Here is an article from a recent online newsletter that I receive from Wharton called Knowledge at Wharton. It seems to have something to say about the kinds of things we have been discussing recently in relation to goal setting, teacher appraisal, etc.
It seems to me that the business world is now re-discovering a truth that was always known in the world of education: viz., that there are valuable processes in organizations that cannot be captured through process or product metrics. This seems to be particularly true of innovation (according to the article), but also (I would suggest) about learning. Generally, it may be true of any situation where one has to develop a creative understanding of an unprecedented situation on the basis of a limited range of experience or other resources for understanding inherited from the past.
The article seems to me to provide support for my belief that if you focus too much on measures of achievement, you will only focus on achievement that is measurable. Usually (but not always), these are short term achievement objectives. Consequently, in focusing on short term measures, we tend to lose sight of long term gains or losses that may exert a lift or a drag on the organization as a whole. I also believe in what is actually an analogue of what economists call Goodhart’s law: there are certain situations in complex settings like economies, organizations, and in life generally where the overly focused pursuit of tangible (measurable) performance indicators undermines what these indicators are supposed to indicate.
This is not to say that the pursuit of such measures should be abandoned. The article argues that process metrics continue to be valuable in many situations. One just needs to understand that there are situations where they may be inappropriate, and develop a judgment about when to apply them and when not to. The knowledge generation enterprise may be one such. The building up of what social scientists are now calling social capital may be another. The problem is that learning, innovation, the building up of networks of trust and solidarity, and many other important things that add value to organizational or associative life tend to be very difficult to pin down through measures.
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