Intangible Drivers of Performance

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“Not everything that can be counted counts,
and not everything that counts can be counted.”

Albert Einstein

When I feel especially frustrated or impatient with those who want metrics for anything and everything of value, I reference this quote from Einstein. The play on words makes it almost too easy to throw it away as just another slick slogan. And I fear that’s what our clients often do, regrettably.

I recently heard the CFO of a Fortune 50 company speak to a group of senior R&D; executives about the impact of non-financial, intangible factors on how Wall Street analysts make their buy/sell recom-mendations. But when it comes to promoting innovation and enhancing performance, it’s remarkable to me how quickly leaders revert to their apparent comfort zone of finding or creating metrics which can be analyzed, scrutinized, and then refined in order to make their case for improved productivity.

There is a great map of intangible assets as part of an article, “Do Intangibles Matter?” in the current issue of Chief Executive. Check it out! As the article notes, only one-third of executives polled “claimed that their companies were proficient in monitoring critical non-financial indicators of corporate performance.”

What’s required to appreciate more fully the impact of these “intangibles”? One place to begin: ask yourself the question, “What’s the difference between inspiration and motivation?”

  • Mark Solien

    Aloha Steve,

    Your comments reminded me of two important aspects of a successful organization: management and leadership. Metrics play an important role in managing an organization. Sorting out the vital few metrics to track is a critical task for a successful organization. Many things can be monitored, but only a few are key to the success of the enterprise. Successful management results in a steady stream of incremental performance enhancements.

    Leadership, on the tother hand, requires insight and foresight. It is experimental in that it seeks out new possibilities for large gains or breakthroughs in performance. Both management and leadership are important and striking the right balance distinguishes the premier organizations.

  • Steve, Hold it!!!!!

    I agree that intangibles are important, and I agree with Mark that there is a HUGE difference between leadership and management (that’s how I start my resume), but I think you might have taken a few liberties when you interpreted that quote. I admit, I did not read the article so this might not be on mark, but you said “only one-third of executives polled ‘claimed that their companies were proficient in monitoring critical non-financial indicators of corporate performance'”. You interpreted that as having relevance to the issue of intangibles, but I do not think it does.

    First, the key phrase is “critical non-financial indicators”, not “intangibles”. There are lots of non-financial indicators that are tangible: e.g. patent production / staff, staff retention, staff demographics, staff education level, staff moral, client satisfaction, just to name a few. None of these are financial, but all are very tangible and measurable.

    Second, the mere fact that the executives thought they “were [not] proficient in monitoring … indicators” means that the managers thought they could be monitored, and hence measured, so they must be tangible.

  • Whereas successful people desire metrics to fulfill their own expectations, mandating metrics squanders the real talent within an organization by over simplifying the complexities that go into creativity. I believe that environmental management styles work best in R&D; organizations. Environmental management is a style that "nurtures the intrinsic nature of workers" releasing individual talent. The difference between a good and great leader in this situation is their ability to inspire the release of talent and creativity in the best interest of the company. This results in a culture that needs no metrics. Obviously easier said than done.

    A thought came to me regarding the difference between inspiration and motivation, but I could be wrong here. Inspiration and motivation is like thinking and doing. It works best in parallel. Its the best I can think of right now. Great blog Steve!

  • Deary Duffie

    I noticed how measurements are used with my clients. In some instances measurements serves as a indicators on performance improvement. For others, especially during tough times, it serves as a justification for existence.

    In his recent book entitled “Community Building”, Peter Block asserts transformations will occur with a new type of leader. This leader has three tasks: 1) create a context that nurtures an alternative future, 2) initiate and convene conversations that shift people’s experience, and 3)listen and pay attention. He believes this kind of leadership is restorative and produces energy rather than consumes it.

    Aren’t these things that matter in creative and collaborative settings? Shouldn’t we measure how engaged and committed our employees are to their work? I think so.