Knowledge - Measurements

What you measure, impacts how you think

Every single one of us measures stuff all the time, even when we’re not using actual numbers to do it. A hunter measures the distance between themselves and their prey. A gatherer assesses the number of berries or tubers they’ve collected, against the expected number of dinner guests. A traveller carefully checks the depth and current of the river they’re about to cross. We do it because it helps us to make the right decisions, but we’re not always perfect at measuring the right things.

Take the road toll for example, the number of people killed on a country’s roads each year. Is it important? Of course it is! Does it help you do anything about it? Ah… now… well… you see… the thing is…

The road toll is a raw number and doesn’t distinguish between 100 people dying in a collision between two buses, and 100 single occupant fatal crashes. A bus crash that kills 100 people is a terrible thing, but it’s just one accident, and probably not a systemic issue in the way that 100 single occupant crashes might be. Nor does a single figure tell you how many drivers were drunk or drugged. You might have extremely good roads, well trained drivers and a well maintained fleet of safe, modern vehicles, none of which need to be changed if only you can solve the substance abuse issues. The only practical use an overall total like that is good for, is raising public support to do something about it, not for correctly identifying the root cause. For that you need more data.

The cholera epidemics that hit London in the nineteenth century were solved by Joseph Bazalgette’s sewer system, but it was an idea based on a completely false premise. In other words, they just got lucky!

When the cholera struck, the powers that be weren’t particularly concerned about the death rate. People dropping like flies was a fact of life, and if most of those doing the dropping were poor, well where was the harm in that? There were plenty more after all, pouring in from the countryside. No, what really worried them was the possibility that it might spark a revolution. It wasn’t too long after the French and American revolutions, so it wasn’t as big a stretch as it might seem to us now.

Even then they didn’t do a hell of a lot more than just talk about things, until it got personal. At the time, London used the Thames river as a wonderful creation provided by Mother Nature specifically to sweep all their poop, dead cats, unclaimed bodies and other atrocities out to sea to be forgotten about. The only problem with that arrangement was that the Thames flowed directly past the Houses of Parliament, and when the Great Stink arrived it really got up their noses! Partly it was just downright unpleasant, but even more important, they saw it as a direct threat against their lives. That’s because everyone still believed that disease was spread by bad air, by nasty smells. That’s what malaria means, bad air. So Mr. Bazalgette’s plans for a new sewer system was just what they needed, even if it did come at a hell of a cost. While the sewers solved the problem, they didn’t address the real root cause. For that, we have to thank Doctor John Snow.

Snow didn’t believe the “miasma” theory about foul air spreading disease, which freed him to consider other possibilities. He collected a great deal of information about who was dying from cholera, and where. Eventually he was able to make the connection between sewage and drinking water, even without any knowledge of germ theory. The fight wasn’t over of course. The idea of poop contaminating drinking water wasn’t an easy one to swallow, and it took a few more years and additional events to unfold before it became mainstream, but he’d done enough groundwork for it to eventually take hold. Without all that diligently plotted data, who knows how long it would have taken us to make the right connection.

I’ve been to a quite a few places around the world associated with rampant disease, and I can fully understand why people thought it was spread by bad smells! In fact it’s very difficult NOT to make that connection… You need pretty strong convincing to believe it’s something else doing the damage, even if you already know.

Data however, isn’t always a force for good. It depends on how it’s used.

In the modern world today, most of us are familiar with our data being harvested, whether we like it or not. It gets shared with people and organisations we have little control over, and used to do who knows what. People use it to secure and maintain positions of power, and organisations use it to make as much money as possible. However, if you’re a salary or wage earner, there’s a much more direct way in which measurements impact you, affecting your very ability to earn enough to live.

The invention of double entry book keeping fundamentally changed the world of business management for the better, mostly. But it’s boring! Right?

When thinking up ways to beat insomnia, reading a history of book keeping must come somewhere near the top of the list, but Jane Gleeson-White’s book “Double Entry” is fabulous. It’s an amazing historical journey, from the clay tokens of ancient times, right through to accounting’s influence on Karl Marx, to the invention of the GDP (Gross Domestic Product) as a war winning strategy, through the sordid scandals of Wall Street, to today’s struggles between corporate profit and environmental impact. If you want to really understandthe clash between modern economics and the environment (as opposed to reading either side’s propaganda), then this is the book for you. It’s well written, easy to read, easy to understand, and really, really, really interesting!

Oh… I seem to have gotten a bit carried away… (Buy it anyway!)

Click on the image to go to Amazon where you can look at/buy Jane's book.

It’s the double entry bit I want to bring up here. The basic idea is that when you buy something, you mark the money going out of an account in one place, and note down the value of whatever you got for that money somewhere else. Double entry, two entries for each transaction, one out, one in. That way you really can keep track of it all, and genuinely understand what’s happening in your business. You know that when you spent sum “X”, it was to receive value “Y”. So the boss can tell at a glance WHY that money was spent, and decide whether to continue doing it or not. That’s handy when you’re making decisions about the future. However, today the rules of accountancy are a bit more complicated than that. Now there’s something that appears on just one side of the ledger, and that’s you.

When your immediate boss hires you, it’s because you’re going to provide something of value that the company wants, and they’re going to pay you some money for that. Sometimes they’re just buying your time, where you work so many hours doing a particular task, but mostly you bring something a bit more than your ability to act like a robot. You bring skill, expertise, insight, creativity, flair, etc.

You and your direct boss know why you’re there, and why you’re “worth your salt”. The CEO however, has no idea. To the person at the top, you’re just an entry in a spreadsheet. Did you catch the key word there? “You’re just ANentry in a spreadsheet.” That’s right. You only appear on one side of the ledger, as a cost. Nowhere in the company accounts does it record your value to the organisation.

That’s why you can hear a CEO publicly state that “Our employees are our greatest asset!” and then order a 10% workforce reduction the very next day. The fact is, that in accounting terms, you’re not an asset. You’re just a cost. And when the CEO is looking to trim costs, labour is one of the biggest they’ve got. Without any visibility of the value you’re bringing to the company, it’s the easiest thing in the world for the CEO to put a line through your name. They save money and there’s no apparent downside. Now your direct boss does know the downside, but they’re not the ones making that high level decision. The only thing they can do is to try and minimise the damage lower down when they have to decide who goes and who stays.

So why isn’t your value recorded in the accounts? The standard answer is that it’s extremely difficult to do it in an empirical, accurate, and meaningful way. And it is. No question. But without it, those high level decisions are always going to be made without knowing a very important part of the equation.

So what people measure does directly impact how they see the world, and how they choose to act. And that affects you every day of your life, whether you’re aware of it or not.