Review of Spitzer’s Transforming Performance Measurement

Everyone interested in practical measurement applications needs to read Dean R. Spitzer’s 2007 book, Transforming performance measurement: Rethinking the way we measure and drive organizational success (New York, AMACOM). Spitzer describes how measurement, properly understood and implemented, can transform organizational performance by empowering and motivating individuals. Measurement understood in this way moves beyond quick fixes and fads to sustainable processes based on a measurement infrastructure that coordinates decisions and actions uniformly throughout the organization.

Measurement leadership, Spitzer says, is essential. He advocates, and many organizations have instituted, the C-suite position of Chief Measurement Officer (Chapter 9). This person is responsible for instituting and managing the four keys to transformational performance measurement (Chapters 5-8):

  • Context sets the tone by presenting the purpose of measurement as either negative (to inspect, control, report, manipulate) or positive (to give feedback, learn, improve).
  • Focus concentrates attention on what’s important, aligning measures with the mission, strategy, and with what needs to be managed, relative to the opportunities, capacities, and skills at hand.
  • Integration addresses the flow of measured information throughout the organization so that the covariations of different measures can be observed relative to the overall value created.
  • Interactivity speaks to the inherently social nature of the purposes of measurement, so that it embodies an alignment with the business model, strategy, and operational imperatives.

Spitzer takes a developmental approach to measurement improvement, providing a Measurement Maturity Assessment in Chapter 12, and also speaking to the issues of the “living company” raised by Arie de Geus’ classic book of that title. Plainly, the transformative potential of performance measurement is dependent on the maturational complexity of the context in which it is implemented.

Spitzer clearly outlines the ways in which each of the four keys and measurement leadership play into or hinder transformation and maturation. He also provides practical action plans and detailed guidelines, stresses the essential need for an experimental attitude toward evaluating change, speaks directly to the difficulty of measuring intangible assets like partnership, trust, skills, etc., and shows appreciation for the value of qualitative data.

Transforming Performance Measurement is not an academic treatise, though all sources are documented, with the endnotes and bibliography running to 25 pages. It was written for executives, managers, and entrepreneurs who need practical advice expressed in direct, simple terms. Further, the book does not include any awareness of the technical capacities of measurement as these have been realized in numerous commercial applications in high stakes and licensure/certification testing over the last 50 years (Andrich, 2005; Bezruczko, 2005; Bond & Fox, 2007; Masters, 2007; Wilson, 2005). This can hardly be counted as a major criticism, since no books of this kind have yet to date been able to incorporate the often highly technical and mathematical presentations of advanced psychometrics.

That said, the sophistication of Spitzer’s conceptual framework and recommendations make them remarkably ready to incorporate insights from measurement theory, testing practice, developmental psychology, and the history of science. Doing so will propel the strategies recommended in this book into widespread adoption and will be a catalyst for the emerging re-invention of capitalism. In this coming cultural revolution, intangible forms of capital will be brought to life in common currencies for the exchange of value that perform the same function performed by kilowatts, bushels, barrels, and hours for tangible forms of capital (Fisher, 2009, 2010).

Pretty big claim, you say? Yes, it is. Here’s how it’s going to work.

  • First, measurement leadership within organizations that implements policies and procedures that are context-sensitive, focused, integrated, and interactive (i.e., that have Spitzer’s keys in hand) will benefit from instruments calibrated to facilitate:
    • meaningful mapping of substantive, additive amounts of things measured on number lines;
    • data volume reductions on the order of 80-95% and more, with no loss of information;
    • organizational and individual learning trajectories defined by hierarchies of calibrated items;
    • measures that retain their meaning and values across changes in item content;
    • adapting instruments to people and organizations, instead of vice versa;
    • estimating the consistency, and the leniency or harshness, of ratings assigned by judges evaluating performance quality, with the ability to remove those effects from the performance measures made;
    • adjusting measurement precision to the needs of the task at hand, so that time and resources are not wasted in gathering too much or too little data; and
    • providing the high quality and uniform information needed for networked collective thinking able to keep pace with the demand for innovation.
  • Second, measurement leadership sensitive to the four keys across organizations, both within and across industries, will find value in:
    • establishing industry-wide metrological standards defining common metrics for the expression of the primary human, social, and natural capital constructs of interest;
    • lubricating the flow of human, social, and natural capital in efficient markets broadly defined so as to inform competitive pricing of intangible assets, products, and services; and
    • new opportunities for determining returns on investments in human, community, and environmental resource management.
  • Third, living companies need to be able to mature in a manner akin to human development over the lifespan. Theories of hierarchical complexity and developmental stage transitions that inform the rigorous measurement of cognitive and moral transformations (Dawson & Gabrielian, 2003) will increasingly find highly practical applications in organizational contexts.

Leadership of the kind described by Spitzer is needed not just to make measurement contextualized, focused, integrated, and interactive—and so productive at new levels of effectiveness—but to apply systematically the technical, financial, and social resources needed to realize the rich potentials he describes for the transformation of organizations and empowerment of individuals. Spitzer’s program surpasses the usual focus on centralized statistical analyses and reports to demand the organization-wide dissemination of calibrated instruments that measure in common metrics. The flexibility, convenience, and scientific rigor of instruments calibrated to measure in units that really add up fit the bill exactly. Here’s to putting tools that work in the hands of those who know what to do with them!

References

Andrich, D. (2005). Georg Rasch: Mathematician and statistician. In K. Kempf-Leonard (Ed.), Encyclopedia of Social Measurement (Vol. 3, pp. 299-306). Amsterdam: Academic Press, Inc.

Bezruczko, N. (Ed.). (2005). Rasch measurement in health sciences. Maple Grove, MN: JAM Press.

Bond, T., & Fox, C. (2007). Applying the Rasch model: Fundamental measurement in the human sciences, 2d edition. Mahwah, New Jersey: Lawrence Erlbaum Associates.

Dawson, T. L., & Gabrielian, S. (2003, June). Developing conceptions of authority and contract across the life-span: Two perspectives. Developmental Review, 23(2), 162-218.

Fisher, W. P., Jr. (2009, November). Invariance and traceability for measures of human, social, and natural capital: Theory and application. Measurement (Elsevier), 42(9), 1278-1287.

Fisher, W. P., Jr. (2010). Bringing human, social, and natural capital to life: Practical consequences and opportunities. Journal of Applied Measurement, 11, in press [Pre-press version available at http://www.livingcapitalmetrics.com/images/BringingHSN_FisherARMII.pdf%5D.

Masters, G. N. (2007). Special issue: Programme for International Student Assessment (PISA). Journal of Applied Measurement, 8(3), 235-335.

Spitzer, D. (2007). Transforming performance measurement: Rethinking the way we measure and drive organizational success. New York: AMACOM.

Wilson, M. (2005). Constructing measures: An item response modeling approach. Mahwah, New Jersey: Lawrence Erlbaum Associates.

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2 Responses to “Review of Spitzer’s Transforming Performance Measurement”

  1. Dean R. Spitzer Says:

    William…I was really blown away by your review of my book “Transforming Performance Measurement.” It was almost like I had written the book just for you! Your understanding of what I said, and your explanation, was thorough and ‘spot on.’ You definitely got the vision. Hopefully those who read this blog will read the book and be able to contribute to a dialogue about how to transform performance measurement, so that we can better transform organizations and nations. Certainly our country and the world is desperately in need of better measures (especially of intangibles), more integrated measurement systems (that reduce the silos and suboptimization), better interactivity around measurement (rather than meaningless ‘cadence calls’ when clueless people share the numbers), and lagging indicators, which no one understands or can do anything about, and all this in a negative context in which defensiveness and justification rules. It is a sad situation…but I am so glad that there are people like you who ‘get it’ and are willing and able to develop some thought leadership and critical-mass behind solving the problem. Can you imagine, for example, how great it would be if we had some meaningful, really actionable, leading indicators of the drivers of true quality in healthcare, social services, philanthropy and aid programs, international relations, and some of the other critical areas that will determine whether the next period on this earth will be more like heaven or hell!

    • livingcapitalmetrics Says:

      Dean, I have struggled for years to find just the right high-impact bottom line take-away to use in talks to leaders in business, education, and health care. About the best I could come up with was along the lines of, “You can get more from measurement than you know, but you aren’t likely to get what you can’t and don’t ask for.” And I’d provide a list, along the lines of the kinds of things I put in the book review.

      But even in those rare instances where someone was motivated to make the effort to follow through, the end results were always disappointing. Why? Because the things you describe as failures of measurement leadership saturated the organizations I was working with! Even when people see what can be done, making it happen seems impossible. Measurement theory and practice has made absolutely stunning advances in the last 50 years, but you almost certainly have to have a Ph.D. to understand and use them. Nothing inherently evil about that; the same thing is true of thousands of technical fields. The problem has been telling the story in a way that alerts people to the opportunities for massive improvements we have–and have had, for decades–right in front of us. It has been a problem of finding the demand for the supply. If anyone is paying attention to what you’re saying in your book, Dean, the seeds for that demand have been planted.

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