Wednesday, August 13, 2003

The Seductions (& Giant Sucking Sounds) of Metrics -- Part One  

In business endeavors w/quantifiable results (manufacturing and sales for example) there's a near-erotic fascination with "metrics". Measurement with numbers is a great idea I endorse thoroughly, but too many of the folk who create them are not numerate. Those who have a "tin ear" for numbers are likely to grab onto the most measureable factors or the most well-known numbers or the most obvious (the most obvious are usually the most well-known).

And those numbers frequently are JPI (just plain irrelevant), sapping the organization's mojo and torque in a myriad of ways. One of the most obvious endeavors where this happens is baseball, which is a clear baseline example from which all businesses can learn.

Seduction #1: Measuring the Measureable -- Radar Guns and Gross Sales

Many people fall back on simple numbers to justify their decisions. One can avoid resposnsibility this way...if it doesn't work out, one can say "The numbers were such and such; who'da thunk it wouldn't work out?!". Such managers grab for that-which-can-be-measured when the full picture is complex, requiring pattern-recognition. Take baseball scouts' passion for radar guns. One of my pseudo-godsons, The Big Train, got a small chance to pitch for scouts at one of those mass meat market tryouts. He told me how the stadium scoreboard flashed the speed gun numbers three times the size of Vishnu and that, wierdly, many of the scouts, instead of watching the kids pitching just watched the scoreboard printing a numeric artifact transmitted from an electric appliance notorious for its inconsistency and imprecision.

Ryan Metcalfe recently wrote an article called "Radar Love: Baseball's fascination with speed diminishes chances for crafty young pitchers" for the Marin Independent Journal that was referenced at Baseball Primer.

To excerpt the essence of his piece:

Major League Baseball is replete with successful pitchers who throw below-average fastballs or are less than 6 feet tall. In fact, some of the most successful active pitchers - Atlanta's Greg Maddux, Seattle's Jamie Moyer, the Giants' Kirk Rueter, the New York Mets' Tom Glavine and Anaheim's Aaron Sele - rarely, if ever, break 90 mph on the radar gun.

However, not many scouts are looking for the next Rueter or Maddux, nor are their general managers asking them to. The scouts carry their radar guns and rarely send back reports on pitchers who throw slower than 90, and teams continue to draft kids who throw 95 but don't really know how to pitch.

"There are a lot of guys out there that don't throw 90 or even close to 90 and they get people out," said Giants announcer and former pitcher Mike Krukow. "I think those kind of guys should get a better look because if you can get people out, how you get them out doesn't matter. (A's reliever) Chad Bradford doesn't throw 85. Kirk Rueter doesn't throw 85 consistently, but his winning percentage is phenomenal. If you were looking at Jamie Moyer, you wouldn't sign Jamie Moyer. If you were the scout who recommended him [JA note: and he failed], you would probably lose your job, yet he is one of the most proven winners in the league.

The challenge is that prospective pitchers come with only two clearly measureable differences: pitching speed and height. And while both of these are advantages in pitching performance, neither is a giant factor once a hurler achieves a certain minimum (Height seems to be a long-term deficit at some point; I don't yet have publishable data, but I'm working on a study of major-league longevity by height, and early indications look like guys above 6'4" are more injury-prone). And it's true that pitchers who master high-speed pitching (and have some control and another pitch they can throw for strikes) are more effective in both the short-term and the long term as a composite average. But as Metcalfe points out, there are plenty of very successful guys with long careers who don't have either of the easily-measureable metrics. But no scout ever got fired for touting Ryan Anderson, a 6-foot-10, high-90s fastballer who struggles with control and is as fragile as a frog your science teacher just dipped in liquid nitrogen.

Scouts exchange quantity of good prospects signed in exchange for the CYA metric.

In business we see this all the time.Take sales folk. Most usually, their commissions and/or respect are measured by the most easily-measured metric: gross sales. Most sales folk working within this structure will focus on selling the most gross dollars, ignoring net margins (the actual life's blood of a for-profit organization), consideration for the customer's needs (the long-term viability of repeat business) and the strategic importance of the particular products sold (the long-term health of the company).

Most businesses could devise incentive systems that rewarded net, repeat business and tweak commission percenatges based on how important individual products were to long-term strategy. And because sales folk tend to be very good at "working the system" of commissions, a company would be creating a gravitational field towards health and away from dysfunction justified by a simple number.

Most companies won't. They're too busy looking at the big scoreboard with the speed gun numbers to notice what it takes to make a winner.

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