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MANAGING STRICTLY BY NUMBERS IS LIKE PAINTING BY NUMBERS Some things that you want to encourage will be quantifiable, and some will not. If you repor… - Ben Horowitz
" "MANAGING STRICTLY BY NUMBERS IS LIKE PAINTING BY NUMBERS Some things that you want to encourage will be quantifiable, and some will not. If you report on the quantitative goals and ignore the qualitative ones, you won’t get the qualitative goals, which may be the most important ones. Management purely by numbers is sort of like painting by numbers — it’s strictly for amateurs. At HP, the company wanted high earnings now and in the future. By focusing entirely on the numbers, HP got them now by sacrificing the future. Note that there were many numbers as well as more qualitative goals that would have helped: Was our competitive win rate increasing or declining? Was customer satisfaction rising or falling? What did our own engineers think of the products? By managing the organization as though it were a black box, some divisions at HP optimized the present at the expense of their downstream competitiveness. The company rewarded managers for achieving short-term objectives in a manner that was bad for the company. It would have been better to take into account the white box. The white box goes beyond the numbers and gets into how the organization produced the numbers. It penalizes managers who sacrifice the future for the short term and rewards those who invest in the future even if that investment cannot be easily measured. CLOSING THOUGHT It is easy to see that there are many ways for leaders to be misinterpreted. To get things right, you must recognize that anything you measure automatically creates a set of employee behaviors. Once you determine the result you want, you need to test the description of the result against the employee behaviors that the description will likely create. Otherwise, the side-effect behaviors may be worse than the situation you were trying to fix.
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About Ben Horowitz
Ben Horowitz (born June 13, 1966) is an American businessman, investor, blogger, and author.
Biography information from Wikiquote
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Alternative Names:
Benjamin Abraham Horowitz
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MANAGING STRICTLY BY NUMBERS IS LIKE PAINTING BY NUMBERS Some things that you want to encourage will be quantifiable, and some will not. If you report on the quantitative goals and ignore the qualitative ones, you won’t get the qualitative goals, which may be the most important ones. Management purely by numbers is sort of like painting by numbers — it’s strictly for amateurs. At HP, the company wanted high earnings now and in the future. By focusing entirely on the numbers, HP got them now by sacrificing the future.
Some things that you want to encourage will be quantifiable, and some will not. If you report on the quantitative goals and ignore the qualitative ones, you won’t get the qualitative goals, which may be the most important ones. Management purely by numbers is sort of like painting by numbers — it’s strictly for amateurs.
Additional quotes by Ben Horowitz
With this in mind, here are the basic steps to organizational design: 1. Figure out what needs to be communicated. Start by listing the most important knowledge and who needs to have it. For example, knowledge of the product architecture must be understood by engineering, QA, product management, marketing, and sales. 2. Figure out what needs to be decided. Consider the types of decisions that must get made on a frequent basis: feature selection, architectural decisions, how to resolve support issues. How can you design the organization to put the maximum number of decisions under the domain of a designated manager? 3. Prioritize the most important communication and decision paths. Is it more important for product managers to understand the product architecture or the market? Is it more important for engineers to understand the customer or the architecture? Keep in mind that these priorities will be based on today’s situation. If the situation changes, then you can reorganize. 4. Decide who’s going to run each group. Notice that this is the fourth step, not the first. You want to optimize the organization for the people — for the people doing the work — not for the managers. Most large mistakes in organizational design come from putting the individual ambitions of the people at the top of the organization ahead of the communication paths for the people at the bottom of the organization. Making this step four will upset your managers, but they will get over it. 5. Identify the paths that you did not optimize. As important as picking the communication paths that you will optimize is identifying the ones that you will not. Just because you deprioritized them doesn’t mean they are unimportant. If you ignore them entirely, they will surely come back to bite you. 6. Build a plan for mitigating the issues identified in step five. Once you’ve identified the likely issues, you will know the processes you will need to build to patch the impending cross-organizational challenge
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