The Necessity of Leading Without Reacting to Metrics

We Had the Problem Without Looking

It is wrong to suppose that if you can’t measure it, you can’t manage it — a costly myth.

Deming, Dr. W.E., The New Economics, 3rd ed. (p. 26)

American industry is on the decline, has been for 14 or 15 years, it will continue on the decline until style of American management changes: the time fuse is not long. So many people at work on on productivity, so they say; they're not working on productivity at all, they're working on how to measure it.

The thermometer might read under 108 degrees Fahrenheit, blistering hot, but the thermometer does not do anything about it, it just tells us the problem.

We had the problem without looking. We didn't need the thermometer, it does nothing about it. Time the people got up in their hind legs and did something about it, but management cannot when it know not what to do. They don't know what to do. 98% I suppose don't even know that there's a problem or there's anything that they can do; it's always for somebody else to prove, it is for somebody else.

Deming, Dr. W.E. “Dr. Deming - The 5 Deadly Diseases 1984”. The Deming Institute YouTube Channel, (0:46).

A numerical goal accomplishes nothing. Only the method is important, not the goal. By what method?

Deming, Dr. W.E. The New Economics, 3rd ed. (p. 23)

By what method could new leaders bring improvement in living? Do they possess knowledge requisite for improvement? What characteristics ought a leader to possess? Will best efforts bring improvement? Unfortunately, no. Best efforts and hard work, not guided by new knowledge, they only dig deeper the pit that we are in.

Ibid. (p. 1)

THE AIM for today’s entry is to share with you an interesting essay I came across while perusing LinkedIn by David Heinemeir Hansson, or DHH has he’s known in the tech community, wherein he makes an argument for the “luxury” of working without metrics. He is the co-owner and CTO of 37Signals, a tech company that currently makes a wildly successful online project management app called BaseCamp, and an email alternative called Hey.

A Little Background…

Early in my career as a software developer I became aware of DHH and 37Signals, mostly for his work as the creator of the Ruby on Rails programming language which heralded a new era web application development that was simpler, easier to read and use, complemented by a built-in quality improvement feature, RSpec, that allowed developers to write in-situ tests for their code as they went, a practice colloquially known as “Test Driven Development” or TDD.

I was also keenly aware that 37Signals had an entirely different philosophy on how it was organized and managed, compared with other firms that just chose to adopt the trappings of the prevailing style of management. For example, they are deliberately small, with only 34 employees, 70% of whom work remotely. In fact, they were a remotely-distributed firm long before it was fashionable. Their collective wisdom on leadership was gathered into a book in 2010 by both co-owners (DHH and Jason Fried), called Rework, that’s well worth a read.

Attention to Quality

I’ve also long-observed that 37Signals products are made to a high standard of quality, by which I mean the features are well thought out and helpful to users who rely on them to get their work done, and work well together overall. Additionally, they are very focused on understanding their customers’ joys and grievances with their performance, with the knowledge of what Dr. Deming called “unknown and unknowable” consequences that come from each. See this 2022 essay by DHH’s business partner, Jason Fried, about the two types of reactions you can have to a customer’s problem, for example.

So, I see their products as an extension of their philosophy and theory of management, which I think incorporates shades of a Deming perspective. Which brings me to choice excerpts from DHH’s recent essay, that I think weave in and out of a Deming perspective:

We Run the Numbers… But They Don’t Run Us

In the second “graf” (look at me slinging journalist lingo…) we get to brass tacks with a tenet of 37Signals’ theory of management: They actively avoid Management by Results:

Source: The Luxury of Working Without Metrics - May 2023

I particularly like the simplicity and situational awareness of this. I also like how DHH is correctly-aimed (intentionally?) away from sampling statistics which won’t tell him if his supporting systems and processes are functioning predictably. If he’s not using PBCs to track whatever system metrics he’s following, he will get an extra boost when and if he does, as it will help separate signals from noise.

Luxury? Necessity.

Here’s where I’ll diverge from the message DHH is trying to communicate and slip on my Official Deming Lenses, as I think this graf undercuts the argument he’s just advanced. There’s a lot going on here:

Source: The Luxury of Working Without Metrics, May 2023

• First, navigating without reacting to every fluctuation in a system metric isn’t a luxury, it’s a necessity. As Deming teaches us, when we overreact/correct this leads to the phenomenon of tampering where our blundering interventions can cause more undesirable variation and a host of unknown and unknowable consequences. It’s not how a system is best-managed, it’s just plain old Prevailing Style of Management.

• Second, reacting to investors who want to “squeeze out even more” is an indication you have the wrong investors. This will have you commit the second sin of Management by Objective, which will again set you up for some hard times.

• Third, while it’s useful to understand your competition, benchmarking can lead to copying without theory, and earns another warning from Dr. Deming that this can be catastrophic. At the same time, if this competition helps us to become a better competitor, and we understand our long-term aim and purpose, we’re set.

Fingerspitzengefühl

DHH invokes a rather fanciful term in this excerpt reminiscent of the old Yellow Pages slogan, “Let your fingers do the walking.”:

Here he makes the case for managing as an art guided by intuition. This runs contrary to a Deming view of management as prediction, which requires theory to interpret evidence. It might be charming, but it might also lead to what Dr. Deming warned as confusing coincidences with causes and effects, which ultimately undermines managing for the long-term. I’m not convinced, but maybe something is lost in translation, here.

Channeling Deming

Here’s the excerpt where I have to imagine DHH is aware of Dr. Deming’s talk about the Five Deadly Diseases of Management and what he wrote in The New Economics about the myth of you can’t manage what you can’t measure:

Source: The Luxury of Working Without Metrics, May 2023

Source: Dr. Deming, The Five Deadly Diseases 1984 (1:17m)

The follow-up to this intellectual haymaker:

Management cannot [fix problems] when it know not what to do. They don't know what to do. 98% I suppose don't even know that there's a problem or there's anything that they can do. It's always for somebody else to prove, it is for somebody else. (1:32m)

Takeaway? A different way of thinking about management that focuses more on systems and system phenomena is required!

Managing by Results == In the Swamp

In the final two grafs, DHH makes the appeal to not steer your business by “derivative” metrics unless you want to end up in a proverbial swamp of troubles. This again is very Deming-aligned advice to avoid the faulty practice of Management by Results. For a visual representation of what can happen, see my September 24 newsletter, Lessons of the Funnel.

Additionally, the advice to not manage by the quarter is classic Deming, who advised seeing, thinking, and managing with a long-range view toward the future against the prevailing wisdom of just shipping, which exacerbates problems. Instead, managing the organization as a system is required.

Best Efforts is Not Enough.

In his conclusion, DHH loses the Deming vibe:

I’ll let Dr. Deming’s words from the opening of the first chapter of The New Economics speak for themselves, here:

By what method could new leaders bring improvement in living? Do they possess knowledge requisite for improvement? What characteristics ought a leader to possess? Will best efforts bring improvement? Unfortunately, no. Best efforts and hard work, not guided by new knowledge, they only dig deeper the pit that we are in.

Concluding Thoughts: We Had the Problem Without Looking

In this essay, I find DHH flirting with describing a theory of management that almost aligns with Deming. I certainly find agreement with not becoming fixated on “derivative metrics” and how that can lead to MBR and the proverbial swamp. However, I think his message becomes a bit muddied by describing a luxurious state of affairs where one gets away from this and moves toward Management by Fingerspitzengefühl, or feel. This runs contrary to what I have come to appreciate as the causal linkages Deming establishes for a theory of management:

• Management in any form == Prediction

• Rational prediction requires theory to interpret results

• Theory improves through repeated cycles of comparing predictions to results.

Alternatively, I think a better argument could be made to manage for the future, guided from Day One by a theory that avoids Management by Results and Management by Fingerspitzengefühl, by managing the organization as a whole, which should naturally lead to a more Deming-aligned view where this is the everyday rather than the exception.

In the end, the problem was always staring us in the face: The prevailing way we think about managing.

Reflection Questions

Consider David Heinemeir Hansson’s essay through the lens of the Deming management philosophy with respect to Management by Results, Management by Objective, Management by Fingerspitzengefühl, and Management by Best Efforts:

• How would you characterize your organization’s prevailing view on metrics? Is it a “luxury” to avoid reacting to every data point, or a necessity?

• What is your leadership’s long-term view for the business? Is it well-understood by everyone?

• What is your prevailing theory of management from the four listed above? What have been the effects? Is there an awareness of digging deep holes without good theory?

• How many problems do you see that are more about increasing the precision of the thermometer rather than dealing with the heat? What has been the effect?

• Do you run the metrics, or do the metrics run you?

• Are you and your leadership aware of the myth of “if you can’t measure it, you can’t manage it” ? What has this knowledge, one way or another, brought about in terms of behaviours and practices?

• How does the discussion in DHH’s essay about derivative metrics and short-term thinking contrast with Deming’s view of managing the system as a whole? Does DHH’s advice, if followed, set leadership up for a fall?

• What is your reaction to DHH’s thinking on Management by Fingerspitzengefühl? Is that the true luxury all leadership should aspire toward?