Peter Drucker on metrics as misdirection

Business, like any other institution, has important results that are incapable of being measured.

Any experienced executive will know companies or industries that are bound for extinction because they cannot attract or hold able people. This, every experienced executive also knows, is a more important fact about a company or an industry than last year’s profit statement.

Yet the statement can’t be defined clearly, let alone “quantified.” It is anything but “intangible”; it is very tangible indeed. It is just nonmeasurable. And measurable results will not show up for a decade.

A balance between the measurable and the nonmeasurable is therefore a central and constant problem of management and a true decision area. Measurements that do not spell out the assumptions with respect to the nonmeasurable statements that are being made misdirect, therefore.

They actually misinform. Yet the more we can quantify the truly measurable areas, the greater the temptation to put all-out emphasis on these – the greater, therefore, the danger that what looks like better controls will actually mean less control, if not loss of control all together.

Peter Drucker – Management: Tasks, Responsibilities, Practices in The Daily Drucker

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