How Measuring Performance Makes Things Worse

Last Updated Mar 5, 2010 12:23 PM EST

Here's a quick thought on measurement to contemplate as you head into the weekend.

Scientists constantly wrestle with the problem of how their very presence in a research setting can change the behavior of what is being studied. This same principle was brought to a business realm by Robert D. Austin in his groundbreaking 1996 book, Measuring and Managing Performance in Organizations.

What Austin learned was that the very act of measuring something often creates the wrong behavior as a result, behavior that is against the goal of the measurement. So if a company chooses to study the failure rates of parts coming off an assembly line, workers respond by slowing down production to raise quality. And if the company measures unit production, quality may suffer in the rush to get product out the door. In both cases the measures are achieved (yippee!), but the overall goals of the company are perverted.

Microsoft's Steven Sinofsky, who ran the Window's 7 product team, writes about this phenomenon in a new book written with Harvard Business School professor Marco Iansiti, One Strategy. Measuring the "bug fix rate", for example, encourages the withholding of bugs until the fix is assured. He says:

"Thus understanding that if we choose to measure something, we are also choosing both to exclude some data and realize the direct action of the measurement. Trying to correct this by adding yet another counter-measure only yields a Rube-Goldberg status report that few can understand and even fewer acknowledge or act on."
So think about this time the next time you are deciding on Key Performance Indicators or other measurements in your business.

The way to beat this problem is admittedly difficult: measure everything, not selectively.

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.