Karate Explosion!!

Yes, my title has nothing to do with the article, but now you might be reading it.

Our question this week has to do with how much evaluation is a good thing.

When dealing with scarcity, economic models tend to do a great job outlining how things tend to work and why.  Organizations have limited resources (time, talent, manpower, money, etc.,) so its allocation of resources to measurement should follow economic models of behavior.

This means that organizations should devote the amount of resources to measurement that allows it to get the same amount of marginal benefit as the marginal cost of doing it.  This will bring the most possible benefit before the firm begins incurring net losses for implementing the measurements.

Not everyone will find it as interesting as I do to go into why all of that works and is true, but the models are there and they do a reasonably logical job at prescribing what any creature should do when faced with varying amounts of marginal benefits and costs based on the quantity of engagement in any activity or opportunity.

The problem with these models is that it doesn’t give us much more in the way of practical solutions; the model essentially tells us that we need to invest more in measurement so we can measure how much we should measure.  Yeah.

This also assumes that the entity involved has perfect information about how much something really costs and how much benefit a action (like measurement) really brings.  If the entities have perfect knowledge (even if just from intuition) then the prompt question is unnecessary because organizations will automatically function at the optimal amount of evaluation and we can discover just how much an organization should do simply by what it does do.

But, since we don’t have perfect knowledge, here’s what we do know and what we can do: the social impact world is seeing more and more benefits and improvements from measurements, and because the benefits from this still seems to outweigh the costs, we know that we should do more.  We should keep doing more measurements until it because more costly than beneficial to do so, then we will know the answer of how much is optimal.

The optimum amount will be different for every industry or organization depending on how costly it would be for an organization to fail in its purpose, how difficult it will be to measure its impact, how complicated measurements tend to be, etc., but there’s no way to know until we try.