Metrics of Success
The Institute prefers metrics that allow us to understand, track, and manage the cause-and-effect relationships that determine our performance.
1. Define the governing objective— our holistic goal.
Is our goal to produce a successful mango farm business in Colombia or is our goal to produce a high degree of human satisfaction while restoring Earth's ecosystems in order to allow future generations to follow in our footsteps?
The two are not in opposition but they may need to be reconciled from the outset. Achieving the smaller goals should never detract from accomplishing the greater goals. Our principal client is Mother Earth. She always gets first consideration.
The holistic goal should be epic. Day-to-day or project cycle goals can be more modest, but they all must contribute to an epic undertaking that sustains the drive of the team and allows them to overcome adversity with courage, style and good humor.
2. Grow economic value.
A clear set of objectives is essential to business success because they guide the allocation of the various forms of capital. Creating economic value is necessary within the social context, so it needs to be a logical governing objective and part of the design process. Teams may choose a different objective, such as maximizing the project’s longevity, but eventually there is always the need to create economic value.
3. Develop a theory of cause and effect
In each project we undertake we must assess presumed drivers of our stated objective. The three commonly cited financial drivers of value creation are sales, costs, and investments in the future. Outside investors typically look at earnings growth, cash flow growth, and return on invested capital. From a triple bottom line perspective we want to measure improvement in community well-being, education, health, and happiness.
Naturally, financial metrics can’t capture all value-creating activities. We always assess non-financial measures such as worker and family satisfaction, product quality, and increases in soil fertility, biodiversity and carbon drawdown. We determine the means by which to directly link non-financial goals to the financial profits that are required for sustainability and growth.
We always assume our best laid plans have missed something important. Somewhere we have introduced errors. The role of monitoring and reporting should not be to gloss over these imperfections but to seek them out and allow us to devise remedies and improvements. What we are after is not perfection but a virtuous cycle.
5. Introduce biomimetic systems
One of the prime features of systems that survive is that they are adaptable. Viable systems are recursive; they contain inner subsystems that can be modeled using an identical cybernetic description as the higher (and lower) level systems in the containment hierarchy (Beer expresses this as cybernetic isomorphism). A core value of any organization is good communication. We assume that people working together on a project are rational actors with good hearts — they want the project to succeed. What is required of project designers and managers are adequate flows of information and feedback to allow them to function as independent actors working toward a shared goal, after the fashion of a hive of bees. Stafford Beers assigns these four mandates:
Managerial, operational and environmental interests should be designed to harmonize with the minimum cost or damage.
The channels carrying information between management, operation, and the environment must have sufficient capacity to maintain fidelity and timeliness.
Wherever the information changes hands or types it undergoes transduction (converting from one form to another). We must assure faithful, timely and accurate signal transmission across boundaries.
The operation of the first three principles must be cyclically maintained without delays. Routine review is needed to assure this.
It is not enough to discover flaws in the system and repair them. All actors should also be free to innovate. "If it works perfectly, it’s out of date."