Beware of the productivity measurement fallacy
This post was first published in my “Driving IT Productivity” column on CIO.com and has been updated from its original form. About twenty years ago (ok, thirty year ago), I worked for a company that implemented a company-wide productivity initiative. To their credit, they really did it right. Senior management was very involved and truly worked hard to lead the charge. The program was clearly communicated to the employees. Prizes were given out to the teams that created the greatest company savings. All in all, it was very well done and very successful. A number of business processes were improved, vendor costs were reduced and quality throughout the company was enhanced. An issue that arose was the way they calculated savings, it was left up to each individual teams to decide. Yes, we were given some guidelines, but they were very open to interpretation. So, as you may expect, since everyone wanted to win the prizes and bragging rights for coming in first, everyone was very generous to themselves, regarding the calculated savings. In the first six months, the total savings across all teams was greater than the company’s annual revenue. The result of this poor measurement process was that the program lost credibility and was eventually cancelled; even though from a true productivity perspective, the program was a great success. I clearly remember this event and the lesson it teaches. Poorly and/or overly optimistically measurement, even in the best of projects, can lead to their downfall. As a result of this [...]