measurement mania

  • Common Sense Trumps Data

    I was in northwest Ohio this summer where Trump yard signs were everywhere and Clinton signs were practically nowhere.

    What changed? The increasing role of data.

    Most Clinton staffers apparently believed that targeted election canvassing and social media produce greater results than yard signs, campaign buttons and bumper stickers. And the data suggests that physical signs have only a slight impact on campaigns.

    Hillary Clinton online ad

    The Hillary Clinton campaign favored online ads like this one over yard signs.

    The lack of Ohio yard signs was a shock in that I covered presidential campaigns in Ohio during my early career as a reporter for WTOL-TV, the CBS affiliate in Toledo. Yard signs always dominated the landscape during election season. For voters looking around for clues of which way the wind is blowing among friends and neighbors, yard signs matter.

    Yard signs illustrate how data and common sense can diverge. Common sense suggests that campaign signs, particularly those on residential lawns, have a significant impact. Many people vote for the candidate their friends and neighbors support. And regardless of ads and chatter on social media, there’s nothing quite like the real-world visual reinforcement of a candidate’s signs dominating one’s street or neighborhood.

    And Ohio is by no means the only state that lacked Clinton yard signs.  Published reports indicate that Trump signs dominated rural Pennsylvania. Last January, Wired profiled Edward Kimmel, a part-time campaign photographer and Clinton supporter, who noticed the visual shift from previous presidential campaigns in Iowa. Kimmel voiced concerns about the impact a lack of signs might have on voter turnout. Kimmel was prescient.

    A tyranny of data short circuited the Hillary Clinton campaign and contributed to Donald Trump’s victory. From the bubble of its Brooklyn Heights headquarters, the Hillary Clinton campaign apparently viewed yard signs as obsolete in the age of targeted digital canvassing and social media.

    The Clinton campaign is just one example of how relying exclusively on data can compromise value. Wells Fargo emphasized measurement over common sense, and its reward system encouraged team members to cut corners and open unauthorized accounts for customers as I detailed in my September 13, 2016 post. The company is now paying the price in fines, lost business and compromised reputation.

    Donald Trump yard sign

    A Donald Trump for President campaign yard sign in West Des Moines, Iowa. Photo by Tony Webster. Licensed under CC BY 2.0

    Measurement mania and the tyranny of data are nothing new. In my most recent book The Bounty Effect: 7 Steps to The Culture of Collaboration , I write about the myopic approach dubbed “management by measurement” which dates back to the so-called Whiz Kids. In the 1940s, the Whiz Kids were junior faculty from Harvard Business School recruited by Charles “Tex” Thornton to run the Statistical Control unit of the Unites States Army. The group included Robert McNamara, who would later become president of Ford Motor Company, secretary of defense and president of the World Bank.

    The Whiz Kids applied statistical rigor in running the army, and later Henry Ford II hired the team to bring a similar data-driven focus to Ford. The Whiz Kids also introduced bureaucracy and hierarchy and developed rules requiring that, among other things, memos from vice presidents must appear on blue paper to highlight their importance.

    The Whiz Kids sacrificed long-term value for short-term targets by limiting investment in new equipment and R&D. Plus Ford’s products suffered when plant leaders failed to prove through numbers the necessity for new equipment. Ultimately, this myopic focus on data led to foreign competition from companies that focused as much on engineering and production as on finance.

    The Clinton campaign is by no means the only organization blinded by data. Organizations in every sector and industry suffer from measurement mania that impedes collaboration and value creation. In The Bounty Effect, I detail Five Measurement Counter-Measures to prevent data from short circuiting collaboration and compromising value. One of them is “perform a common sense reality check.”

    Had the Clinton campaign used common sense to check its data, yard signs might have sprouted in the industrial Midwest and, more broadly, the campaign might have adopted a message that would have resonated with swing-state voters.

    Regardless of level, role, region, organization or sector…never rely on data without a common sense reality check.

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  • Health Insurance Company Experiences The Bounty Effect

    When Presbyterian Health Plan denied Dave Bexfield of Albuquerque, New Mexico reimbursement for a multiple sclerosis treatment trial, Bexfield launched a campaign to recover the $200,000 he spent on the treatment. He contacted media, bombarded Presbyterian with calls and emails, and ultimately lined his garage walls with the insurer’s denial letters, according to an August 1, 2014 column by David Segal in the New York Times.

    The treatment was a stem cell transplant trial sponsored by the National Institutes of Health. The trial worked in that Bexfield no longer takes M.S. medication and the disease is in remission. But the stem cell transplant was apparently not a covered benefit when Bexfield received the treatment. Ironically, Presbyterian Health Plan added this treatment to the benefits for Bexfield’s plan a few months after he finished the trial. A Presbyterian spokesperson reportedly called the timing “unfortunate.”

    Unfortunate indeed for Presbyterian Health Plan in that Bexfield refused to back down. Presbyterian reportedly insisted that the only reason the company had added stem cell transplants for M.S. as a benefit was that the federal government had mandated it. So Bexfield submitted a Freedom of Information Act request and received documents indicating there was no federal mandate. This suggested that Presbyterian had decided on its own based on the treatment’s merits to begin covering stem cell transplants after Bexfield had completed the trial. After receiving many additional letters and media calls, Presbyterian changed course. Presbyterian Health Plan President Lisa Farrell Lujan agreed to reimburse Bexfield not only the $200,000, but also an additional $198,000 in interest at 18 percent, according to the Times.

    Boom. The Bounty Effect had arrived at Presbyterian Health Plan, and the company seized the opportunity to change. The Bounty Effect happens when exigent circumstances compel businesses, governments and organizations to change their structures from command-and-control to collaborative. The exigent circumstances were groundbreaking advances in stem cell research. Bexfield’s campaign and the resulting media attention drove The Bounty Effect home. In this situation, Presbyterian adopted a more collaborative approach. Often structural change starts small and grows. This episode may pave the way for more fundamental structural changes at the company.

    In my latest book, The Bounty Effect: 7 Steps to The Culture of Collaboration, one of the 7 steps is Processes. And a key process is employing Measurement Counter-Measures which curb the measurement mania that can complicate collaboration and compromise value. The point is that a maniacal focus on measurement can produce the opposite of the intended result. Clearly, Presbyterian’s measurement mania produced myopia in that claims representative had difficulty seeing beyond the numbers.

    The $200,000 for the stem cell transplant would cost the insurer in the short run, but the money produces a living, breathing example of an insurance customer who may potentially avoid further treatment for M.S. and save the insurer plenty. One measurement counter-measure is to perform a common sense reality check. If the numbers defy common sense, that’s our cue to pause and reconsider. Employing Measurement Counter-Measures is often the hardest collaborative process for financial professionals to adopt.

    Lujan, Presbyterian’s president, is the company’s former CFO and was previously an audit manager with Arthur Andersen. She told the Times that the individual decisions Presbyterian made in Bexfield’s case were correct but that consistent policies had to be balanced against fairness. “When I looked at the forest, I came to a different conclusion than those who had looked at each individual tree,” according to Lujan.

    The old reimbursement decision was obsolete, because of scientific breakthroughs. Clinging to an antiquated coverage decision would expose the company to possible litigation, bad publicity, and a hit to its reputation. More fundamentally, the old decision—and the structure that produced that decision—failed the fairness test and the common sense reality check.

    The Bounty Effect prompted Lujan to take a key step—but changing the structure requires much more. If only the CEO can see the forest and use a fairness test, the organization flies blind and the business suffers. In adopting a collaborative structure, the challenge for Presbyterian and for many organizations is empowering people at all levels to consider the big picture, participate in decisions and take action. This requires, among other shifts, changing the recognition and reward system and enabling spontaneous interaction so that all Presbyterian Health System team members share a view of the forest and not just individual trees.

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  • Big Data, Measurement Mania and Collaboration

    The world is drowning in data. The term “Big Data” appears in most technology trend articles in 2013 and reverberates at seemingly every conference regardless of industry. This reminds me of a quote attributed to Mark Twain that I used with my senior picture in the high school yearbook: “Collecting data is much like collecting garbage. You must know in advance what you are going to do with the stuff before you collect it.”

    Now companies and government agencies have an idea what they’re going to do with the data they collect. And a leading use of data is measurement. Measurement mania has spread throughout every function of seemingly every organization from government agencies and universities to public school systems and corporations. Organizations can now measure traits among applicants and team members ranging from emotional intelligence to flexibility. Plus companies can calculate transactional cost-per-hire.

    The relentless drive to measure people can reduce value creation and compromise collaboration. Measurement mania breeds fear and internal competition among team members and encourages leaders to focus on short-term results which create less sustainable value than achieving longer-term objectives. In a numbers-obsessed organization, leaders are more likely to cut corners by booking phantom sales or sacrificing safety in manufacturing plants. With hidden agendas running rampant, collaboration towards common goals becomes impossible.

    Media reports suggest that Zynga, the company that develops online games including FarmVille, has thrived on numbers. “Relentlessly aggregating performance data, from the upper ranks to the cafeteria staff,” is the way Evelyn M. Rusli of the New York Times describes the company in a November 27, 2011 story. According to a November 28, 2011 blog post by Ryan Fleming of Digital Trends, executives nurture “fierce competition both between the groups and within each department.”

    Apparent measurement mania is one of many structural and cultural issues that have plagued Zynga. A September 8, 2010 story in SF Weekly by Peter Jamison indicates that the company’s values are sub-optimal and that rather than focusing on innovation, Zynga has instead pushed team members to appropriate ideas from competitors. If these assessments are accurate, it appears that Zynga would benefit from changing the structure and culture of its organization. Principles is one step that I explain in my new book, The Bounty Effect: 7 Steps to The Culture of Collaboration.

    In perhaps the most sober indication of problems with Zynga’s focus, the company reported second quarter results last Thursday that contained few bragging rights. While the results exceeded analyst expectations, the number of daily active users declined 45 percent in the quarter from the same period last year. In the three months ending June 30, Zynga’s sales fell 31 percent to $231 million. According to the Wall Street Journal, Zynga CEO Don Mattrick indicated that “getting a business back on track isn’t quick, and isn’t easy.” Mattrick recently replaced founder Mark Pincus as CEO.

    While Zynga clearly faces challenges on many fronts, the company’s structure and culture are likely factors in Zynga’s woes. The company is by no means alone in the issues it faces and the possible structure and culture elements. Organizations of all kinds face exigent circumstances ranging from new competitors and disruptive market forces to natural disasters and terrorist attacks. These storms that blow through businesses provide opportunities to change.

    In The Bounty Effect, I discuss how to replace command-and-control remnants including measurement mania and how to adopt collaborative principles, practices and processes among other steps. Creating value through collaboration happens only when organizations change their structures and cultures from Industrial Age command-and-control to Information Age collaborative.

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