Why Measure ≠ Manage: How KPIs Distort Reality and What Tool to Use for the Conscious Leader
Updated at: 14 February 2025
Anastasiya Kolesnikova
If all popular quotes really belonged to the people to whom we attribute them, the phrase "if you don't measure it, you don't manage it" would be on Peter Drucker's list of wisdom. However, Drucker never uttered those words, nor did he endorse such an approach. Most importantly, this idea is wrong in itself.
#### *"*What gets measured gets managed - even when it doesn't make sense and is harmful to the organization*"*
## The long game of "spoiled telephone"
In 1956, the American journalist W. F. Ridgway published an [article]() on the risks of quantitative indicators. He wrote: "Performance measures are useful, but their blind use is dangerous. Without an understanding of the consequences, the cure may be worse than the disease."
Later, journalist Simon Caulkin accurately [observed](), "What gets measured gets managed - even when it is meaningless and harmful to the organization."
Over time, Ridgway's basic point about caution in measurement was forgotten. And Drucker himself thought that mental labor cannot be measured as easily as physical labor. It is impossible to assess how well a person performs intellectual work with simple numbers. He wrote about this in his book, which is clearly different from the popular phrase assigned to him.
With the advent of systems like SAP and Oracle, consulting companies saw an opportunity to capitalize on the idea of total measurements. They needed authority, and they chose Drucker. They simplified his complex ideas into a primitive formula, removing all the caveats and nuances.
Drucker believed that leaders should rely on intuitive thinking and look for opportunities rather than waiting for "hard facts." After all, when the facts become clear, it is often too late to act. This thought is completely at odds with the modern obsession with metrics and KPIs. Turning hazard warnings into 'best practice' is a prime example of how ideas are distorted for commercial gain.
## Myopia in measurement
The problem is not the measurements themselves, but the blind faith that any numbers are necessarily useful. When we start counting everything, it can lead to unexpected and even harmful consequences. That's why it's important to approach measurements consciously:
1. **Measurements can do harm. **In the 1950s, Toyota, trying to compete with U.S. automakers, focused on increasing production volumes, which led to a decline in vehicle quality. Faced with this problem, the company revised its approach. Instead of increasing quantity, Toyota emphasized improving quality at all stages of production, which ultimately improved vehicle quality and competitiveness.
2. **What's important can't be measured in numbers. **A company's success often depends on what can't be counted. You can't measure employee enthusiasm. You can't measure their dedication to the company. You can't measure their willingness to do more than is required.
3. **Numbers can be deceiving. **When a metric becomes a goal, people begin to manipulate it. They think about how to improve the numbers in the report instead of the actual work.
Does that mean there is no need to measure? No. You just have to realize: measurement is a tool to focus the attention of the manager. Properly chosen and interpreted metrics help to quickly identify where intervention is needed and where things are going according to plan. An effective manager does not use measurement as an end in itself, but as a means to properly allocate his or her attention and company resources.
## How to create a measurement system
Any measurement is an integral part of driving improvement. It helps not just to capture the current state, but also to understand how to reach a higher level. This idea began to materialize in a collection of best practices for building an ITIL(R) service approach through the Continual Service Improvement (CSI) cycle.
ITIL Continuous Service Improvement Model
The CSI model has 7 stages where measurement plays a key role. For example, in the third step we determine what to measure and in the sixth step we analyze the results. This process echoes the universal PDCA (Plan-Do-Check-Act) methodology proposed by William Schuchart and developed by Edward Deming, which has become the foundation of many quality management systems.
PDCA is known as the management cycle: from planning (Plan), through action (Do) and check (Check), to correction (Act). In the Check stage, it is important to use metrics and indicators to see how effective the actions taken are. These principles have formed the basis for other approaches such as the aforementioned continuous improvement model.
PDCA "Plan-Do-Check-Act."
As the product approach has evolved, especially in the context of rapid experimentation and hypothesis testing, a new model, HADI (Hypothesis-Action-Data-Insights), has emerged. It adapts the PDCA concept for flexible hypothesis testing and analysis of results. For example, in the Data phase of HADI, we use data to evaluate a hypothesis. This is similar to the Check stage in PDCA, but is presented from a different angle focused on speed and flexibility.
Regarding goal setting, some modern companies use OKR (Objectives and Key Results) instead of Objectives - Metrics cascades. OKR focuses on measuring key results that achieve a specific goal. However, as with the difference between PDCA and HADI, the difference is more of a terminological one. Essentially, OKR is the same "goal - critical success factors (CSFs) - metrics (KPIs)" cascade.
Regardless of the underlying management system approach, measurements are not a control tool for control's sake. They exist to be part of a larger cycle of improvement. Each measurement leads to action, action leads to improvement, improvement leads to revision and new measurements. This process is universal and applicable in any area, from services and processes to one-off tasks.
The following steps will show you in detail how to create a measurement system that is effective for any goal or project.
### Step 1: Set the goal
Management value is created when measurement helps managers achieve their goals. If you don't know what you want to accomplish, any measurement will be a waste of time.
For a project, setting a goal is usually not difficult. For example: "Launch a new product by September 2024 with a budget of no more than 5 million rubles." Or for the sales department: "Increase market share to 25% by the end of the year while maintaining current margins".
For processes and services, the goal is usually linked to one of four indicators: performance, compliance, efficiency or productivity. For example, for a help desk, the goal might be: "Increase user satisfaction to 95% while maintaining current costs."
Most importantly, the goal should be specific, measurable, achievable, relevant, and with a clear timeline (SMART). If the goal is vague, you won't be able to assess whether you have achieved it or not. For example, the purpose statement for a change management process might be "Ensure stability of IT services by responding quickly to incidents and minimizing resolution time." The SMART goal in this case could be: "By the end of the second quarter of 2024, reduce the average incident resolution time to 4 hours".
### Step 2: Identify critical success factors
Identifying such factors turns the measurement system into a real management tool. It helps not only to evaluate the final result, but also to make timely course corrections.
Even at this stage, it is important to think about the balance between the different success factors. Excessive focus on one factor can have a negative impact on others. For example, if we focus only on speed, quality may suffer. Therefore, in order for users to be satisfied with the outcome of the Incident Management practice it is important to set a truly balanced set of sub-goals - critical or key success factors, here each factor of the three below contributes uniquely to value creation and perception:
- Timeliness of incident handling,
- speed of incident resolution,
- user satisfaction with the quality of IT support.
**Or using the example of change process management:**
- process performance (timeliness of change implementation, minimization of negative impact of changes on IT service users, satisfaction of IT service users with the quality of change implementation),
- risk reduction and resource optimization through standardization of changes,
- ensuring the completeness of change registration.
### Step 3: Select metrics and measurement tools
Now select specific metrics for the goal and CSF. In theory, this is straightforward. In practice, you need to consider what data is feasible to collect. Sometimes you have to collect information manually - it's more expensive and slower, but sometimes it's the only way.
**Examples of metrics for the IT department on the same change management example:**
- Percentage of total changes implemented within the planned timeframe.
- Percentage of total changes that did not cause incidents.
- Proportion of the total number of changes with a high customer satisfaction rating for the change.
- Percentage of total number of standard changes implemented.
- Proportion of the total number of changes correctly processed.
Interface of the "traffic light balanced scorecards" tool
### Step 4: Generate a KPI system
In this step, ordinary metrics are turned into KPIs when specific goals and thresholds are set. A metric becomes a KPI only after it is determined what numbers are to be achieved. It is important that the KPI system is balanced, so that improving one metric does not harm others.
For example, if the helpdesk only races to respond to calls quickly, it could affect the quality of solutions. Or if salespeople focus only on attracting new customers, they may forget about the ones they already have.
Interface of the traffic light balanced scorecard tool
### Step 5: Aggregate the measurement data
Finally, you need to aggregate all the metrics into a single picture. Different KPIs can be measured in different units (minutes, percentages, rubles) and have different trends (growth or decline). They need to be brought to a common denominator.
**Color indication is often used:**
- Green - the goal is achieved (90-100% of the plan).
- Yellow - there are deviations (70-89% of the plan).
- Red - serious problems (less than 70% of the plan).
It is also important to correctly assign weights to the indicators. For example, when providing a service, user satisfaction may have a higher weight than the speed of response to a request.
Interface of the "traffic light balanced scorecards" tool of the SimpleOne platform
This approach works not only in IT. It can be used for any managerial tasks - from evaluating the work of the accounting department to the effectiveness of marketing campaigns. The main thing is to remember that measurements should help to achieve goals, not become a goal in themselves.
### Technical implementation
When we talk about balance in metrics, it's important to consider how to properly measure all aspects of the business, not just service processes. Based on the functionality of **SimpleOne's ESM platform**, solutions have been developed that cover all aspects of a company's operations.
#### "Traffic light balanced scorecards are not just a visual tool, they are a powerful way to understand how our processes impact quality. They help us identify areas that need attention and make informed decisions for improvement, and this tool is designed to be used across all of our products from different areas of the business: [HRMS](), [B2B CRM](), [SDLC](), [ITAM](), and of course [ITSM]()"
Andrey Vishnyakov
Director of Business Products at SimpleOne, ITG Corporation, ITIL Expert, SL, MP
Video demonstration of the traffic light scorecard tool
## Conclusion
To summarize, it is important to understand that any measurements in business are delicate tools that require careful handling. Their main purpose is not just to collect data, but to effectively manage the attention of the manager.
Traffic light balanced scorecards and other measurement tools help to see the picture of what is happening, track progress and make decisions. They serve as a kind of "compass" for the manager, directing his attention to key aspects of the business. However, we should not forget that some important aspects of work - the enthusiasm of employees, their commitment to the company's goals, their willingness to take on additional responsibility - simply cannot be measured by numbers. The ability to notice these immeasurable factors remains a critical skill.
