The finding
V. F. Ridgway’s research on performance measurement, published in Administrative Science Quarterly, examined how the choice of what to measure shapes behaviour — often in ways the people choosing the measures never intended. His caution, directed at organisations relying heavily on quantitative measures, was that indiscriminate use “results from insufficient knowledge of the full effects and consequences” of the measures chosen, and that reliance on them can produce a cure “sometimes worse than the disease.” Applied to a strategy review, the implication is direct: a review is only as good as what it’s built to look at, and what it’s built to look at is usually decided once, early, and rarely revisited.
This is a different claim from saying strategy reviews become less rigorous as organisations grow. Many become more rigorous, in the narrow sense of tracking their chosen metrics more precisely, with better dashboards and more disciplined reporting cadences. Rigour applied to an increasingly unrepresentative set of metrics doesn’t correct the underlying problem — it can make the review more confidently wrong, by delivering its narrowing picture with greater apparent precision.
What it means in practice
Early in an organisation’s life, a strategy review tends to track a small number of things that map closely to what actually matters, because the organisation itself is simple enough that little translation is needed between “what we measure” and “what’s really going on.” As the organisation grows, the metrics a review relies on tend to stay roughly the same — quarter over quarter, the same dashboard, the same handful of KPIs — even as the underlying organisation becomes considerably more complex than those original metrics were built to represent.
This isn’t usually the result of anyone deciding the metrics were good enough forever. More often, nobody owns the specific question of whether the review’s own design still fits the organisation it’s reviewing — the review itself has an owner, typically whoever chairs or prepares it, but that ownership is usually about running the review well, not about periodically auditing whether the review is still looking at the right things in the first place. Running a review competently and questioning its own foundations are two different skills, and an organisation can be genuinely excellent at the first while never quite getting around to the second.
The review doesn’t stop functioning. It continues to report faithfully on the things it was designed to track. What changes is the proportion of what actually matters that those original metrics still capture. A review built around revenue by product line, for instance, can remain perfectly accurate on revenue by product line for years after the organisation’s real strategic tension has moved somewhere the review was never built to see — cross-functional coordination, say, or the informal interpretation gap between two divisions. The review keeps confirming that the numbers it tracks look fine, because they do; it simply isn’t looking at the place where the actual strategic risk has relocated.
For how this pattern presents in other kinds of organisation, see other sectors.
Questions worth considering
- When was the current set of metrics used in the strategy review last deliberately reconsidered, rather than simply carried forward?
- Has the review ever surfaced a genuine course correction recently, or has it become a meeting that reliably confirms whatever direction the organisation is already heading in?
- Is there a strategic risk the organisation is currently aware of, informally, that the review’s own metrics wouldn’t actually capture?
More on this topic: Strategy Execution.
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