Doing the Wrong Things Right (part 2), or: Doing and Measuring the RIGHT things Right!

Photo: mrwilleeumm (Flickr)

Photo: mrwilleeumm (Flickr)

Recently I blogged on how organizations all too often “do the wrong things right” (see part 1) due to misguided, fundamentally flawed traditional management techniques of rule enforcement and incentives. I also noted that Business Intelligence/Business Performance Management (BI/BPM) software is often misused by supporting misguided rule enforcement and incentives. In other words, many companies are unwittingly “measuring the wrong things right” to help “do the wrong things right”!

I have repeatedly pointed to Barry Schwartz’ related TED talk in past postings (here and also here) for good reason: I think any successful deployment of BI/BPM solutions must begin with full awareness of Barry Schwartz’ warning that rule enforcement and incentives will often lead workers to “stop being wise” — that is, unwittingly discourage workers from independently “doing the right thing” in a given work situation. I also believe organizations can and do unwittingly misuse BI/BPM solutions to help “do the wrong things right” by “measuring the wrong things right.”

I cited a worker behavior example in my above-linked posts. Consider a much bigger, all too real example: CEOs have been compensated quite handsomely — even grotesquely — only to see the companies in their care later implode. Why? Because those CEOs were often heavily comped on one key measure, most notably increasing stock price. Unfortunately, many a CEO “earned” treasure troves of incentives for hitting that higher stock price, only to be found out later the CEO failed to do so in a sustainable, ethical or even legal manner. It’s as if the CEO stuck his or her hand over a glass thermometer, made the measured temperature go “up” and then proclaimed, “See? The room is warmer now! Where’s my bonus?!”

OK, so how can organizations “measure the right things right” and “do the right things right”? It all starts with the company’s mission statement.

Yes, that paragraph that is supposed to powerfully define the reason for the company’s very existence, but is more often than not the Rodney Dangerfield of corporate messages. It sure “don’t get no respect”: too often the mission statement is an incoherent, self-aggrandizing, meaningless, even irrlevant mashup of buzzphrases…a just plain bad mission statement.

I got some insight on the other end of the spectrum — the benefits of a great mission statement — unexpectedly with the help of my longtime work friend Dan McCarthy, Vice President of Operations for Laminated Plastics in Billerica, Mass. Dan recently invited me to meet up and tour the company’s facility.

As soon as I walked through the front door, I noticed the company’s mission statement right there on the wall. Having read scores of truly bad mission statements, I am very happy to share Laminated Plastics’ mission statement and hold it up as a very pretty darn good one:

Laminated Plastics Company is committed to be recognized as the leader in the fabrication and distribution of plastics in the Northeast region of the United States.

In order to achieve and maintain this recognition, our primary responsibility must be to our customers.  We will consistently provide the highest quality products, unsurpassed customer service, and competitive pricing to each customer that we have the privilege of serving.

Additionally, Laminated Plastics Company realizes its responsibilities to those most dependent upon its existence:

To our employees, we will provide a challenging and supportive work environment which rewards each employee in proportion to their contribution to the company’s success.

To our vendors, we will work in partnership for our mutual benefit.

To our stockholders, we will provide an attractive return on investment.

To all who come in contact with our company, we will conduct ourselves fairly, honestly, and as a responsible member of our community.

I suggest it is plain to see how a well-defined mission statement like this one helps set up Laminated Plastics’ success by very clearly defining what “doing the right thing” means across a wide variety of interactions the company will have with customers, employees, vendors, stockholders, and “all who come in contact with our company” (well done — the mission statement addresses basically “everyone”). For example, the company’s primary commitment to customers, typically a vague, throwaway line in poor mission statements, is addressed quite specifically in terms of quality, customer service, and competitive pricing. Even better, by including such statements as “we will conduct ourselves fairly” in the mission statement, there is a clear implication of a level of latitude allowed to “do the right thing” that will run rings around misguided rule enforcement or incentives.

I also credit Laminated Plastics for taking the extra step of each employee signing their name to the mission statement, thus committing to it. Some might say such an exercise is just a gimmick, pithy or merely symbolic. Don’t you believe that for a minute: As proof, I encourage you to watch the recent TED talk by Dan Ariely on “predictably irrational behavior.” Dan Ariely discussed an experiment in which people were subtly encouraged to cheat on a test for which participants were financially rewarded for correct answers. Contrary to traditional economic theory, most people cheated “a little bit,” but did not increase their cheating even when financial rewards went up and the risk of getting caught was virtually nil.

This suggests people might have a “personal fudge factor,” as Dan Ariely put it, but they also “want to look at themselves in the mirror and feel good about themselves.” With that in mind, Ariely then asked a new group of experiment participants to try to recall the Ten Commandments before taking the test. Regardless whether a participant was religious or not religious at all, that group did not cheat at all. By simply asking participants to recall one of the earliest recorded codes of morality, even that “personal fudge factor” of cheating was gone!

In other words, it is very wise to appeal to a person’s sense of integrity and altruism in a personal manner, such as signing a well-defined company mission statement. Doing so will motivate that person to “do the right thing” far more effectively than unwisely relying on rule enforcement or incentives (by the way, another Dan Ariely experiment proves financial incentives are not a strong motivator of behavior).

A “good mission statement” also readily identifies a spectrum of solid, sensible measures a BI/BPM solution can readily monitor. The customer portion of Laminated Plastics’ mission statement defines the effective measuring of product quality (i.e., analyzing levels of quality assurance inspection tests, customer returns, etc. over time); customer service (perhaps analyzing results of customer surveys or rates of repeat orders); competitive pricing (proactive analysis of company pricing versus industry averages). For employees, analyzing employee turnover logically flows from the mission statement, and so on.

Bottom line, a well-defined mission statement not only helps the company do the right things right, but also measure the right things right. Not a bad combination.

Do you know of a company that does — and measures — the wrong things right? What is their mission statement? Please share it. I will hazard a guess the company is struggling one way or another and its mission statement has a high gobbledygook level. And in keeping with the glass half full attitude I’m trying to stick with around here, please share any winning mission statements you know of!

Further reading on mission statements:

IT consultant Bart Perkins wrote a nice article for Computerworld on what makes a great mission statement. An excellent “start here” point for crafting an authentic and relevant mission statement.

Seth Godin found a bad mission statement but “not even close” to the worst (some great links from readers)

Final food for thought: the Preamble to the Constitution of the United States is in fact a very effectively written mission statement.

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5 thoughts on “Doing the Wrong Things Right (part 2), or: Doing and Measuring the RIGHT things Right!

  1. A. J. Peter Wall says:

    Excellent synopsis. On the corporate angle to these issues, may I suggest the book “The Economics of Innocent Fraud”, by John Kenneth Galbraith. It has some very insightful viewpoints about industry as a whole.

    Peter Wall

    1. Thanks for your comment, Peter. I have not read that book but Galbraith’s “innocent fraud,” explained online as the gap between reality and conventional wisdom, is clearly directly relevant to this discussion. I will check it out. Thanks again!

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