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Metrics Can Drive (or Not Drive) Leadership Behaviors for Innovation


When people focus on metrics and lose sight of the intended goal, the end result might be unintended behaviors and failed strategies meant to drive innovation. Metrics are intended to represent strategy and not become the strategy.
— By Daniel Perez

Metrics are one of the most misunderstood measurements of business performance. Meant to represent strategy and measure progress towards goals, they frequently become the focus at the sake of strategy. Innovation leaders are particularly at risk of falling into this trap because innovation is sometimes nebulous and difficult to measure. Instead of developing a strategy, the organization develops metrics that become the focal point. It is easy to concentrate on numbers because they project a sense of control and objectivity. When the measure of a strategy replaces the strategy, it is called surrogation, and it is likely the metrics are working against the organization. A focus on the metrics can lead to lost opportunities for innovation because the numbers begin to drive behavior, rather than behavior driving the numbers. Aligning the metrics with organizational culture, strategy and goals and adding accountability is the solution for surrogation. Metrics do have a role to play in driving the right behaviors, but it is up to leadership to ensure the metrics do not become the incentive.

Driving Deliberate Innovation

In a frequently referenced article in Harvard Business Review, authors Michael Harris and Bill Taylor address the dangers of metrics when not properly used. The risk is a company can lose sight of its strategy and focus only on the metrics meant to give strategy form. The example presented is Wells Fargo. The banking company developed a cross-selling strategy to increase the number of deposit and credit card accounts. Instead, employees focused on metrics to prove performance. Millions of accounts were opened and millions of unauthorized mortgage modifications were made without customer approvals, in addition to unethical auto loan practices. The company was severely punished by the U.S. government in numerous ways. Upon evaluation, it was not a poor innovative strategy that failed. It was that Wells Fargo did not have a customer cross-selling strategy. It has a cross-selling metric, and that was what employees focused on.

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