Bringing the Unmeasurable into the Boardroom

The agenda for our board meeting always opens with numbers. Q3 sales tracking at 94 percent of plan, our lead product holding 27.4 percent market share, next year's R&D spend up 12 percent over last year. I read the list from the top, and my eye stops at the very bottom, item eleven, folded into "other": the materials-review and compliance report. That line alone carries no number. With no number, it draws no discussion. Back when I ran that department myself, the report usually ended with "nothing to note," and no one looked up. From the president's chair I have learned one plain, slightly cruel fact: what cannot be measured never makes the agenda. Correctness, too, is treated as nonexistent in this room unless it carries a number. Today I want to talk about how to move that one line up from the bottom of the list.

What Never Reaches the Agenda

On the third Wednesday afternoon of each month, the division heads gather in the twelfth-floor conference room. The head of sales speaks to attainment rates by region, the marketing director to gains in new-patient share, the head of medical affairs to reactions at the latest congress, each with a single chart. A chart has a slope, and a slope has a story. Management is the argument over how that slope is made. The compliance report alone has no slope. "No serious deviations this month." That should be good news, yet the air in the room does not move. People cannot count what did not happen as an achievement.

The materials-review department I once led still examines four hundred and twenty promotional items a month. Before a single piece aimed at healthcare professionals reaches the world, it checks the wording of efficacy claims, the citation of data, even the point size of the safety statements. On the sales floor, thirty seconds of irritation hang on whether that one piece will clear. "Why can't this one line be cut?" The reviewer is looking at the harm that line could cause later, but because the harm has not happened, it cannot be converted into a figure. Harm that did not occur appears on no one's income statement.

What cannot be measured is treated as though it does not exist. The quietest decay inside an organization always begins right there.

Three Translations

The first step in making the unmeasurable an agenda item is not to measure it. It is to translate it, to recast the value of review and compliance into three languages management already uses every day. Risk, trust capital, and future cost. None of them is a perfect quantification, but each becomes a language the room can speak, so the item can sit on the same table as the agenda items that carry numbers.

Counting the Precursors

After translation comes the search for whatever can be counted, however little. Accidents themselves are rare, so counting accidents draws no slope. What can be drawn is the precursor, the leading indicators of the balanced scorecard, the numbers that move before the outcome arrives, placed now in the territory of compliance. For instance, divide them like this.

The direction of a leading indicator must not be misread. When the rejection rate falls from 8 percent to 2 percent, did the quality of review rise, or did review grow lax? When consultations from sales approach zero, has the field become clean, or has it given up on review and stopped asking? The number only poses the question; the answer can be confirmed only by going down to the floor. That is exactly why these numbers become an agenda item meant to make someone explain. More than the slope itself, what matters is that someone speaks to the slope in their own words.

Designing the Boardroom

Even with translation and leading indicators in hand, an agenda item vanishes if it has no place to sit. So structure must hold it up. What I changed as president came down to three designs.

Make it a standing item

I pulled the compliance report out of "other" and fixed it as item two, directly after the sales report. Order is a philosophy. By placing the talk of risk right after the talk of profit, everyone understands that the two sit on the same table. That eleventh line is no longer "something we touch if time is left."

Put it on one dashboard

I chose just four leading indicators and put them on the same screen as the sales dashboard: rejection rate, average review time, count of gray consultations, and the aging days of unresolved deviations. The indicators do not multiply. As Michael Power warned in The Audit Society, once measuring becomes an end in itself, an organization starts working to produce numbers. Set out to measure correctness, and correctness quietly turns into the work of producing numbers, the boardroom version of the sickness this series has been tracing. So I stop at four. I plant one fence.

The president serves as translator

Standing between two masters is, by nature, a hard role. Management asks for numbers, compliance asks for norms, and the two do not speak the same language. I decided not to hand that interpretation to anyone else. The only person in the company who knows the materials-review floor and now sits in the management chair is me. The frustration I feel each time I look down at my former chair is, I suspect, the signal to take this role on.

Robert Simons distinguished the diagnostic controls used for day-to-day management from the interactive controls that reopen the question of where the organization is headed. Place compliance in the latter: not a tool for checking "this month's violation count" but a forum where everyone reconsiders "where might we step off the path." That, I believe, is the final design for keeping the unmeasurable alive in the boardroom.

Changing the agenda does not bring recalls to zero. Even when the translation works, the tension between management and compliance does not disappear. All I managed was to move a line that was eleventh to second, and to set four numbers and one interpreter beside it. Yet in that same meeting where "nothing to note" once made no one look up, the head of sales now explains, in his own words, why the rejection rate has risen. The unmeasurable may stay incompletely measured. As long as it becomes an agenda item, is spoken to, and someone is asked to explain, the work of serving two masters can go on. Keep correctness on the agenda, and watch that it never thins into correctness kept only to produce numbers. The sickness of righteousness this series has traced lives quietly inside the boardroom too.