You may be surprised to learn that human nature often prompts people to lie to themselves and to others. Have you ever caught a child doing something wrong, confronted them, and their immediate response is something like, “I didn’t do it!”? When pressure comes down from the big bosses, people can get quite creative in how they measure and count progress, lying to themselves and management. I was listening to a good podcast from Endeavor Media where a retired, former plant manager talks real facts in running a manufacturing operation. The title of the episode from July 6 is “Why Everyone Is Faking Their KPIs (But Shouldn’t Be) [Ask a Plant Manager]” and is available at https://podcasts.apple.com/us/podcast/why-everyone-is-faking-their-kpis-but-shouldnt-be-ask/id1450520772?i=1000661323367 and other places on the web.
It comes down to providing and agreeing on exceptionally clear information and directions regarding how to measure KPIs (Key Performance Indicators) and OKRs (Objectives and Key Results). Remember to “trust, but verify.” This goes as well for supervisors and managers, as well as up and into the board room. In the board room we use the phrase, “Nose IN; Fingers OUT.” CPA audits are another version of verifying the numbers to create a level of trust of the financials. A quality audit by an outside organization is another example of verifying details to create trust in the process.
Yet, I find something is missing when it comes to strategy for the future and forecasting. A colleague of mine, Carl J. Cox, is very big on leading indicators that can forecast what the results will be. It can be as simple as counting and measuring the number of outbound calls to prospects to learn early on that you have little chance of meeting your sales order quota, a lagging indicator. Anyone involved with production scheduling in a plant or transportation logistics knows that you need leading indicators since it takes time to ramp up and down as needed. It is better to have a measure you can trust than to use only past experience and gut instincts. What worked in the past for scheduling is not working today with all the issues related to supply and logistics.
My early education at MIT taught me to question my assumptions, check my work, check my answer, and look outside the box. Often, I was asked to focus on the Most Important Thing. This approach tells me that KPI as defined today is not the most important thing to consider. Since I doubt we can get people to change that definition, I suggest we move to a new, four-letter acronym, KPPI. KPPI stands for Key Predictive and Performance Indicators.
It is not as hard as it seems. Everyone knows that if heavy boxes are not picked up using the legs rather than the back, there will be injuries. Some plants will measure the number of lost days due to accidents. That’s good. Better yet is to provide training and assistive devices for proper lifting. Even better is to track the number of times people are reminded and trained on the subject.
It may be good to track the decreasing number of cyber attacks that succeed. Better to track the number of cyber attacks automatically thwarted. Yet, the cause of many successful attacks is a human somewhere in the loop. Even better to track the training of everyone and run cyber attack drills. I have had two clients do this with me, even as an outside consultant.
Nose around in your own business and its procedures. Figure out what the Most Important Thing is. Check to see if anything smells a bit off. Make sure the fingers are clean that are measuring the KPPIs.
