Why KPI's Stifle Innovation And Collaboration In A Complex World
In a world of control, KPIs (Key Performance Indicators) act like the eyes that monitor (control?) progress. It is a healthy retroaction, or return of information on performance, providing managers with a grid to assess the execution of a task easily. In reality, it is an intangible foil wrapping employees' actions that stifles spontaneous creativity, collaboration, and emerging intelligence. Let me explain.
What Does it Mean To Live in A Complex World?
Our world is more complex and unpredictable by the second. Change is more than a constant, it becomes the most defiant variable or challenge, anyone in an organization has to face. We increasingly ask managers and employees alike to manage change, adapt, and innovate to stay ahead of it. It is a sane strategy, albeit a contradictory one.
We ask for the impossible task of being competent, complying with a plan or a set of indicators while being open to the new, to burn the box and create a different path. Competent or complying means we have already done what we are asked to do. The only possible result leads to the incapacity to innovate, be flexible, and be open. It is contradictory. That is exactly what our complex world requires of us: to do what we already know, be open to what will emerge, and invent what does not exist based on resources we don't know of yet.
Today's KPIs Only Measure The Known
As a team coach, I often witness how KPIs only focus on individual performance, trapping people into a set of behavior and attitude they already know to do. Even when they stretch the capacity, they still refer to a predictable output.
To increase the capacity of an employee to communicate better, we frame a specific behavior as an important indicator, like "they show the capacity to listen and ask questions during a conversation." Or an indicator to solve problems could be: "learn from experience" or "use their experience to look at a problem from different angles."
These examples are based on best practices, on what previous competent employees could do that aligns with the culture, values, and behaviors promoted by a company. In that sense, most existing KPIs measure the known. Whereas the complexity of the world bids for an open-ended indicator that evaluates an individual or collective outcome.
Two Elements to Take Into Account in KPIs
Today's KPIs measure something planned or fixed, even if it leaves some room for interpretation. In a predictable world, it is the best measurement, assuming that resources and actions are certain and their effect predictable. In a complex, unpredictable world, such KPIs trap people into behaving as expected, ignoring signals and needs to vary, differ, or change like innovation necessitates. There is a dire need to shift the assumption to take into account two elements referring to actions ecology in an uncertain world:
Any action in a complex setting influences its environnement in ways that are not predictable. For example, the Chinese invented the compass. When it arrived in Europe, it inspired Christopher Columbus to seek India and found the United States. He didn't know then how that compass will impact our geographical knowledge. He had a goal, took action, yet, he didn't reach the expected output. He didn't know that it was a mere bet to find India, that produces the discovery of an important continent.
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To support actions, one can set a strategy and not a program. The latter is fixed, where the former helps using the information collected randomly along the way to modify the action or stop it, using feedback and iteration. We see why Agile Frameworks are so useful in today's world.
The word "complex" mean to forge links. In essence, a complex world refers to its web of interconnected moving parts. It is impossible to know or predict how an action will influence other parts of the system via the ripple effect. Combine all the actions each moving part takes at any moment, and you understand how unpredictable it is.
The principle of double causality plays an important role, where the cause creates an effect that becomes a cause that creates another effect and so on. Any actor or action is a product of a production system that, to survive, needs to reproduce. Actors are producing products such as actions, projects, services, ideas, energy, buildings...
KPIs forces a behavior to become predictable. What would be logic is to leave a KPI open to what is emerging, to keep it undefined until it arises. Another option would be to measure the outcome and not the output. To this day, I don't know how to proceed. All I know is that we need KPIs to measure the unknown.
What Will Shift The Assumption Behind the KPIs?
Reading this article you might resonate and think "yeah, that is right!" Still, nothing will change. As human beings, the only drive to change is the sense of urgency. If we don't have to do it, why doing it? Like climate change, we knew for long it was a menace closing up, it is only since the past few years where floods, wild fires and drought touch us where we live, now that we start to act. We sense the urgency so we are (more) ready to behave differently.
My question is, how to create a sense of urgency to shift KPIs in every organizations so they can measure both the known and the unknown, the predictable and the unpredictable, the expected and the new?
Please comment when you see a path to a solution.
Sara Bigwood - PCC - ORSCC
Team Collaboration Catalyst