A bigger brain than mine observed that ‘You get what you measure’. This has been proven to be true time after time.
Our lives are run by those who make the rules based on what has been, simply because it is easy to quantify.
However, what do you do when you want an outcome you cannot measure?
Like ‘good parenting’. We all know the kid benefits, as does the family, and community, from good parenting, but what is the measure? It is particularly challenging if you choose to try and measure good parenting in real time.
Like ‘Culture’.
We all want a great culture, but how is it measured? There are consultants flogging all sorts of snake-oil dressed up in pretty graphs and dashboards, but I am yet to see one that is of any demonstrable value.
Like ‘Great marketing’. ‘I will know it when I see it’ is simply not good enough! How do you predict which marketing strategy will be great, and which will be a steaming pile of crap?
If a PhD candidate was to compare the balance sheet valuation to the market cap of the top 1000 listed companies of 1998, I would bet my house that there would be a far closer correlation then, than a similar comparison done in 2018. In those 20 years, capital markets learned to factor into their valuations the future value of intangible assets.
Facebook paid 19 Billion, yes Billion US in 2014 for WhatsApp, when it was owned and run by 12 people in a garage, supported by a VC investment. At the time it was seen as an insane price by most pundits, the same ones who are now saying it was the purchase of the century.
Intangibles now make up a significant proportion of the market cap of most successful companies, and where do Intangibles come from?
Marketing!!
But what is the measure?
We can see the value with the great benefit of hindsight, but hindsight is not available to us as we do the planning.
So, the question becomes: ‘How do we generate quantitative links between cause and effect?‘
Such links will provide the connections between Foresight and Hindsight, so we can learn and accumulate wisdom as we go, make resource allocation decision based on what should happen, rather than what we hope may happen, or even worse, an assumption that the future will look just like the past?
Even then, we need to remember the sage words of Einstein who knew a bit about measuring things, when he said ‘Not all things that are important can be measured’
Header cartoon courtesy of Hugh McLeod at www.gapingvoid.com
