With results only existing on the outside, only the customer determines what the organization’s measurables are. Customers do not quantify results however, the organization determines what they choose to quantify. Organizations have different measurables depending on what they contribute to society.
For example, at an animal shelter, the quantifier is the amount of animals incoming and outgoing from the shelter. An oil refiner will look at how fast it is processing and distributing oil; whereas, government may be looking towards how many of its citizens are satisfied within the jurisdiction. These are the quantifiable results, an executive or logician can look at the results and create formulas to effectively chart the organization towards success. However, this is not the only way to track results.
Every organization has the human element attached to it. Even automated systems such as the emergence of applications throughout the Internet are developed and maintained by a group of individuals. It is human tendency to act and react based on emotion; even the analytical mathematician or determined scientist are driven by emotion. Society works in a similar fashion; emotions are driven based on external forces directly or indirectly caused from organizations. These non-measurable events that cannot be recorded now will turn into measurable results in the future.
A severe accident occurred within BP’s oil sector in early 2010, resulting in parts of the Gulf of Mexico being covered in oil from a decimated rig leaking up to 5000 barrels a day. The measurable results are clearly there: the dollars lost in oil spilling into the ocean, the extra costs in cleanup and repair and the lost asset of this rig caused from an explosion. What are not tangible are the consequences of this ecological disaster and its impact to the corporation in the future.
- The emotion towards the contamination of wildlife and the coasts along the United States.
- The questions of safety controls and contamination controls built within BP’s systems.
- The impact of multiple governments all coordinating on reducing this man-made disaster.
- Investor trust of the organization’s future after this disaster costing millions of dollars a day.
These non-measurables cannot be recorded on a financial statement; they will continue to be “outside” events until the certainty of the future of BP’s corporation is in place.
Organizations consist of a conglomerate of people aiming for tangible results; whether measurable or non-measurable. The nature of results exists only on the outside of an organization – the customers, investors, and society determines the profits; the inside of an organization is just a cost center creating a “product” in order to “profit” from. Profit can be determined in a variety of ways; profit does not necessarily mean making money, but anything that can contribute to the organization. Determining the impact of past measurable results and the inevitable non-measurables determines the effectiveness of an organization.
Executives and entrepreneurs need to take heart that profit is used to help sustain organizations, not the other way around, and in BP’s case, be aware of what results can impact that goal.