I’m getting close to giving up on metrics altogether.

It isn’t that metrics aren’t important. It’s that in so many cases they seem to do so much more harm than good.

Consider, for example, the lowly customer service call center—the place a company’s customers … its real paying customers … dial when something isn’t as they’d like it.

Lowly? Yes, lowly, because like it or not, few companies have much respect for their customer service call centers.

Want proof? Ask yourself this: What is a company’s best source of information about what characteristics of its products and services aren’t satisfying customers as they should?

The answer would be obvious even had I not just telegraphed the punch: The customer service call center.

Second question: How many companies analyze the calls to their customer service call centers to find out what customers are calling to complain about?

Answer: I have no idea, other than knowing that whenever I call one and ask if the person I’m speaking to has any feedback channel for passing along suggestions from customers. The unvarying answer is no.

Third question: What do companies measure about their call centers? Queue time. Abandon rates. Average call time. A few … and these count as advanced compared to most of what you’ll find out there … measure the first-contact problem resolution percentage and time to problem resolution.

Ever hear of a call center that’s measured on the number of product improvement suggestions it generates? How about one that’s measured on how many customer-eliminating business practices it identifies?

Me neither.

Look, companies pay good money to get their Net Promoter Score—a strategic metric that, instead of trying to measure the elusive “customer satisfaction,” measures how likely it is that a customer will recommend them to friends, colleagues, and other associates.

They’re paying to get the likelihood without gaining any insight into why that likelihood is as good or as bad as it is, when they could, instead, gain insight into why that likelihood isn’t better for a cost of … let’s see, divide by pi and multiply by the square root of a potato … for whatever it costs to ask call center employees what customers have told them.

To summarize:

MetricsTable
Peter Drucker famously said, if you can’t measure you can’t manage. Call it Drucker’s Metrics Dictum — DMD if you’re acronymically minded. At the risk of being criticized for criticizing the patron saint of management consulting (and please understand, I have immense respect for Dr. Drucker’s overall opus), the above table shows just how wrong DMD is. NPS is measurable. That’s its point. But it isn’t actionable.

And if a piece of information isn’t actionable, it doesn’t help you manage one bit.

Let’s start over, with a better understanding of what metrics are for. To get there, start with this: There are two kinds of metrics. One measures progress toward or achievement of goals, he other measures the current state and trend of controls, a control being a factor that contributes to making progress toward or achieving a goal.

Second: Goals and controls are fractal, which is to say, when you zoom in, every control becomes a goal with its own controls, and so on ad infinitum, ad nauseum, and ad only enough layers that you’ve reached the point of the obvious.

If, that is, you can map out a complete set of controls for a particular goal, and you can define useful and tallyable metrics for every control, then you really can measure things in a way that helps you manage them.

And: Metrics serve two purposes. One is to help management understand how it’s doing. The second is to drive employee behavior in the right direction, which explains Lewis’s Law of Metrics: You get what you measure—that’s the risk you take.

Set a goal and employees will help you achieve it. Establish a metric and employees will make that their goal — they’ll move the metric in the right direction, whether or not the steps they take to move it are actually good for the business.

Why would they do anything else?

Metrics tell managers how they’re doing and they tell employees what management wants. If metrics were completely out of the question, do you think you could find other ways to achieve these two goals?

Scary news this week.

No, not Ebola, although that’s scary enough. Ebola, while extraordinarily lethal, is, fortunately, not particularly contagious when compared to other viruses.

Not that Ebola should be trivialized. Somewhere between “there’s always something” and panic in the streets is a reasonable reaction. I’m concerned, not that there’s anything I can do about it.

Anyway, the most likely outcome of the Ebola outbreak will be large-scale tragedy that mostly happens to Other People Far Away From Here.

The outcome of this week’s scary news, in contrast, affects us all every day.

The scary news? According to Bloomberg’s Lu Wang and Callie Bost, in the aggregate the companies that make up the S&P 500 are going to spend 95% of their earnings on dividends and stock buy-backs.

By itself, this statistic is less dire, or at a minimum more ambiguous than most analysts make it out to be.

Areas companies “should” spend their money (should being as much a moral as business proposition) such as labor, R&D and preventive maintenance, are pre-tax expenses. Dividends and buy-backs, in contrast, are after-tax expenses and aren’t deductible.

Which means it isn’t really proper to think of these as competing for the same funds. If a company were to reinvest more in its future (pre-tax) that would affect how much money is left in this-year profits to use for buybacks and dividends, but wouldn’t affect what percent of profits get used this way.

It would just make the amount that percentage translates to smaller.

Move along folks. There’s no story here. Or there wouldn’t be were it not for two factors: (1) Executives make spending decisions with an eye to how much will be left to fund buy-backs and dividends; and (2 … and this is the scary one) this year, companies aren’t just returning profits to their shareholders. As reported in Bloomberg, “Cash returned to shareholders exceeded profits in the first quarter for the first time since 2009.”

In short: Investments in what analysts delicately describe as “financial engineering” are up, capital investments are down.

The verdict: If this is the best use for cash the folks running the S&P 500 can come up with, it means they can’t figure out how to use the money to grow their businesses.

Which is, when you come right down to it, pathetic.

Only … for many of KJR’s readers and subscribers, they is we.

Yes, I’m sorry to report that it’s mirror-gazing time again in KJR County, because …

You might recall reading in this space from time to time that part of your job as an IT leader … and part of IT’s job as an organization … is to provide technology leadership.

Now I’m the first to say (or at least, close to the head of the line) this isn’t limited to tactical, hard-dollar, short-term ROI opportunities. The most critical dimension of technology leadership is identifying competitive threats and opportunities and recommending a course of action to deal with them.

The most critical dimension, not the only dimension.

Which leads to this question: When was the last time you or another member of your team sat down, one-on-one, with a business executive or manager to discuss what he/she wants to do differently and better?

There’s little question, some of the buy-back-and-dividends vs capital investment decision-making is pure, lazy opportunism. Buy-backs in particular are a cheap trick to prop up the price of a share of stock and nothing more. Directing cash in this direction when such niggling details as preventive maintenance are underfunded is ridiculously short-sighted, akin to making sure your wine cellar is well-stocked when your car needs its oil changed.

But in here is also an opportunity. Boards of directors approve buy-backs when, as already noted, they don’t have higher-return alternatives for investing the company’s spare cash.

It’s an opportunity because it tells us these boards have cash and need places to invest it, which might mean they’re open to suggestions from the company’s top executives.

Which might mean the company’s top executives are open to suggestions themselves.

The word is “might,” because if a company suffers from a paucity of investment possibilities it also might mean the company culture discourages employees at all levels from looking for and suggesting possibilities for improvement.

Now culture flows from the top, so if your company lacks a culture of innovation the CEO is probably the source of the lack.

But what do you have to lose by trying?