4.3 Introduction

Read the above quote by John E. Jones again. How well does this quote fit with your own experience? Let's consider this question in the context of your university studies. Where would you place homework on your to-do list if your assignments were never graded? Unless you find homework intrinsically rewarding, chances are you would find a good reason to postpone doing it—perhaps indefinitely. What motivates you to get your homework done? The answer is: Measurement. The fact is that we all have very busy schedules. When we get out of bed each morning, we must decide how we will spend our day. Our choices are largely determined by what is important to us. How we are measured influences what we perceive to be important.

Companies face the same issue because they must manage competing priorities and constrained resources. Senior leadership, for example, expects marketing and sales to drive sales growth, operations to produce high quality products at a low cost, and logistics to execute the seven rights in order to assure a positive customer experience. What is measurement's role in all of this? Consider two critical roles.

1. The company's measurement and reward system helps decision makers in marketing, operations, and logistics understand what they need to do to help the company succeed.

2. Measurement also assesses how well decision makers are performing—a fact that influences which functions get resources and which managers get a merit raise.

These two realities mean that managers pay close attention to what gets measured. As the opening story relates, short-term, non-aligned, tactical measures often lead to great on paper performance, but customers may not receive the perfect order. The bottom line: If we don't measure well, we will never measure up to customer expectations and competitive challenges.