There appears to be an enormous amount of interest in using data (a.k.a. analytics) as a management tool for gaining some degree of certainty of performance through better control of the tasks and the task doers of an enterprise. In fact analytics seems to be the beginning and end all of management these days. After all, as Lord Kelvin asserted ‘to measure is to know” and “when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.” This is all well and good if we are dealing with pure mechanical systems, systems with no inherent will or self-initiation and that function according to laws of physical science.
Spoiler alert: Organizations are not such systems and neither are the people who are members of the organization. So let’s not get carried away with the idea of realizing certainty and control by making everything an abstraction when we are dealing with living (not mechanical) systems.
In a recent posting by Michael Schrage in HBR Blog Network it was presented that analytics is used by professional sports management in a moneyball fashion (yes just like in the movie) for predicting and paying for future performance. In athletic endeavors it is a fact that ability—quickness, speed, reaction time, vision, etc—decreases with age. So of course this makes better sense paying for what can happen due to current ability than paying for what happened in the past, for yesterday’s wins. Further in sports perhaps there are also considerations for the celebrity value that puts fans in the seats.
So does this transfer to business management? What does performance depend on in business organizations? It is not athleticism, so what is it? Schrage rightfully points out that personal loyalty has a role in one’s performance, yet he implies that factors like (old) age impairs performance. On the latter point, if this were true those with more (years of) experience would have less value than one who has few. The point of fact is it is not just the person’s knowledge and skills but also his/her relationship to the people he/she co-labors with and the relationship with the system itself.
Just as the organization’s performance is an emergent property and not reducible to the knowledge and skills of each individual, an individual’s performance is likewise an emergent property. Whether one actualizes his/her potential is not solely up to the individual; it isn’t just a matter of effort. Whether potential is actualized is very much dependent upon the space provided by the organization within which one works. So those gathering analytics need to do so on the very processes that impact the likelihood of potential being actualized—that is management practice. If management manages as if the organization is a profit-producing machine then what will get actualized will be far less than the potential that is actually available—a lot of potential will lie dormant. It will be management who is not performing and so who is collecting analytics on that!
Again, I quote Lord Kelvin, “the more you understand what is wrong with a figure, the more valuable that figure becomes.” What’s the implication? Those who are employing analytics must understand fully the limitations of the data; otherwise their application will be misguided and prove quite harmful to future performance, of both individuals and the organization. There is no substitute for knowing!