Understanding performance measurement systems using physical science uncertainty principles

Abstract

Observes that performance measurement models are largely based on deterministic assumptions about the world. Suggests that it is time to re‐align performance measurement with post‐deterministic discoveries made in the physical sciences, especially quantum physics. In the physical sciences, scientists have (reluctantly) come to accept that the world has a fundamental uncertainty at its core. Asks the question of what lessons can be drawn for performance measurement from this knowledge of the physical world. Addresses this question first by describing the development and epistemological consequences of three post‐deterministic (physical world) discoveries of: uncertainty, bounded instability, and self‐organisation. Then traces the equivalent path to uncertainty in management. Concludes that it is time for the oldest management theories, which still underpin current performance systems, to be realigned with knowledge on uncertainty. Ends with a look at two current performance systems, activity‐based management, and the Balanced Scorecard. In line with knowledge about fundamental uncertainty, these (and other) performance systems should focus on identification of the “aggregate system” critical few.