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A Different Measure

What we should measure and how we should measure it are questions we sometimes don't think to ask. We routinely accept hidden assumptions about these questions. We forget that the choice is ours.

The president of a furniture company was once asked by a reporter how his company compared to others in the same field. "Well, our employees are four inches taller on average," he answered. The reporter tried again, this time asking how their profits measured up to the competition's. "We had 10 customer complaints last year, so that works out to $40,000 profit per customer complaint - a much better profit/complaint ratio than out competition."

This amusing example shows how we can choose to measure different things, and how we can choose different ways to measure them. This is an important point if you want more creative ideas, because each choice of what to measure and each method of measurement affects our thinking.

It might seem at first glance that there are only one or two relevant measurements that we should look at in a given situation. Depending on one's goal, there ARE measurements that are more directly useful. But sometimes we are assuming we already know what they are, and we are wrong.

What To Measure

For example, suppose an auto maker is designing a new car, and the designers are told to emulate what has worked for other car companies. A natural first step might be to gather statistics on the ten car models which have had the most sales. Popularity - as measured by number sold - seems like a good standard to start with, right?

Now, what if one designer decides to try a different approach. He gathers statistics on the ten cars which made the most money for their makers. That's a entirely different measurement, since simply selling a lot of something doesn't mean you make a lot of money. Comparing the two lists might reveal that many popular cars have small profit margins, so some luxury cars make more overall profit for the company even if they sell half as many.

But it doesn't end there. A list of the cars which make the most profit per car might include even more useful information. Certain cars may be a small part of the profits of a company, but provide a very large margin per sale. With this in mind, designers might be better off creating six new models, each with a high profit margin in mind. The profit from sales of all six might be more than from a single very popular model.

How To Measure

In addition to choosing the wrong things to measure at times, we also easily choose the less-useful ways to measure them. Using the auto company example again, how should you measure profit? Should you look at the profit a car or company made last year, or over five years? Profit as a relation to invested capital certainly might be more important than measuring it as a percentage of sales.

Often it's worth measuring in new ways just to see what ideas are suggested. For example, consider the seemingly silly "profit/complaint ratio" invented for the story above. Perhaps companies with high profits but a low profit/complaint ratio see profit decline more often, due to fewer repeat sales. This could be a warning to work on the quality of product or service. A high ratio might suggest that you can concentrate more on sales efforts.

The ways we measure create a perspective, as shown in this story:

George works for a cleaning company. He thinks he makes $400 per week, simply because he's paid that much weekly. He is actually paid $10 per hour, which is another perspective. One day he decides to play with different ways of measuring his pay. He writes down: "I make $80 per day worked, $57 per calendar day, $20,800 per year, a lifestyle that includes ten travel days per year, or about $25 per office cleaned.

Different ideas come with each perspective. A per-hour perspective reminds him of the $16-per-hour job offered by a friend with a construction business. He said no due to frequent lay-offs, but what if he found a way to fill those hours during lay-offs?

Then he thinks about the per-office perspective. What if he convinced his boss to actually pay him $25 per office? He knows he could clean twice as fast if he chose to. It would mean half as much time spent working to make the same paycheck. Alternately, he could make $40 profit per office, he realized, if he started his own cleaning business.

Considering his annual pay, George asks how else he could make $20,800. He realizes that with what he knows he could buy, fix and sell a house and make that much money on one project. It would only take a few months, leaving him the option to travel more (a goal of his), or make more money doing two projects each year.

A per-calendar-day perspective has him thinking about money that could come in every day. He doesn't want to work every day, but it does occur to him that some efforts create residual income that streams in every day without additional labor. His brother has websites that produce more than $57 each day and every day regardless of whether he is even in the country. Maybe he could do the same.

Radical Measures

You can see that each thing measured and each way of measuring provides a different perspective. Want more radical ideas? Find more radical ways to measure things. In the above example, the "I make a lifestyle that includes ten travel days per year," perspective may be the most radical. Perhaps there is a way for George to travel more and live more how he wants to even though he makes less money. It may be difficult to think of and measure "pay" apart from money, but it's a powerful perspective.

There is a lot more to say about measurement, but for now I will leave you with the following questions to apply when measuring things.

1. Why is this being measured?

2. What else could be measured here, and how might that be useful?

3. How has this been measured in the past, and with what results?

4. Are there other ways to measure this, and what do they suggest?

Measuring The World - A Mental Exercise

The following exercises are meant to exercise the brain and change your thinking. They aren't meant to suggest that everything should be measured or that we should have faith in our measurements. There are things that can't be measured in practice, or at least shouldn't be until our knowledge has advanced.

It's also very easy to have too much confidence in how we measure things. These exercises are an antidote to that, because finding new measures and new ways means constantly challenging the old ones.

Exercise 1. Find something that isn't being measured (at least not commonly), and consider how you might measure it. For example, how could you measure love? By emotional intensity? By the number or effectiveness of actions taken to help another? By intention? What about measuring creativity or the distance between two opinions?

Exercise 2. Think of something that isn't being measured very well, and find a better way to measure it. For example, if customer satisfaction surveys are not very effective, what other way could you measure how happy people are with what they buy?

Until next time,

Steve

www.RadicalNewThoughts.com