Colin (00:01.723)

Hello and welcome to today's episode of The Growth System, the podcast that looks at the world of B2B growth through a systems thinking lens. I'm Colin Shakespeare.

Chris (00:11.261)

I'm Chris Bayless.

Colin (00:13.583)

And today we're talking metrics. Now, we speak about metrics a lot, but specifically we're talking about how do you make sure that metrics don't undermine the performance of your system? So in planning for this episode, I read a great quote in the Harvard Business Review on metrics. said, for years, goal setting has been seen as a benign, over-the-counter treatment for motivation. But managers need to conceptualize goal setting as

prescription strength medication that requires careful dosing, consideration of harmful side effects and close supervision. And in a nutshell, that's what we're going to be talking about today. The side effects of well intentioned metrics and the potential damage they can do to your business and its interconnected network of systems when not properly prescribed. So Chris, why don't you kick off as always with diagnosing the problem, sticking to torturing these medical analogies.

Surely metrics aren't all bad, are they?

Chris (01:13.506)

Well, in a word, no, of course they're not. I may continue to do some more torturing of the analogy because I just kind of love the idea of metrics being a prescription drug that needs to be used carefully by a qualified practitioner because I think that's absolutely right. The potential for harmful side effects is immense. And the unfortunate thing is that...

People actually that usually are setting metrics, setting goals within organizations have no idea of the potential fallout that can come from goals and metrics that at face value seem like great ideas. I came across an example actually which I think paints this picture really, really well. It is a B2C one, so hopefully we'll be forgiven that.

It's a bank called Wells Fargo. I imagine for any of our US listeners that will be a very common name, less so over here in Europe. they were looking to deliver growth naturally, as everyone's trying to do. And they set a metric to all of their front line bank staff on the phones in branches.

So really focused on cross selling products. So like savings accounts and credit cards and whatever. So if someone came in with a query about their checking account, they try and sell them a credit card or open a credit card account. At face value, that sounds like a perfectly great idea. Sell more to the people who already buy from you that already know you and like you.

it's something that we tell our customers to do frequently. It's cheaper and it's easier than acquiring new customers. The problem at Wells Fargo is that they quickly became a victim of something I think we've mentioned before called Goodheart's Law, which states, and I actually had to write this down,

Chris (03:22.014)

It says that an observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes. Bit of a mouthful. Now, Goodhart, as it was probably clear in the formation of the law in inverted commas, was an economist. And specifically, he was talking about the indicators or economic kind of indicators you use to track the performance of an economy when you're a government or

the ONS or whatever. But the kind of the friendly common interpretation of the law is that essentially any metric when closely observed ceases to become a useful metric on which to judge the health of a system, an organization or whatever, an economy. And really what Goodheart is saying is that just like the mere introduction of a metric puts pressure on that metric to be used for kind of control purposes. And that's the biggest

problem with pretty much any metric. It changes the behavior of the people whose kind of work it is to be measured by it. And typically it's going to change those behaviors in ways that weren't necessarily expected or desirable. And that was definitely the case with Wells Fargo. So what actually happened when they set this cross-selling metric was that

millions of accounts over a few years got opened by employees that the customers didn't actually even know about, or in some cases didn't think that they'd agreed to, certainly didn't think that there was going to be a cost for the account. And this sort of fairly benign idea of let's cross sell more to the people that we already have as customers. Well, it definitely didn't drive growth. In fact, it

Colin (04:51.921)

Remember this story.

Chris (05:14.498)

actually had the net effect of causing, think, one and a half billion dollars in kind of fines and litigation. And I suspect, you one and a half billion sounds like a crazy amount of money, but for a bank, I suspect what was probably worse is that for years afterwards, like they were like 50 % down on new customer acquisition, period on period, because they just destroyed their reputation. And, you know, that's, I think, just a really good example of setting an under sort of innocuous

reasonably sensible sounding metric and have a cataclysmic kind of second order effect that is totally contrary to the to the thing that you wanted to set the metric for. So you know that that for me is the sort of the danger of metrics if you like. Incidentally when I was reading about this I read about something that apparently this is also known as the Cobra effect which I thought was was quite an interesting story that I thought I'd share was

The cobra effect is something that was sort of based on a law that was passed by the British government in India. And they financially rewarded people for bringing in dead cobras because they were dangerous poisonous snakes. They were in the cities. They were causing lots of deaths and hospitalizations. And it sounded like a great idea, know, somewhat, you know, perhaps not the sort of thing we would expect to do today, but it was perhaps of its time.

Initially it worked great. Lots of people turned up with dead cobras. They got some money in return. The cobra population fell lovely. Except that what they then realized was people had actually started breeding cobras. So they could then clonk them on the head or do whatever you do to dispatch a cobra and then present them in and make money from them. And that's obviously an unintended second order effect.

when it got really bad was when they repealed the law, all of these people that were breeding cobras just released them all. And then they had, you know, times more cobras than they did before. And, you know, that's a fairly sort of extreme example. But a similar thing actually happened really, really recently in Ireland, I think, sort of five years ago, that they introduced this like energy credit system to reduce CO2, I guess. And what they sort of didn't counter on

Colin (07:21.819)

you

Chris (07:42.018)

was that I think it was something to do with wood pellets. Like if you transition to a wood pellet fired boiler from like sustainable sources, they would pay you for the wood for a period of time. I think it was like a business thing. And what they didn't counter on is that suddenly this massive demand for wood from these subsidies, you know, created a sort of supply and demand effect where the prices of the wood pellets were driven downwards. You know, the cost they were paying had been capped and suddenly there was a profit margin in it.

So the more wood you burn, the more money you made because you claimed these credits back. And what ultimately ended up happening is that farmers would be heating giant chicken sheds and running these wood pellet boilers 24 hours a day, pumping God knows how much CO2 into the atmosphere because they were actually making a quite decent profit on it. fact, the article I read suggested that one farmer thought he was going to make about a million quid over 10 years just on

burning pellets in their scheme and using vastly more natural resources than they would have done if they just stayed on an oil-fired boiler or whatever they were on. metrics can lead to unintended and sometimes unethical behaviors. And what they really do, I think, is have the propensity to narrow people's focus.

and ultimately pull them away from the true goal that's actually trying to be achieved. And I think this is the salient point really, probably the point I should have started on rather than talking about cobras, talking about what metrics really are or indeed are for, is really about kind of like understanding the fact that they are the mechanism for delivering on strategy and

for holding people accountable, of course, to the sort of delivery against that strategy. And if you think about strategy as maybe the blueprint for a house, then metrics are the tools that you're going to use to sort of build it. And, you know, as every person that's ever done any DIY knows, it's a lot easier to do a job if you've got the right tools. And when it comes to metrics and strategic attainment, then

Chris (10:05.166)

picking the wrong tool is super easy to do, frighteningly easy to do. think another, yeah, think about this maybe through like a worked example. So Apple, they had a sort of a slogan that think fundamentally was their strategy at the time, which was think different. And

If you kind of think about that as their strategic purpose, then you could think about the sort of metrics that they might have picked to help them achieve that strategic purpose. you would think that, I don't know this to be true, but you would think that they would probably prioritize things like R &D spending, new product development hires, and sort of innovation focused metrics. And it's pretty clear that whatever they did pick for their metrics at the time worked.

because when they sort of set that strategy in the late 90s, they were still, know, all the bit that we know of Apple was still ahead of them. imagine if they'd focused on profit as a metric, which would be a pretty, you know, a pretty normal thing to do, Or if they had focused on profit above R &D spending or innovation, then they probably wouldn't have spent all that money on R &D.

they probably would have tried to reduce production costs and extend the life cycle of the products that they had in the market at the time, which I guess would have been like that multi-colored like TV looking IMAG and stuff. And most likely they wouldn't have then gone on to produce the iPod and the iPhone. You know, they wouldn't have kind of created those category shaping, category creating products because they were focused on a short term metric like profitability.

And I think that's, you know, it's another sort of cautionary tale, I guess, like Wells Fargo, that if you think about metrics as the vehicle for delivering strategy, then you've really, really got to understand how that strategy is going to get delivered and start picking appropriate metrics that are going to get you there. And it was something I think we talked about in a previous episode that

Chris (12:26.338)

Systems are really the instrument of strategy. Great system design is inextricably linked to great strategic execution because systems are purpose driven. Systems are nothing without purpose. And they really, therefore, goals its purpose. And metrics are the instrument for measuring goal attainment. I think perhaps I'd add one more.

sort of worked example here just to try and bring the issue to life a bit more, which is when you think about things like customer delight being a strategy pillar, you know, it's a super frequent thing. We have it. Most businesses will have keeping customers happy pretty central in terms of what they want to do. Now, the problem I think you have with that is that as soon as something becomes

strategic imperative, metric, then they want sort of metrics to measure that strategic imperative. And the default position is certainly as far as I see, people will use some sort of a customer health metric like MPS or CSAT or some sort of survey. And the problem is that as soon as you do this, customer delight actually ceases to become the goal.

the metric of getting higher NPS scores becomes the goal, at least in the minds of everyone that's operationally involved in doing the thing that needs to be done. And what happens is the sort of score takes over. And in reality, I you'd like this not to be the case, but think at university pretty much is, employees will start to game the system to try and achieve the metric. And this is...

I think really good hearts law in action again is something actually I worked in the car industry years ago and I used to see this all the time that every time a customer would have an interaction with a salesperson or a service desk person or whatever on the phone or even in person they'd sort of warn them you're going to get this call you're going to get this email or whatever it is and you know if there's any reason you can't give me a nine or a ten when you get this you know let me know now.

Chris (14:50.901)

And of course.

Colin (14:51.087)

Yeah, I've had that before as well. was either give a 10 or don't fill out the survey. And that was for an in-person training session at a very large and very well-known corporate that I won't name.

Chris (14:56.011)

Yeah, exactly.

Colin (15:05.393)

Sorry, gone.

Chris (15:06.954)

No, no, I don't go ahead. I mean, I think you're probably about to say exactly the same thing as me, which is, you know, people just trying to prime the pump, you know, they say, this is the score you need to give me, they anchor them to the score, they guilt them sometimes, as you said, they might say, if you can't do 10, just don't fill it in, please. And that's

Colin (15:26.681)

Yeah, they actually told me that if you don't do a 10 or not fill it in, then that somehow messes up the metric, which is clearly not true. At least don't insult my intelligence if you're going to ask me for a favor, you know. And game the system.

Chris (15:36.46)

Yeah.

Chris (15:40.702)

Yeah, exactly. Exactly that. invariably the reason that they asked you to do that and the reason that all of the car retailers that I was working with asked customers to do that is because they were incentivized on getting that good score or perhaps incentivized in the sense that if they didn't get the good scores that they were out. But whatever it is, ultimately the incentive

to get the good score became the objective, not the delight of the customer. And I saw a quote recently from Sam Altman, actually read this lovely blog on like things he wished he'd known, you know, before he started a business, which is very good, I'd suggest seeking it out if you haven't read it. And what it said is the incentives of superpowers, set them carefully. And I think that's that's so, true. So

I guess the final point for the prosecution on what's wrong with metrics is metrics are inherently quantitative and actually I think that quantitative metrics actually introduce a sort of fragility into the business because they're immovable. When have you ever worked in a business that has changed the metrics on the scorecard or on the goals or on the incentive on the comp plan halfway through the year? It doesn't happen, does it?

So they're this sort of immovable force in the business and they can't change within the planning cycle. And this leads to a sort of inherent loss of agility and like the ability to sort of pivot and adapt to market conditions. And I think you kind of see this at a micro level too.

that you know when you look at kind of individual teams and individual contributors success just looks like doing the number so there is no incentive at all to do anything that doesn't contribute directly to the number.

Chris (17:40.48)

And this stalls innovation, know, it hurts sort of qualitative outcomes. I think it probably hurts employee motivation as well. Like if all you've got to do is mechanically do the thing that's been set and there's no scope for doing any creativity, adaptability, reacting to the things you see around you, proposing new ideas, because frankly, they're not going to impact the thing everyone's being measured on.

you've got an organization that's set to break because you've just introduced this sort of leverage point, this negative leverage point into the operational structure that is the metrics, the numbers. So, you know, if you go full circle, no metrics aren't all bad. You just need to make sure that you're kind of being more Apple than Wells Fargo when you're setting them.

Colin (18:33.381)

Yeah, no good point. was just going to say kudos for for stating Goodhart's law correctly. What most people who've heard of it would see is Goodhart's law is when a measure becomes a target, it ceases to become a good measure, which I think is more succinctly put. But that's actually apparently I did look this up while you were talking. was actually Marilyn Strathern, who's an anthropologist who said that. But I can see why everyone uses Marilyn's version.

Chris (18:48.47)

Yes.

Chris (18:56.522)

Is that right? Well, didn't leave that.

Chris (19:01.32)

It's certainly pithier than the real version, yeah.

Colin (19:06.257)

And I just wanted to kind of look up, well, again, look this up while you're talking. I did kind of have to remember it about Apple's strategy around think differently. And I remember there was a bit more to it than that one. It was to create beautiful functional products that are simple and intuitive to use. And it seems like their kind of goals and metrics are kind of laddering up to that. And that's an interesting way to steer away from purely.

quantitative metrics and it kind of explains why maybe Apple didn't care that when something like the Microsoft Zune came out to try and steal a bit of market share off of the iPod that they didn't care. They didn't care if it won on a feature by feature basis because they were achieving their strategic purpose. They were doing what they measured themselves on of creating beautiful functional products that are simple and intuitive to use and ultimately won that game. Ultimately stayed in the game which Microsoft didn't.

Chris (19:57.41)

and that's.

Yeah. Isn't that just like the perfect example of, you know, the, danger of quantitative metrics, because you can't quantitatively measure a beautiful product or one that is necessarily functional, easy to use. You know, it's just that whole strategic direction was qualitative. You know, it was about people and their interaction with products and how, you know, how it made them feel.

Colin (20:11.675)

Yeah.

Chris (20:27.902)

And I think this is a point, perhaps indirectly, that I suspect we'll come onto when we start talking about what to do different. Because I think that's actually a far better illustration of it than the bit I used here.

Colin (20:41.903)

Okay then, so how do we be more Apple and a lot less Wells Fargo then? What does good actually look like when it comes to metrics? It's quite easy to point the finger and see what's wrong, but I guess a lot of people would be interested to know what can I do about it?

Chris (20:56.428)

Well.

Chris (21:01.858)

Well, that's the big question, isn't it? And for once, one I think I can actually sum up fairly succinctly. And that is, and I think we pretty much alluded to it a moment ago, that great goals and by sort of proxy great metrics need to focus on the ends and not the means. And what I mean by that is if you set goals with the long term in mind, then your chances of success are way higher.

Another Sam Altman quote that was actually in that same article, which I really liked, that plans should be measured in decades and execution should be measured in weeks. And I think actually the point he was trying to make here is without iterating quickly, but.

But for me, the point is that you're iterating for the long-term achievement of the strategy, all the ends. And most poorly conceived metrics that I see focus on the means, like cross-selling current accounts. And for me, this was actually a really big revelation in our own business in terms of how we measure performance.

and you know what I'm talking about here in terms of the way that we look at scorecards, you need to ensure that you're measuring the long-term health and performance of the system and its movement towards long-term strategic aims. And we did this by decoupling inputs and outputs or know means and ends.

You know, the means or the inputs are the things that are wholly in your control. And I think that they should be measured. You know, that is what I was saying before is not a rallying cry to not measure inputs and to not focus on the means. I do think that that's important. But for me, they shouldn't be incentivized. You shouldn't be giving people a reason to game the system. And outputs should be

Chris (23:02.742)

focused on showing your progress towards the system purpose. And if appropriate, I think they should be incentivized, if appropriate. And another big thing for us in kind of taking that view of the world was taking a sort of team or subsystem view of inputs. So.

Sales team inputs, you know, this is the growth system. Let's talk about the growth team. You know, sales and marketing team inputs as being two separate sections on the same sheet. You know.

If marketing is all green and sales is all green on the inputs, but the system outputs are all red, what that tells you is the strategy is wrong. Everyone's doing what they're supposed to be doing, but we're not getting it from it, what we want to be getting from it. So we're doing the wrong thing. You know, if one seems red, the other is green. You can triage the performance issues. You can sort of understand causal relationships. it because, you know, marketing is generating a billion MQLs and sales are drowning in them?

we've covered that one before. But doing this avoids short-termism, it avoids sort of goal fixation, and it sort of drives some of the more positive behaviors that sort of counter the negatives we were talking about earlier. Because ultimately...

it creates a sort of diagnostic capability within the organization through that goal setting because it positions goals holistically across multiple functions trying to achieve the same ends and the ends being achieved are long term and that's really, really key. I think the customer delight example I used earlier,

Chris (24:55.967)

you can actually, I think actually to add to that, for me it's also really important to know what should be a metric and what shouldn't, because a goal doesn't have to be a metric, the two aren't inextricably linked.

And I think that there are some things that are better at being holistic goals or even cultural values than metrics in terms of helping you achieve the same thing. So, you know, that NPS score, customer delight, sort of dilemma that I was talking about earlier. Obviously, it's tempting to pick a quantitative metric when it's available.

You know, they're very binary. can see rises and fall over time. You can plot them on a graph. You can put them on a spreadsheet that goes green every month and everyone's happy and doesn't need to look at the actual numbers because it's all green like it's all lovely. But, you know, as we said, all it's really going to tell you is that you've got good at getting good MPS scores. Or actually, you know, what it also may end up doing is you're burning a load of time and effort getting people to fill in bloody surveys, which is often what happens in my experience with MPS.

but if you'd left the customer delight as simply a goal, that goal was something like to ensure that every call ends with a delighted customer, most likely you're going to get far closer to that customer delight stated objective than you are by focusing on trying to get as many MPS scores above nine as you can.

And I think the point about culture is also a really important one when you're talking about this sort of thing, which is if you truly have a culture in your business of putting customers first, of truly delighting customers, then most likely you're going to need to start building some cultural values like psychological safety throughout the business because

Chris (27:03.708)

If you kind of give individuals the means and the power to make decisions that benefit customers, you need to not slap them down when they get it wrong because they will sometimes they'll spend too much money, they'll do something that actually, you know, they should have pushed back or whatever because the customer genuinely was, you know, way off base.

But if you create that culture of psychological safety, then you will breed those behaviors of genuine kind of customer positivity. And, you know, I think it's it's obviously a difficult balance to strike for obvious reasons, but

But if you were giving that same team you wanted to measure NPS on, like a discretionary spend part to give away on freebies or surprising to like gestures, you gave them access to sort of escalate things to the CEO directly so they could intervene in certain scenarios or whatever. These are not things that you can easily measure as inputs.

and you shouldn't try to, but you can easily measure them as outputs in the long term.

If you're looking at customer retention or spend per customer or whatever, if you have a policy like that and you say, I'm going to look at that over three years or five years or 10 years or be really brave, then you're going to see that go up because you're going to embed a culture over time that's going to have genuinely meaningful strategic change. Whereas if you quarter to quarter look at, is my MPS moving in the right direction? You're so far away from tracking the true, from really

Chris (28:44.978)

having that force multiplier effect of strategic attainment. And I think that's a big thing is knowing when to deploy a metric and when not to. And I think that's a lot about understanding the underlying condition you're trying to treat to keep laboring the medical analogy. A big part of this is taking a system-wide view of the problem.

Colin (29:05.797)

Ha ha ha.

Chris (29:14.498)

We talk a lot in this show about alignment and I'm pretty sure we've mentioned the sort of goal conflict concept before. In fact, I we mentioned it in the sales and marketing alignment episode. And really that kind of states that companies are pretty good at vertical alignment on goals and therefore metrics. They're less good at horizontal alignment. And this is because

goal setting and therefore metric setting is delegated to individual departments more often than not, in fact almost always. And that means that each scorecard set of metrics, KPIs, whatever you will in your own business are constructed inside the silo of each department. And then they're passed, you know, back up the chain of command. you know, the health of the organization is viewed as a composite of the health of all the silos. And

I think we're seeing good hearts law probably raising its head here for a third time in one conversation, which is it's really possible, I believe, to have a composite scorecard, a set of metrics that are all green at the same time have a fundamentally unhealthy business. This is the wrong goal trap that we've talked about before again at work. In this example, I guess you're sort of

If you're focusing on things like profitability or return on capital or share price or whatever right at the top of the business, then you're going to drive decisions down the business like cost reduction or headcount reduction. And what that's going to do is potentially reduce product quality. It's potentially going to reduce customer satisfaction. And guess what? That's probably going to drive down sales. It's going to negatively impact profitability.

And this is what we call a negative reinforcing feedback loop. And these can be exponential. They can be what we call runaway feedback loops. And they ultimately can actually lead to the collapse of businesses. Because, you know, if you view in the short term, you're going to have lots of nice green metrics, know, we're nice and profitable, whatever's going on up there, everyone's happy up in the ivory tower. Whereas at the same time, you know, the sort of

Chris (31:35.99)

Rome is starting to catch fire and you're not seeing it in the scorecard and all the sort of fires well and truly burning, you're not actually looking in the right direction. And I think that's the real danger of the sort of non-holistic kind of goal setting approach. So I think, you know, the important thing is to sort of view system health and organization health holistically and sort of work backwards up from there.

Colin (32:04.847)

Yeah, that often seems to be the wrong way around in my experience. I think we're going to have to find some time on the pod to really go into goal setting specifically, not just into this kind of metric side. They're very closely related. think particularly with a kind of lens to look at this, the short termism and also the kind of lack of holistic thinking and I guess what the alternatives are.

Chris (32:29.196)

Mm-hmm.

Colin (32:34.777)

So what's the system's view of this problem then, back to metrics, as what's going on under the hood?

Chris (32:45.868)

So I think it's important to remember that organizations are complex systems. They're filled with interrelated subsystems and the interplay between all of these subsystems is governed by what's known in systems thinking as feedback loops. And we've mentioned these before, we've mentioned them actually on this episode. They're not so much feedback in the traditional sense of, although they can be, people giving feedback.

and they can be positive or negative, they can be balancing or reinforcing which aren't actually synonyms of each other, you can have positive and negative reinforcing loops, they really just mean whether they're sort of adding to the, adding to that part of the system or taking stuff away, but they can be taking away bad stuff, adding good stuff, whatever.

You can kind of consider these feedback loops to be ways to measure the emergent behavior of each subsystem within the organization. And it's actually possible to visualize these interactions and feedback loops. It's a technique that in kind of systems thinking we call causal loop diagramming or diagrams.

If anyone wants to play around, they're a sad individual like me, are a lot of free tools out there. One I like using is called Kumu. You can sign up for a free account and start making these causal loop diagrams. It's way of creating system models. It's a good way when you're doing this goal setting exercise of actually, said a good way, it's quite a detailed way, but often the things that add value are hard work.

of really understanding what the possible feedback loops can be from certain actions and you can kind of build them up and they're a good way to kind of see how systems work visually. The point here is that every metric set results in a set of actions taking place to deliver on that metric and if you zoom out you're going to see what the true impact of those actions are by taking a system's view positive and negative.

Chris (34:53.578)

So we often refer to these as second order effects and in extreme cases they can lead to that sort runaway clap scenario I mentioned a minute ago. I mean, ultimately by viewing the world through a sort of systems lens the way I've sort of suggested then, yeah.

kind of looking at inputs and outputs and focusing on outputs being about holistic system health, then I think what we're really doing there is better understanding cause and effect. And that's a sort of central tenet of systems thinking. I think understanding cause and effect within the system allows us to identify negative behaviors that are being reinforced, like fake accounts being opened. And it...

It should allow us to understand better areas of system misalignment, such as goals set in different teams having negative impacts in other parts of the system. That's an example I used earlier. And I guess what I'm trying to say is that the system's view here is not so much about like, here's the technical form and function of the system that we're looking at, and here's how it works. I mean, there is an element of that.

But it's really the systems view here, I guess, is that you need a systems view. It's that having a systems thinking mindset enables us to better understand how goals should be set. It allows us to kind of zoom out. It allows us to view them more as prescription drugs than over the counter cure all. I promise that's probably the last time.

Colin (36:28.778)

It's a good one to be honest, you should probably just steal it.

Chris (36:33.194)

So I think we could probably end on the systems view, I guess, by talking about some systems archetypes that are at play here. And there are quite a few that we could call on to start sort of explaining some of these phenomena, but let's pick out three.

limits to success, I'm told limits to growth archetype, shifting the burden and the goal displacement archetype are probably all fairly well at play in a lot of these sort of examples that we've mentioned. know, limits to success really illustrates how having

an initial success from focusing on specific metrics can lead to complacency. So we think that, you know, we've set those metrics, everything's ticking along in the right direction, everything is going green. We're not really thinking about whether it was the right metric at this point. We're just all happy that, you know, every time we turn up at that monthly meeting, our bit of the, you know, our bit of the spreadsheets got all the green boxes on and

know, what, and it happens, doesn't it? Like that is a, that is a completely normal behavior. I think we can all identify with because we've been bred to sort of think that green boxes are good, charts go up and to the right. And what it means is that we continue to kind of push the same strategies. You know, we,

And we sort of do that until we start encountering the limits that are sort of inherent in the system. That might be resource constraints, might be market saturation. It might actually be us running into other things like sort of drift to low performance. But ultimately, it's sort of the limits to success is because we've kind of the complacency has driven a lack of adaptability. So when we sort of

Chris (38:33.442)

fall into that systems trap, into that systems archetype, you kind of store growth in the long term by not focusing on adaptability in the short term, I guess. Another one is sort shifting the burden. So this is a really key one, I think. And it's when organizations kind of rely on...

symptomatic solutions, might call them, like ultimately like gaming, like kind of manipulating metrics, instead of actually looking at the root causes of problems. So, you know, you might find that actually that, you know, that MPS

going in the wrong direction, the way that what we're going to focus on actually is being better at prompting people to put a 10 rather than actually looking at the process issues or the product issues or the skills gaps or whatever's going on underneath it. So we're kind of looking at that symptomatic solution to the problem. We're treating the symptom not of course. And this creates dependency on quick fixes. It makes it harder ultimately to implement change later on because the business is orientated around

getting green, not getting good. The final one, which I think is really intrinsic to what we've been talking about today, is the goal displacement archetype. And this is kind of about like where the means become the ends, I guess. It's that point that we were talking about earlier where

whatever that intended goal was, customer delight, actually over time, know, NPS becomes the goal, not delight becomes the goal.

Chris (40:30.467)

hitting the metric becomes more important than achieving the goal or the actual objective. And that's something that you see everywhere in life. It sounds like we're talking picking on one obscure example. I was thinking about this earlier. It's things like driving tests. When you learn how to drive, you don't actually learn how to drive, you learn how to pass a driving test. I think you could probably see that in education.

we're breeding, we're sort bringing up generations of children that are good at getting GCSEs or A levels or whatever the sort of education system is wherever you're listening, but they're getting good at passing tests, they're not becoming great human beings that are going to be well equipped for the challenges of life. And that's all that same sort of goal displacement archetype. The goal of the education system is to educate children.

but what we measure them on is, you know, in the UK, an Ofsted score on, you know, how good the school is and how many exam results did they attain. So funny enough, that's what they focus on. And you just see this all over life. So hopefully that sums up the case for and against metrics. know, metrics are powerful tools. They're the fuel for goal seeking systems here, you know, that the businesses are.

But they, you know, they can be a force for good. They should be a force for good. But they, you know, they can also be a force for evil. They can be a force for driving the system in the wrong direction. You know, they are in many ways the tiller, you know, with which we're steering the boat. And you need to be really, really careful about what direction they're pushing you in, because the effect is not direct.

You know, it's not, you know, we push it left and we go right or however Attila works. It is, there is a delay in the system and multiple goals create a system wide effect. And that's the siloed decision-making silo goal setting, you know, short-termism, driving short-term feelings of success. All of this, when you zoom out, you have the long view, you take the Sam Altman decades view.

Chris (42:52.82)

you realise that actually you're a long way from your intended destination and you don't really know how you got there because we're working incrementally.

That is the opportunity, I guess, to reframe this in a positive way towards the end of the episode, that by changing the view on how you use goals, suddenly they can become extremely powerful for moving you in the right direction. But all the work happens at the start and you need to be prepared to be adaptable on the journey and not just view them in planning cycles. I think that's all.

Colin (43:27.461)

Yes, another thing that's not set and forget,

Chris (43:30.484)

Indeed, yeah, absolutely that. So yeah, think that's probably looking at the time about what we've got time for, but should we do some summing up?

Colin (43:42.659)

Yeah, yeah, I'll give you a break just for a couple of minutes while I think about some of my final thoughts. First of all, just thinking there about the shifting the burden and the goal displacement archetypes and shifting the burden. Your description of it sounds idly like the economic management that successive short termists, democratically elected governments go through. I think colloquially known as the

Chris (44:09.506)

We are recording this on the table.

Colin (44:12.431)

We could call it the kicking the can archetype, you know, essentially what becomes important is manipulating the metrics, right? And you made a point about education on the goal displacement side. mean, obviously this is directly relevant to, B2B growth, but it goes to show how powerful a tool for analysis systems thinking actually is. Actually, I think the top rated state school in Scotland, or somebody I know.

went to. There's very much, the reason they are there is it's a teach to the test school very, very much. So I know someone who got incredible grades and went to Edinburgh University, which is very hard to get into, and then was completely out of their depth the second they walked through the door because they simply were not equipped to do the type of deep learning and critical thinking that they would have needed to do. So clearly that

Passing the test has become the metric that matters. They are not actually preparing for higher education. But they've kicked the can down to the, well, certainly away from themselves.

Chris (45:20.45)

We talk about systems boundaries. You say it's not a B2B challenge, if you want to, how big you want to draw the boundary, mean, these are generations of kids that are going to be ending up in businesses that have been trained from a very early age that passing the test is the goal. The metrics is one lens.

Colin (45:37.657)

Yeah, yeah, and I think some of them come out of it actually realizing that the grades they've got don't actually really mean anything because they don't have the capabilities that the piece of paper says they do. But I guess moving back to some of the outtakes directly from today that I guess more directly relevant, I think you're right that's probably relevant to B2B. I guess trying to sum up, think metrics should solve

should serve the organization's strategic objectives, not become the objectives themselves. I think that's a fairly concise way of putting it. I think there's a tendency to let the pursuit of really specific numbers overshadow broader goals and that can lead to negative consequences within the system. And I guess the Apple example was a really good one of how sometimes

qualitative goals or cultural values are actually more effective than quantitative metrics. You put an example emphasizing customer delight as a cultural value can actually foster genuine customer satisfaction rather than fixating on NPS scores, ultimately might encourage in fact, it undoubtedly would encourage gaming the system. And I guess just as a final, final thought.

you got me thinking really about these how we focus on individual department we don't but I guess we've all been there where an organization focuses on individual department metrics and he described it as the the overall picture of health we have of the organization as a sort of composite of those scores which is a really it can give you a really false sense of progress or even worse

not give you the indicators you need to know that the train is coming off the tracks and I've seen that in real life a few times and I think we need to all be focusing on evaluating the organization's health holistically and identifying misalignments and ensure the different moving parts are working towards common goals, working synergistically there as part of our system rather than a bunch of

Chris (47:51.298)

Mm-hmm.

Colin (47:54.939)

just a bunch of interconnected systems that are essentially each gaming the system according to some metric.

Chris (48:04.034)

Yeah, absolutely. think that gaming can become quite complex quite quickly in terms of understanding like where it's all coming from. You know, that's a diagnostic issue of how do you then fix this once it's already happening. That can be really challenging. I guess my couple of points would be that...

understanding that organizations are complex adaptive systems, so you need to leave room for adaptability. We've talked about like the self-organizing principle of teams before and you need to

not make the goal structure so rigid that you're not leaving space for innovation, for adaptability, for pivots, for personal endeavour, for personal contribution. I think that's really important to kind creating overall, kind of overall sort of healthy systems. I think I would echo one that you use, that you really need to know when to choose a metric over a goal or a cultural value shift as being the right tool to do the job.

And I think that sort of toolbox analogy is a really good one to keep in mind that if we know where we're going and we're thinking long term, then we shouldn't just default to a scorecard, to a spreadsheet view of the world in terms of tracking our progress along that journey and taking that sort of thinking in decades view.

if you're building something big and meaningful for the future, then you've got to take that really long range view that's quite unpopular, I think, in modern business that is so focused on quarterly earnings reports and creating short term shareholder value and actually truly great companies are built for the long term, not for short termism. I think that sort of, okay, is my sort of final point, which is

Chris (50:01.76)

you do need to set those goals and metrics for the attainment of long-term vision. And I think that's really key. Obviously, businesses have got to be solvent. They've got to make money from one quarter to the next, from one year to the next. We're not, I think, intrinsically saying that setting revenue and profit goals is a bad thing. But

It's that good heart's law piece. If you overly focus, if you kind of get that narrowing of goal focus, that sort of myopia on just the money in the till, then actually the chances are you've taken your eye off what's actually driving money there in the first place. So having a very broad base and a broad view of system health, of organisational health and taking a long term picture of attainment.

I think that that is a way to create kind of operationally healthy organizations.

Colin (51:02.97)

I think we are pretty close to time Chris. I feel like this is such a rich topic that we are going to return to it in some way. I think probably most likely first of all around goal setting and short termism. I think there's probably a lot of mileage in this topic. I think for today we're probably going to have to wrap it up. It's been a really interesting episode.

Chris (51:24.244)

I think so.

Chris (51:32.594)

I think it's also been miraculous we've managed to not talk about things like sales targets and incentive structures and stuff. think that would be a good one, I think, to focus on maybe a whole episode in its own.

Colin (51:33.104)

As we get.

Colin (51:44.357)

Yeah, yeah, good idea. Be interested to hear some feedback from the growing audience actually about what they would like to hear more about as well.

Chris (51:55.872)

Yeah, I think that's actually a really good point. You know, this is episode six, maybe, struggling to keep count, but the audience and the following has grown a lot and we thank all of you for tuning in and listening and we hope that you're enjoying it and that it's adding something. But, you know, do give us that feedback because we can shape the show to whatever everyone's finding interesting to a certain degree. So we'd love to know.

Colin (52:03.065)

Let's have a switch back here.

Colin (52:24.069)

Yeah, yeah. Yeah, also guys, don't forget to follow and rate the podcast. It really helps us to bring the content to wider audience. And as we just saying, we'd really appreciate if you would take a moment of your time to tell us what you think, what you want to hear more about. That's all we've got time for. The Growth System is brought to you by RevSpace, an applied growth consultancy that connects B2B organizations with the future of growth. offer consultancy, education, and applied delivery services.

that's all we've got time for. See you again soon. Thanks for listening. Bye bye.

Chris (52:58.018)

Thank you.