in Leadership, Process Improvement, Quality Improvement

The ‘Invisibles’ in Business Performance

In world of quality and management, W. Edwards Deming is widely famous for “Deming’s 14 points” and “Seven Deadly Diseases”. One of these deadly disease according to Deming is “Running a company on visible figures alone”.

Whether manufacturing or knowledge industry, primary goal of business is to generate value. However, in knowledge world, where the raw material is human brain, how this value is generated matters. Deming opined that everything that is critical for business performance may not be measurable.

However, planning for and managing these invisibles makes all the difference in an organization’s performance – more so in service and knowledge oriented world.

So, apart from visible figures (top line, bottom line, productivity, defect rates etc) what are the invisibles that play a huge role in determining performance of a business? Here are a few I could think of:

  • Organization’s vision and values (and the extent to which  values are lived)
  • Stories people tell each other at water coolers (organization’s culture)
  • Employee’s actual engagement levels
  • People’s alignment to organization’s vision and values
  • What customers/people say (and to what extent do they really mean it)?
  • Existence of invisible functional/departmental barriers
  • Knowledge, skills and attitude of professionals
  • Actual empowerment to people/managers/leaders in making things happen
  • Top Leadership’s viewpoints and mental barriers (short term v/s long term)
  • Knowledge versus application gap (and tapping discretionary effort of people)
  • Actual training effectiveness (and to what extent it improved business outcomes)
  • Innovation effectiveness and dynamic changes in the economy/market forces.

It is said – “Not everything that can be counted counts, and not everything that counts can be counted.” But what really counts can always be managed.

In my view, there is a difference between “running a business” and “building a high performance organization”. In both cases, generating revenue and profit margins are equally important. But with visible figures alone, a business is run. By managing the invisibles together with the visible figures, a high performance, sustainable and scalable organization is built.

  1. Yay! Well said, Tanmay!
    I deeply believe and live by it, that what matters the most cannot be measurable. How do you measure, that your clients feel great when interacting with you? How do you measure change of someone’s mindset, so he/she is encouraged to go for unachievable and unthinkable things before? You cannot capture it in real time and in numbers.
    But over a long rung, effect of focusing on what matters not on what can be measured, will bring on the table numbers/sales/profits.
    It takes longer to build relationships, but once you will invest your time into it and trust is present, you can put it into your “invisible” balance sheet as asset. Success is guaranteed.
    Happy doing, what matters guys!;-) So, you will have things to be measured and counted!;-)
    cheers,
    i.
    .-= Ivana Sendecka´s last blog ..Well Invested Time in July 2010 =-.

    • @Ivana – Thanks! The strength of your belief is very visible in that comment. Agree totally on the fact that these invisible things are not measurable, but eventually they (if managed well) lead to better outcomes and ground breaking ideas.

      It is GREAT to have you around Ivana, keep shipping!

      Best,
      Tanmay

  2. -People’s alignment to organization’s vision and values

    when we say this, this means how your immediate leaders think of you and your future in the organization, if one is put in a leadership possible say a manager or a lead then he has to own the full ownership of the growth of a person in all lines. In the corporate world today we have too many examples of POWER WITHOUT RESPONSIBLIY and those at the same time those who are responsible are not given the power

    • @Anonymous – No. Alignment of people with organization’s vision and values means the following.

      It means what role is leadership playing in making sure that all actions of people on projects/initiatives are in line with the values set out. It also means that people truly believe in what organization stands for and in benefits that services offer to customers. When people buy these important things in, leadership is said to be successful in aligning people. But to what extent people are aligned is an “unmeasurable” or “invisible”. It can be seen when it happens, but cannot be predicted/confirmed via a metric.

      I hope that clarifies the point. I would have loved it if you had commented with your name, but in any case, thanks for stopping by and commenting. 🙂

      Best,
      Tanmay

  3. Great ideas. Many of these things can be counted. Consider the countries that count Gross National Happiness. The problem is organizations can’t be broken from the inertia of “safe” counting.

    • @David – They can be counted, but only on samples. When an organization is concerned (and behaviors that directly impact the outcomes), measuring becomes a bit tricky. I totally agree when you say that organizations can’t be broken from the inertia of “safe” counting.

      Best,
      Tanmay

    • @working girl (Laura) – Yes. People, their aspirations, alignment and motivations are highly invisible. Managing them, however, is extremely crucial (and as important as managing those numbers).

      Best,
      Tanmay

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