CHAPTER 1 Why Measure?

There are some excellent reasons for not measuring. No one can say that you missed your goal; it is just another opinion. Cost savings are substantial, since measurement can be costly. It may be that you feel you are the best at what you do and have everything under control. Measurement would only confirm that, so why bother?

The truth is that everyone measures; everyone has some sort of quantification for what they do. In business, measurement is forced to be somewhat formal because of accounting requirements. For public companies, certain other standards are imposed that prescribe measurements and measurement discipline and formality. Throughout the organization, everyone has at least an informal mental picture of the quantitative nature of what is necessary to do his or her job and manage risks. A detailed report is unnecessary for the material people to know how many pallets are on the dock or for the production people to know the size of various queues or the inventory of key supplies and materials. In fact, it is an accepted generalization that during a relatively steady state, even the most comprehensive measurement program has little effect on current or future events.

However, the opportunity to effect change or the ability to respond efficiently to change is lost if there is little or no measurement formality or discipline. If a key person leaves, the successor must start from scratch to figure out what his or her predecessor knew and needed to know to perform that job. If there is a significant change in a product or the demand for a product, the adjustments needed are made by trial and error, which can be costly. Usually, any ad-hoc need for information is met with inappropriately high cost in gathering the information and a high risk that the information will be inaccurate or unverifiable.

Thus, chances are that even if an individual is convinced that he or she is not using measurement, the organization likely is measuring, quantifying, and supporting decisions in an informal manner. The change is not in going from not measuring to measuring, but in going from a lack of formality to more formality and from a lack of communication to a much higher level of communication regarding quantitative information.