OK, I stole the title. John Hagel III, John Seely Brown, and Lang Davison posted on this very topic on the Harvard Business Review today. And then they spent the entire time dissing return on equity and touting return on assets in its place.

Hello? I understand the whole “business-exists-to-make-a-profit-and-nothing-else-really-matters” position, but are ROA or ROE really the best ways to measure company performance? I thought the balanced scorecard came along because our obsession with financial performance wasn’t working. Apparently, a lot of folks can’t stop obsessing.

Case in point: HuffPost Business. If you visited its home page today you would find articles on Goldman Sachs, predatory lending, Hank Paulson, the Treasury Department, AIG’s bonus cutbacks, robber barons, financial crisis, financial innovation, bank bailouts, Federal Reserve, credit card blacklists, financial reform, economic oracles, Citigroup, China, more on the Federal Reserve, home sales, jobs bill, dollar vs. euro, Greece bailout, still more Federal Reserve, etc. About the only articles on the home page that weren’t about money were about health care and fast cars.

It shouldn’t be HuffPost Business; it should be HuffPost Finance. And they’re far from alone. Pick any random site that purports to tell you what’s happening in the business world and you’ll find that 90% of their articles revolve around finance. The same is true for most business magazines.

This is how the Baldrige Criteria, which define performance excellence, measures company performance:

• What are your product performance results?
• What are your customer-focused performance results?
• What are your financial and marketplace performance results?
• What are your workforce-focused performance results?
• What are your process effectiveness results?
• What are your leadership results?

Financial performance accounts for one-half of one of these items, worth 35 points—out of a thousand. Still, you would have trouble winning a Baldrige Award if you had poor financial results, but you’d have trouble if you performed poorly on any of these questions. A well-run company cannot be obsessed with financial results at the expense of these other important—some would say equally important—indicators. But what Baldrige Award winners have shown is that performing well in all of these areas stabilizes and improves their financial performance.

When Bob Galvin was chairman of Motorola (when it received one of the first Baldrige Awards), he made quality the first item on the agenda of corporate performance reviews, which were four-hour meetings held eight times a year. Quality and cycle time took up half the meetings. When the group finished discussing them, Galvin left the meeting. His message was clear: If you’re improving those factors that determine the bottom line, the bottom line will be fine.

The best way to measure company performance is with a balanced set of metrics that address those areas that are most important to current and future success. Financial performance is one of those key indicators. But it’s not the only one.

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