On Measurement, Continuous Improvement, and Customer
Focus — Then and Now
(A decade and half ago I wrote two linked blogs on Operational
Excellence. The are referred at the bottom of this article. When I read them in
the context of the world of today, many principles remail the same, but
manifestations are different. This article is an attempt to revisit the idea of
Operational Excellence in the era of AI and Agents)
There is a particular kind of excitement that technology
companies are exceptionally good at, and a particular kind of discipline they
are chronically bad at. The excitement is building. The discipline is running.
Every new feature, every new product, every new platform gets showered with
energy, talent, and attention. The unglamorous work of making sure it all
actually works, consistently, reliably, at scale, day after day, gets left to
whoever is available, measured by whatever is easy to measure, and improved
only when something breaks badly enough to be embarrassing.
This is not a new observation. But it has become a vastly
more consequential one. Because we are now deploying AI systems and autonomous
agents into operational environments at a pace that far outstrips our
willingness, or our ability, to govern them. And the cost of that gap is no
longer measured in minor inefficiencies. It is measured in compounding,
invisible failures, in decisions that
are wrong by design, in resources consumed by systems nobody is watching, and
in customers quietly harmed by processes nobody is truly accountable for.
The answer to this is not more technology. It is better
operational discipline. And the framework for that discipline is simpler than
most people think.
We call it E = MC²: Excellence, derived from a
culture that Measures relentlessly, pursues Continuous
improvement, and never loses sight of Customer focus. These three
elements are not independent. They are a virtuous cycle, each one feeding the
others, each one incomplete without the others. Understanding how they connect,
and how to make them real, is the central challenge of operational management
in any era. Including this one.
Why Measurement is Hard, Even for People Who Handle Data
for a Living
There is a paradox at the heart of the IT and services
industries. These are sectors whose entire value proposition rests on data, on
capturing it, organising it, analysing it, and making it useful. And yet, in
practice, their internal operational measurement discipline is often
surprisingly immature. The processes that organisations build for their
customers are rarely applied with equal rigour to their own operations.
The reasons are not mysterious. The glamour in these
industries flows toward novelty, toward "cool functions,"
"exciting features," and "latest gadgets." Boring pursuit
of efficiency gains simply does not compete for talent or attention. When a
senior engineer has a choice between building something new and spending six
weeks instrumenting something old to understand why it sometimes fails, the
outcome is predictable. And so operational measurement tends to happen
reactively, in response to a crisis, a
customer complaint, or a regulator's inquiry, rather than as a continuous, proactive
discipline.
To learn how to do this differently, it helps to look at
industries that never had the luxury of treating operations as an afterthought.
The hazardous chemical process industry is an instructive
model, and not an intuitive one. It has been around for centuries, long enough
to have matured its operational practices through hard experience. Its product
lines are largely commoditised, which means margins are thin and efficiency is
not optional, It is existential. The consequences of process failures are
sometimes fatal, which means the scrutiny. public, regulatory, and internal, is
unrelenting. And its processes are integrated end-to-end, with limited
visibility into what is actually happening inside the pipes at any given
moment, which forces a culture of strong monitoring and control.
These are, in fact, exactly the conditions that characterise
complex digital operations today. Thin margins. High stakes. Limited internal
visibility. Regulatory scrutiny. The main difference is that the chemical
industry has spent decades building the measurement culture to match these
conditions, while the technology and services industries are still, in many
cases, at the beginning of that journey.
From that more mature tradition, three elements of
measurement discipline emerge as foundational.
The Three Pillars of Measurement
Flow Management: Count Every Transaction
The first pillar is what might be called micromanagement of
the operation, not in the pejorative sense of hovering over people, but in the
precise sense of tracking each input through each sub-process it was meant to
traverse, confirming it arrived correctly and without error.
This sounds obvious. In practice, it is done poorly, or not
at all, especially for processes that are still evolving. When a new system or
workflow is still being refined, exceptions proliferate. And exceptions, in
young computerised systems, have a dangerous tendency to become invisible, swallowed by automated retry mechanisms,
silently skipped, or classified as edge cases that never quite make it onto
anyone's priority list.
The consequences of poor flow management are almost always
financial and reputational, and they tend to be discovered embarrassingly late.
A large bank once sent letters to its credit card customers admitting that it
had not been tracking transactions correctly, and asking recipients to settle
on the basis of their own personal records. The transactions were not hidden.
They were not stolen. They had simply not been tracked. The systems were
running; the accounting was not. When providers of transaction billing
solutions are brought into organisations for the first time, the revenue
leakage they surface, from transactions that fell through the cracks of
inadequately monitored processes, is routinely staggering.
These are not exotic failures. They are the entirely
predictable consequence of building systems without building the measurement
infrastructure to watch over them.
Capacity Management: Know Where the Bottlenecks Are
Before They Happen
The second pillar is the macro view, tracking the capacity
of processes, people, service providers, and machines in order to anticipate
bottlenecks before they become crises. This requires establishing trend
measures for each element and monitoring them continuously, not just
periodically.
Capacity management is especially treacherous in
computerised environments for a structural reason: shared resources. Network
infrastructure, compute capacity, database connections, these are all consumed by multiple processes
simultaneously, and the utilisation curve for each process grows differently. A
system that appears to have adequate capacity for today's workload may have
none for tomorrow's if the growth curves are not being watched and modelled.
Two particular categories of hidden capacity consumers
deserve special attention, because they are pervasive and almost universally
underestimated.
The first is queries. Every business generates a need for
data extracts — for management reporting, regulatory compliance, customer
service lookups, and ad hoc analysis. These queries consume the same production
capacity as the operational processes. And they are disproportionately likely
to be written inefficiently, because they are typically assigned to junior
resources or business analysts who lack the training to optimise them, and
because there is very little accountability for query performance until something
breaks. A query that was meant to run once becomes a standard report. A
standard report that runs nightly becomes a standard report that runs hourly.
The cumulative resource consumption creeps upward invisibly until, one day, the
system slows to a crawl during peak operational hours, and nobody can
immediately explain why.
The second is design debt. For most software developers, the
genuine satisfaction is in building features. Once a feature is live and
functioning, interest moves on. The pressure to optimise, to refactor, to
improve efficiency, runs directly against the incentive to ship the next thing.
The result is that bespoke systems accumulate performance inefficiencies that
are never addressed , not because fixing them is technically difficult, but
because nobody is measuring the cost of leaving them in place, and nobody is
accountable for the cumulative drag. In most organisations, there is scope for
at least a hundred percent improvement in process efficiency simply by
addressing the worst of these design inefficiencies, but only if someone is measuring for them.
Service Levels: Commit to the Customer, Then Track the
Commitment
The third pillar is where measurement connects most directly
to purpose. The most powerful mechanism for ensuring that measurement and
improvement activity stays focused and meaningful is to define, publicly and
clearly, what the organisation is actually committing to deliver to its
customers.
There is an important distinction to draw here between a
Service Level Agreement and what might be called a Customer Service Commitment.
An SLA is a floor — a formal definition of the minimum below which the
organisation will try not to fall. It is a legal and contractual instrument,
and it tends to create a culture of adequacy: as long as we are above the
floor, we are fine. A Customer Service Commitment is something different. It is
a genuine aspiration — a statement of what the organisation sincerely believes
it can and should deliver, at a level meaningfully above the minimum.
This distinction matters because people and systems tend to
optimise for what they are measured against. An organisation that measures
against its SLAs will manage its operations to the SLA threshold. An
organisation that measures against its Customer Service Commitments will manage
its operations to the standard it actually believes in.
The mechanics of tracking these commitments deserve specific
attention. Time-series data, tracking key performance parameters not just at a
point in time, but continuously over time. is essential for detecting trends
before they become crises. A single data point t ells you where you are today.
A trend tells you where you are going. And it is the trend that matters
operationally, because by the time a single bad reading turns into an obvious
crisis, the window for preventive action has usually closed.
It is also worth having the team that tracks customer
commitments sit separately from the team responsible for operations. This is
not about distrust. It is about the structural reality that an operations team
under pressure will, understandably, interpret ambiguous data in the most
favourable light available. A separate tracking function provides the
independent visibility that makes measurement honest.
Continuous Improvement: From Counting to Acting
All of this measurement serves one purpose: enabling the
organisation to improve, continuously, before it is forced to by failure.
This is more difficult than it sounds, because the culture
required to use data for continuous improvement is fundamentally different from
the culture most organisations actually have. In most places, data tracking
reports are either compliance artifacts — produced to satisfy an audit or a
boss, or post-mortem instruments, pulled out after something has gone wrong to
explain what happened. Neither of these uses generates improvement. They
generate paper trails.
The culture of continuous improvement requires something
harder: the regular, disciplined use of data to find problems that have not yet
caused visible failures. This means looking at trend shifts before they become
obvious. It means investigating unusual volatility in metrics that are still
technically within acceptable bounds. It means preferring prevention over
heroism — which runs directly against the organisational instinct that rewards
the person who fixed the crisis rather than the person who avoided it.
To make this a habit rather than an occasional initiative,
it has to become a ritual. The cadence of reviewing operational data,
identifying trends, assigning root cause investigations, and tracking
improvement actions has to be embedded into the organisation's regular rhythm,
not treated as an additional burden on top of "real work." When it is
done well, it does not feel like overhead. It feels like the organisation
learning from itself in real time.
The AI Era Changes the Stakes, Not the Principles
Everything described above was relevant in 2009. It is more
relevant now by an order of magnitude.
The introduction of AI systems and autonomous agents into
operational environments does not render these principles obsolete. It makes
them urgent. Because AI introduces a new category of operational actor, one
that is more capable, more opaque, and more consequential than anything that
preceded it, into environments that, in
many cases, barely had adequate measurement cultures to begin with.
The most important thing to understand about AI in
operations is that it fails in ways that are qualitatively different from how
conventional software fails. Traditional software fails visibly. A system
crashes. A transaction errors out. A service goes down. These failures are, in
their own way, manageable, because they announce themselves. AI fails silently.
A model that has drifted from its training data continues to generate outputs
that look confident and coherent, while producing decisions that are subtly,
systematically wrong. A recommendation engine with a bias baked into its
training data does not flag an anomaly; it just consistently disadvantages
certain customers. A document processing agent that hallucinates does not throw
an exception; it produces a confident, plausible, and incorrect result.
This is the flow management problem, rewritten for the age
of AI. Every AI-powered process needs a systematic accounting not just of what
it produces, but of the quality, reliability, and drift of those outputs over
time. The input went in; the output came out, but was the agent's reasoning
within acceptable bounds? Was its confidence calibrated? Were there exceptions
that the system silently swallowed rather than escalating to a human? The
revenue leakage and customer harm that flow from unmonitored AI processes make
the untracked credit card transactions of an earlier era look quaint.
The capacity management problem is also fundamentally
transformed. AI models are the most resource-intensive entities ever introduced
into enterprise operations. A single large model inference can consume more
compute than an entire legacy application stack, and when multiple agents run
concurrently, as they increasingly do, in agentic architectures where AI
systems orchestrate other AI systems, the shared infrastructure constraints
become genuinely complex to manage. The hidden capacity consumers have
multiplied: poorly designed prompts that generate verbose, expensive outputs;
inefficient agent chains that make redundant calls; one-time AI automations
that quietly become permanent fixtures eating into rate limits and GPU
capacity. None of this shows up on a standard IT dashboard unless someone has
specifically built the instrumentation to see it.
And the service levels question, always the most important
one, has become the most morally loaded. When an AI agent makes a decision that
affects a customer, about a loan, a
medical triage, a service entitlement, a pricing offer, that customer has a right to understand it,
challenge it, and have a human correct it. This is not only a regulatory
requirement in an increasing number of jurisdictions. It is the operational
definition of customer focus in a world where the agent, not the employee, is
the primary interface. A Customer Service Commitment in the AI era must include
commitments about explainability, human override, and recoverability, not just
turnaround time and accuracy.
The Measurement Culture the AI Era Demands
Bringing this together, what does operational excellence
actually look like for an organisation running AI at scale?
It looks like flow management that tracks not just whether
transactions were processed, but whether the AI agents that touched those
transactions acted within defined parameters, and that surfaces exceptions
rather than silently absorbing them.
It looks like capacity management that instruments AI
resource consumption with the same rigour that a hazardous chemical plant
instruments its pressures and temperatures, understanding not just current utilisation,
but growth trajectories, shared resource constraints, and the hidden consumers
that creep up over time.
It looks like Customer Service Commitments that extend into
the AI layer, that define not just what
will be delivered, but how decisions will be explained, how errors will be
corrected, and how human accountability will be maintained even where AI is the
primary actor.
And it looks like an organisation where data is used not to
satisfy bosses or produce compliance artifacts, but as a genuine tool for
continuous improvement by everyone at every level. Where a shift in a trend
line is treated as a signal worth investigating, not as noise to be explained
away. Where prevention is valued as much as heroism. Where the excitement of
building is matched, at last, by the discipline of running.
The Hardest Part Has Not Changed
In the end, the measurement framework, however well designed,
is only as good as the culture that uses it. And culture is stubbornly human.
The data is the easy part. The hard part is persuading organisations and the
people within them to use data as a tool for honest self-improvement rather
than as a performance to be staged for external audiences.
That challenge has not changed in sixteen years. It will not
change in the next sixteen either. What changes is the cost of getting it
wrong.
Give the people the facts, about their processes, their
agents, their customers, their capacity, their failures, and their potential, and they will, if the culture is right, do the
right thing.
That is still the bet. It is a harder bet to lose than it
has ever been. But it is the only bet worth making.
"The customer does not
care about your dashboard. They care about what happened to them. Those are not
always the same thing."
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