Measure This

by colbert | June 14, 2011

So we sit here today in a heap of mess. No jobs, a tsunami of home foreclosures, a mountain of debt, an almost insolvent Medicare and Social Security system, a broken financial system, the government printing way too much money and corporate America ground to a halt. And for my little industry, agencies bleeding red, clients circling wagons, and employees holding onto their desks for dear life. Yikes.

As a person who both loves and believes in the power of thinking differently and the creation of distinct yet simple strategy to solve virtually any problem, I have been asking myself “Any ideas of how to fix all this?” I am pretty sure that hoping won’t work, that waiting is for wimps, and that delusion always ends up under-delivering…

So what about this:

Two economic theories merged as one.

It is believed that there are three variables to encourage a high performing economy, captured in what is called the TFP: Total Factor of Productivity (see I did remember something from business school!): the availability of capital, the quality and availability of an educated workforce, and an efficient infrastructure (technology and support services). That’s theory one. Theory two is my own: That which is not measured cannot be improved upon. It’s true of weight loss and it’s true of economic performance. The problem with the current measures of economic performance and measuring our country’s TFP is that they are too macro. They are measures which do not point to clear, actionable ways to improve (other than controlling the money supply).

What we really should be measuring more effectively (read specifically) is the performance of the real contributors to our economic viability: corporations and the people who work within them. We should be looking at the TFP of individual corporations and organizations (including not-for-profits), the TFP of their leadership, and the TFP of their employees. If we established different and specific measures of performance that focused on every entity’s capacity to create tangible value from resources allocated to it (capital), its ongoing effort to further its skills and abilities through formal education, and its efficient (or not) utilization of the tools and resources available, imagine the difference we might make. Another way of saying all this: What if we got more rigorous about how we measure our performance, and particularly the performance of white collar workers? Because the ability to have a higher performing economy is predicated on higher performing companies and governments which is predicated on higher performing leadership and employees…

As example, the formal measures of most white collar workers’ “productivity” are non-existent. If you show up, keep your head down, dutifully attend meetings, and do something every now and then, you’re being productive. There is little if any measurement of how much you have learned, how much you have created, or how proficient you have become at using the system or the tools. Another example is the small business sector. Many economists have declared that the GDP contribution from small businesses is essential to turning this mess around. If so, shouldn’t we be measuring the sectors’ TFP? And shouldn’t we be more focused as a government about making sure we are enabling that TFP: providing small businesses with the capital they need, delivering the education on how to run a small business, and creating the infrastructure to enable it all?

Now I know people will say that it’s all being worked on. But it’s being worked on without clear and specific measures of what constitutes improvement. There is no Small Business Education Index. Most companies don’t even have non-financial specific measures for the return on most investments (including marketing communications…) or an agreement on how much (and how) they want employees to learn over time.

It’s all akin to us saying our country needs to lose weight but not pinpointing who exactly, not declaring specific goals, not getting on the scale regularly to assess our collective and individual weight loss and not taking the actions necessary to maintain or improve on it.
We’ll just remain fat. And 80% of life-threatening diseases can be attributed to being fat.

My next post will be focused on applying this economic construct of TFP and more relevant measurement to my industry and agency. Stay tuned.

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