People who know me probably know that I am a big fan of NPR, especially Planet Money and its spin off The Indicator. I recently heard one of The Indicator’s episodes called “Economics of A Border Wall”. The episode was very interesting but what was even more interesting to me was the story told by the fire chief Jesus Morales.
Jesus started his story by saying that there used to be nothing between Mexico and Naco, Arizona. People used to walk to each side as if there was no border. Eventually the US government put up a huge metal wall around the border of his town because of drugs and other issues. It changed the pattern of how people crossed the border. People tried to climb or jump over the wall, and that caused different types of injuries for Jesus and his team to respond to. Then the wall actually got cut and a door with hinges got put in. Of course, it was found and welded shut eventually.
I was thinking about “the cat and mouse” game the whole time while listening to the episode. Management puts up scorecards, policies, dashboards all the time. Some good ones are set up with good attainable goals, which paint pictures about bright futures and become encouragement. But there are ones set up no differently than a border wall, which try to restrict certain behavior. Even worse, some come with unattainable goals with limited resources. Regardless of the intention, people will always try to find a way to defeat it, just like people try to climb the wall as the opportunities seem to be better on the other side.
20 years ago, I was thinking about how there must be a good metric that could monitor business performance for years to come. After I developed a few and managed several dozens, my conclusion was that all metrics require updates and maintenance. The scorecard and metric would only work when combined with an up to date definition, an attainable goal, and with reasonable resources. A scorecard with bad goals is no different than a wall without changed fundamentals. People will try to defeat it/ cross it by all kinds of means, including cheating or illegal behaviors. Therefore, a smart way to develop a scorecard is to have well defined metrics and attainable goals based on business priorities. Management may look at lagging (outcome) indicators such as sales, revenue, or profit. But a smart management would help its organization identify leading indicators to drive its performance. We will discuss more on how to identify leading indicators in future blogs.
Of course, there are more takeaways from this episode. Just like all actions in life, there are consequences and unintended consequences too. It is an easy 10 minute long episode and you may find it interesting, as I did. Here is the link: https://www.npr.org/sections/money/2018/12/14/676899095/economics-of-a-border-wall