The ‘Invisibles’ in Business Performance

In world of quality and management, W. Edwards Deming is widely famous for “Deming’s 14 points” and “Seven Deadly Diseases”. One of these deadly disease according to Deming is “Running a company on visible figures alone”.

Whether manufacturing or knowledge industry, primary goal of business is to generate value. However, in knowledge world, where the raw material is human brain, how this value is generated matters. Deming opined that everything that is critical for business performance may not be measurable.

However, planning for and managing these invisibles makes all the difference in an organization’s performance – more so in service and knowledge oriented world.

So, apart from visible figures (top line, bottom line, productivity, defect rates etc) what are the invisibles that play a huge role in determining performance of a business? Here are a few I could think of:

• Organization’s vision and values (and the extent to which  values are lived)
• Stories people tell each other at water coolers (organization’s culture)
• Employee’s actual engagement levels
• People’s alignment to organization’s vision and values
• What customers/people say (and to what extent do they really mean it)?
• Existence of invisible functional/departmental barriers
• Knowledge, skills and attitude of professionals
• Actual empowerment to people/managers/leaders in making things happen
• Top Leadership’s viewpoints and mental barriers (short term v/s long term)
• Knowledge versus application gap (and tapping discretionary effort of people)
• Actual training effectiveness (and to what extent it improved business outcomes)
• Innovation effectiveness and dynamic changes in the economy/market forces.

It is said – “Not everything that can be counted counts, and not everything that counts can be counted.” But what really counts can always be managed.

In my view, there is a difference between “running a business” and “building a high performance organization”. In both cases, generating revenue and profit margins are equally important. But with visible figures alone, a business is run. By managing the invisibles together with the visible figures, a high performance, sustainable and scalable organization is built.