognize that delivering value to their customers is the path to organizational success. While billable hours may drive a quarterly revenue target, failure to consider quality issues or people factors creates an invisible illness within the organization.

Sadly in the many sectors quality oriented organizations remain the exception and not the rule. While most organizations measure projects in terms of schedule and budget performance, many are completely unaware of the level of rework within their organization or how the metrics they choose to use may be shaping behaviours in undesirable ways. As an example, in his book, Software Team – Taking Ownership for Success, Jim Brosseau reports that typical software development organizations loose 40 to 50% of their budget to rework and the total can be as high as 70%. Unfortunately many organizations are oblivious to the numbers because quality is often a blind spot in the organization’s measurements system.

Although I’m not a fan of large-scale formal metrics programs (because of the political games they can lead to), I do think management teams need to have their finger on the pulse of the organization. Where management fails to see the levels of rework and the drag poor quality has on productivity, no one wins. Where the financial measures or targets used are incomplete, hidden costs can go unseen.

Tapping into the pulse of the organization isn’t hard to do. Unhappy workers and high turn-over rates are the sirens of despair. Constant firefights and high defect rates are the flashing neon lights of damage needing repair. Unfortunately many organizations are blinded by the light and fail to see the warnings that the signs around them do bear.

Resolution strategies to consider:

Carefully consider how the metrics you are using may be shaping behaviour and correct as necessary / Make sure quality is a measure, not just schedule or budget / Keep in close touch with the team to surface any issues you had not thought of.