A Vivid Example of Gaming the Numbers on “The Office”
NBC's “The Office” is often a good source for clips that illustrate the opposite of Lean thinking. Last week's episode was a continuation of the subplot where the new CEO gave Andy, the Scranton branch manager, a goal of doubling sales growth to 8% by the end of the quarter.
Dr. Deming, I think, would have disapproved because it was an arbitrary target without a method. There was no discussion about how to hit the goal (or if that was even the right goal) — there was just the pressure to get it done.
So what happened?
In this clip, you see the result of that pressure (with a description below for those who can't access Hulu).
Andy gives a pitch for all of the things you can do with paper… then Andy makes it clear he's trying to convince his employees to buy their own product.
Then, in a cutaway, Andy says that it's the last day of the quarter and they are $830 away from hitting the target. Andy says:
“I can't afford to keep buying paper”
and, then, after hitting the goal:
“Next quarter, I need to sell the $2200 of paper that's in my garage.”
And then, later, you see poor Andy with the back of his car stuffed full of boxes of paper.
Andy approaches the accounting department to ask them to cook the books:
Oscar, an accountant, tells Andy that $800 is basically “rounding error” and that the CEO should be happy that they came so close.
I've blogged about this topic before — see my post from late 2010 about a Polish police officer writing himself a ticket in order to meet a daily quota (true story). As I wrote there, Brian Joiner wrote in his outstanding book Fourth Generation Management: The New Business Consciousness, there are three things that can happen when you have a quota or a target:
- Distort the system
- Distort the numbers
- Improve the system
Andy is putting more energy into distorting the system (buying his own paper) and distorting the numbers (asking accountants to cook the books) than he is improving the actual system.
There's a bonus web clip / deleted scene where Andy asks the team to “sell $800 more paper than usual today.” One of the employees, Stanley, mentions (privately) that he has $2500 in sales queued up that he could make at any time, but those are “wait until the [marriage] separation is legal sales” and the team debates whether “seven point something” still pretty good performance or not. Andy clearly wants to hit the 8% goal still.
How can we avoid situations like this? Avoid arbitrary goals and quotas. Don't put people into a situation where it's easier to game the system than it is to improve the system. We've seen similar things happen with teachers and administrators cheating on standardized test scores (in Texas and DC and Atlanta) and British emergency departments gaming the system around emergency department (A&E) waiting times.
One well known Lean hospital has had a long-standing productivity goal of 10% improvement. Where does that target come from? Is it as arbitrary as the CEO asking Dunder Mifflin to double their sales growth rate? What dysfunctions or negative pressures does a target like that create? Are there other ways to get people aligned and motivated about improvement?
Do you blame the individual for cheating and slam them for their ethics or morality or do you look to the people who created the system?
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The mad thing is that it all starts from a flawed business planning process at board level. All sorts of assumptions are made and they nearly always fall into the planning fallacy.
That doesn’t stop executives believing that the flawed numbers they’ve produced are valid however and they are then used as the basis for the targets filtered down through the organisation.
One could argue that the only thing the whole exercise is good for is providing material for comedians to parody :)
Reminds me of Goodhart’s Law, which says that metrics lose their effectiveness as soon as people start using them to conduct policy. It’s inevitable that people will game the system, because there’s almost always a “cheaper” (less effort, cost, personal capital, etc.) way to move the metric than by improving the underlying reason for having the metric. People can get the rewards (or avoid the pain) of achieving the goal, at a lower cost. With the pressure that most people are already under in the workplace, they will take that deal in a heartbeat.
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