Ted Merz, CFA’s Post

Success at Bloomberg LP is defined by a number displayed on an electronic board on the wall near Mike Bloomberg’s desk. You can see it in the background of a photo he posted recently on LinkedIn of him reading a book about climate change written by London Mayor Sadiq Khan. The electronic board, one of many hanging throughout the company’s offices, includes the number of Bloomberg terminals sold year to date. The undated photo shows 1,874. The terminal is the company’s flagship product. While Bloomberg may be famous for its media business, it is subscriptions from Wall Street professionals that generate the real money. Bloomberg’s success is due in part to a clarity of mission that the board embodies, as well as a willingness to share that information to motivate employees. It’s not always easy to select one number that defines a business. It needs to be a number that is significant but cannot easily be manipulated and won’t spawn too many unintended consequences. That sounds easy enough, but many companies cannot bring themselves to do it. Instead, they generate and publicize a blizzard of data — in part because they can and in part because they believe it better captures the complexity of the modern world. Business schools and consultants recommend managers adopt a dizzying array of KPIs (key performance indicators) or OKRs (objectives and key results) as a way to track progress. Something is gained with such precision, but something is lost too. Specifically, it’s more difficult to convey a clear objective employees can rally around. It’s harder to promote One Team, One Dream when you have Many Metrics. To be clear, it’s not that Bloomberg LP doesn’t aggregate and track lots of numbers. (Mike is known for saying: “In God we trust, all others bring data.”) But the electronic board illustrates a choice to elevate one number above the others. It helps employees know where things stand. When I worked at Bloomberg (I left last year), Mike’s approach to measuring performance seemed to be accompanied by a healthy dose of skepticism about how humans game any system. Metrics are necessary and inevitable in business, but there are plenty of cases in which they distort behavior. Wells Fargo rewarded employees who signed up new clients, prompting many to invent fake bank accounts to meet quotas. Hospitals use RVUs (Resource-Based Relative Unit Scale) to compensate physicians. Many doctors argue the RVU system is destroying medicine by penalizing them for spending extra time with patients. I never saw Bloomberg’s sales board as negative or particularly celebratory. That’s because it was displayed every day – whether markets (and sales) were booming or sluggish. It was more of an anchor, something that connected everyone to a long-term goal. It was easy to understand and hard to fake. It drove common purpose. (Part of a series of lessons I learned from three decades working at Bloomberg LP)