The key signs your business has a metric management problem
Now, more than any other time in business history, managers have the capacity to measure almost every area of their company and market activities. The advent of artificial intelligence and rapid growth of big data means that yesterday’s subjective discussion can become today's measured metric.
The promise held by clear dashboards, advanced analytics techniques, and on-demand data visualization tools help a company make rapid and informed decisions. Yet, with all these advances and tools, why are leaders still struggling with data and metric problems? Here I raise 7 signs that indicate you have a metric challenge to overcome.
Use this guide to help define if you, your business or workers suffer from any of these behaviors and actions. Some of these signs are a little humorous but there remains a serious message and undertone to each of them.
I suggest you give yourself a score between 0 – 5 in each area. Give yourself a 5 if you recognize fully the signs and a 0 if you do not have any behaviors similar.
1. Managers know Excel better than they know the business
One of the biggest and most common challenges I see in today’s offices is transferring the knowledge and enthusiasm for Excel into the actual business context and understanding. Establishing a culture fixated on numbers with standard metrics can be comforting and well meaning, however, you might be missing out on many opportunities.
When was the last time your leaders encouraged to drop the reporting, PowerPoints and graph production in exchange for a deep dive problem solving or exploration of challenges faced by the market, suppliers, and old customers and staff members?
This may require many unique solutions applied for each person and situation as opposed to a “standard off the shelf” process or procedure. Through collecting a range of such examples and recording the results, you can rapidly develop unique market offerings, improved loyalty, and supply flexibility. These are found outside the world of excel pivot tables.
Here is a short article from the Harvard Business Review on what great managers do to engage employees.
2. The reporting budget is skewed
Establishing expenditure on the latest analytics software is admirable and possibly the envy of your competitors. The decision to pursue such a strategy needs to be supported not just by the software.
Other factors need to be considered and priced into the full running costs. a) Data storage costs. b) Maintenance costs of data c) On-going training and competency validation for the software users d) Cost impact of the software scope with positive and negative areas listed and balanced. e) Data collection process and quality of data checks. f) General cross-functional awareness is lacking due to silo focused departments.
So, do you have a business that has invested several hundreds or thousands of dollars on great data visualization tools but lacked the training to maximize the output from these new tools? The hunt for fancy on demand and instant reporting typically continues to generate more and more questions by the generators and readers of the information supplied.
Some general grounded management training to understand the difference between cognitive bias, critical thinking skills and aligning to the business vision and mission are important steps. These steps along will often go much further and generate a higher rate of sustained payback than the latest software.
Take a short read of this article from ThinkWatson about critical thinking.
3. Data quality is not a regular discussion at meetings
Ok, raise your hand if you attend more than one meeting a month about improvements to data quality. If you just raised your hand, then welcome to an exclusive club – well done. Most readers have not attended such a meeting, are not planning on going to one and might not be sure if such a meeting is needed.
The numbers you report from sales, marketing has a different level of confidence than those reported from the finance department on cash flow and turnover. So, some numbers are known and validated to be absolute and others carry elements of subjectivity, risk, confidence and error. The art of knowing one's management numbers is not about reading the metrics in absolute terms, but understanding the range of potential metric numbers the figure represents.
Creating means, averages, absolute data points and then subjecting them to convenient calendar data plots may provide a very different overview and impact the business decisions when understood correctly. So, providing tolerance bands and confidence levels is a vital part of reporting.
Periodic review of methods of measurement and accuracy plus repeatability is needed to help a business generate continual improvement and impactful decisions.
4. If it is not measured, it is not discussed
This is the leadership philosophy that only numbers and a pattern of established facts will distract and allow issues to be raised. The concern and risk with such an attitude are widespread. Here we run the risk of ignoring new opportunities, risks or weaknesses within an organization.
Indeed, it might also miss a key strength a company has over its competition. Yet, with no allocated budget to pursue measurement then timing and opportunities can be missed. This approach is especially found within larger companies.
Management only through metrics opens the doors for fast moving startup companies to take advantage of such none agile practices.
To avoid this challenge with an obsession only on data-driven decisions, leaders and managers should reflect upon the organizational vision and mission. Often here at the very core and start of the company values are more emotional and less data-driven areas to pursue.
New measures can and should be created over time, yet there is good value in listening and acting upon subjective information – a good hunch can outperform the best analysts.
Entrepreneurs are known for placing high stake decisions based on hunches. Here is an article that can help a business adopt such thinking within a controlled process.
5. You have metrics about your metrics
This is the classic analysis paralysis case, where everything is measured and analyzed and an overabundance of metrics is produced. A business thrives on action and growth, the balance of finding the correct amount of analysis is important. So, if your workers have more than 10 KPI’s and several other metrics to monitor then consider a review of their significance, business impact, and costs.
Take a read of this short article on how to create great KPI's.
Some small companies are dedicated and committed to serving their clients no matter the cost and time applied. These companies can thrive with zero metrics but a dedicated passion for serving their customers and market the best. Although we do not agree with this approach, certainly many companies could operate much better and become more productive with a lean approach to managed data.
The advancements of computer power and analytics tools encourage many companies to measure more parts of the market than ever thought possible in the past. This information and data can be powerful and transformational.
Care should be taken to automate as much data collection as possible, automate the reporting and where possible set up basic traffic light or report by exception mechanisms to only raise issues when needed.
6. Social conversations about friends and family are numbers based
How does your business ensure its staff has a normal relationship with their family and friends during downtime hours? If you discover your management team talk amongst themselves as having a nice time with 6 guests, 1 partner, 3 kids, 2 cars, 3 pets and holiday 3 times a year with 4 relatives, then consider the profile and diversity of your team. A business must have its numbers people, to control sales and finance yet a balance with some diversity is also needed to help thrive.
The leading business consultancy company McKinsey wrote this article about the importance of diversity in the workplace. It makes common sense from a logical and emotional perspective. Your market and customers do not think just like robots (no matter what a salesman will tell you after a lost sale), so reflecting such values and variety will help strengthen a business team towards success.
7. You are already imagining a new graph to plot the prior 6 signs
This is the business that takes every new input and creates a metrics model around it. Without consideration or contemplation, all new input is considered positive and good. It then becomes part of the business. I see this attitude mostly amongst startup companies with eager leaders wishing not to feel out of control of any situation.
They handle most situations by creating a rapid measurement system and are savvy enough to automate it. This business, however, does not always link its current actions to its wider strategy and place periodic reviews to ensure the company direction remains correct.
Having a business and living within a high octane world of instant dopamine benefits from social media likes and client smiles does not mean you should respond to everything equally. To defend its position, “well I might need it later” will be often the answer provided to any questions as to the reasons why certain measures are taken.
To avoid this, I encourage a simple 5x why process. Ask why you this should be measured 5 times, if you do not have a strong case then it just might be a waste of your time.
How did you and your business do within spotting any of these signs? The purpose of this article has been a gentle light read with a serious undertone.
Let’s look at your scores and see how you did.
Mostly zeros: Great, you seem to have the right balance but I still suggest conduct a periodic review.
Mostly 1’s: There is the chance that you might have a challenge with metrics. Ask a coworker to do the same score system to valid or provide a discussion base of your score levels.
Mostly 2 or 3’s: You seem to be similar to many companies and leaders that suffer from cultural stiffness or are not working as strategic as possible. – I suggest making your own corrections and review in 3 months.
Mostly 4’s: Well, great for being so honest with your self-assessment. How long have you already being aware of these issues? It is time to create some change and made some adjustments to your metrics behaviors. Your business can operate much better.
Mostly 5’s: Call me, call me now, and get some help right away!
There are many companies and leaders guilty of at least one or most of these signs. The key message is to stimulate a form of personal and business review of your metrics. More consideration and thought should be applied to your actions in an area that appears to be low cost and beneficial.
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