You’ve probably heard of the famous Heisenberg Uncertainty Principle in Quantum physics. It states
“The more precisely the position is determined, the less precisely the momentum is known in this instant, and vice versa.”
–Heisenberg, uncertainty paper, 1927
This principle is related to the observer effect. In physics, the term observer effect refers to changes that the act of observation will make on the phenomenon being observed.
Ok, now to get to the point. As a business manager responsible for P&L, I am asked to produce several performance metrics or revenue metrics. Some of these metrics are simple and straightforward Key Performance Indicators (KPIs). KPIs can include net revenue, profit, # of new customers or in our case customer satisfaction numbers.
The problem with metrics crops up when we need to measure a property and no mechanism exists to measure it quickly or the metric is not representative of the property being measured. In general this happens when the following scenarios arise:
- Metric is not available: No mechanism is in place to measure the property at that time.
- Property is not measurable: No metrics are available to capture the property.
- Deliver unplanned metrics quickly: Metrics that the system was not designed to capture need to be measured quickly.
- CSF masquerading as KPI: Critical Success Factors are vital elements for a strategy to be successful and should not be confused with KPIs which quantify strategic performance. The metric being asked for is a CSF not a KPI.
In simple words, the amount of effort required to measure the metric changes the amount of effort we can dedicate to create the metric. The act of measuring the metric changes it. For example, in the economic downturn several teams have had to reduce headcount. If this barebones team is now asked to capture information on how a recently released tool is being used by customers without that mechanism already in place, then they cannot deliver that metric without additional effort that will impact the overall KPIs.The problem that arises is what I’ve dubbed the Akshay’s Uncertainty Principle:
In a resource constrained environment, a new or modified metric cannot be measured without impacting the metric itself.
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