In the previous chapter, we looked at TINA’s Numbering sector; using the management steering wheel to gather your important numbers, the data, the measurements (call them what you like) that gives numerical values to those parts of your business that must be functioning correctly (the targets that must be achieved) if you are to avoid early—stage business failure.
In this chapter, we’re going to look at TINA’s Analysing sector. The reason that analysis is important is that data (the readouts from the dials on your dashboard), do not always have a context and adding the context to the data is how we derive useful information (see section 6.2, below). Taken together, these various data will tell you how your business as a whole is performing.
Having established your dashboard, or more likely, dashboards, how does this help you to run your business? Well, on a regular basis you’ll be gathering data from the measurements being made at the critical parts of your organisation. Knowing what is going on within your business is a wise strategy, however, if you don’t do anything with those numbers, then you might as well be burning money. Recording numbers to store in a drawer is a waste of resources. You are using resources to gather those data, use your resources efficiently. What’s required is a system, embedded within your normal business behaviours, that ensures that your numbers are being useful to you.
The numbers that you collect provide a series of snapshots of the state or condition of the various parts of your business. These snapshots are like still frames in a film; unless they are in the correct order and being reviewed at the right speed, the ‘story’ will be difficult, if not impossible, to follow. Establishing ways to collect your data is good; ensuring that your individual ‘frames’ present a coherent story about your business is better. We’ll deal with this in more detail in section 6.2, but for now, we’ll use our old friends at Generic Boxes Ltd (GBL) to make clear why the format of your business data is important. Diagram 6.2 shows some sales numbers that GBL’s managers have managed to get from measuring production output.
Now, imagine that these twelve numbers are GBL’s monthly unit sales. What can we deduce? Well, in truth, because they are not in order, not a lot really. Sure, we can calculate an average, in this case 48.42 units per month, and a total unit sales, i.e., 581. We can also state that two of the numbers (i.e., 25) are the same, but in the absence of some context, the data provides little in the way of information. Is GBL doing well? Are they about to fall into the failure abyss? We’ve no idea. So, let’s put in some context. What context would be useful here? How about which sales occurred in which month?
| MONTH | SALES |
| JAN | 20 |
| FEB | 21 |
| MAR | 25 |
| APR | 25 |
| MAY | 32 |
| JUN | 45 |
| JUL | 54 |
| AUG | 55 |
| SEP | 63 |
| OCT | 65 |
| NOV | 78 |
| DEC | 98 |
Table 6.1: Increasing monthly sales data for Generic Boxes Ltd
Right, with a little context, we can now get information from the data, and look at how well Generic Boxes Ltd are doing. From January to December of last year, their sales increased steadily, more or less month—on—month, so that by the end of the year they were processing almost five times more than they did in January. Fantastic news. But, what would be the conclusion if the numbers ran the other way?
| MONTH | SALES |
| JAN | 98 |
| FEB | 78 |
| MAR | 65 |
| APR | 63 |
| MAY | 55 |
| JUN | 54 |
| JUL | 45 |
| AUG | 32 |
| SEP | 25 |
| OCT | 25 |
| NOV | 21 |
| DEC | 20 |
Table 6.2: Decreasing monthly sales data for Generic Boxes Ltd
Oh dear. Generic Boxes aren’t doing so well. From January to December of last year, their sales decreased steadily, more or less month—on—month, so that by the end of the year they were processing almost five times less than they did in January. Disastrous news.
From these examples, it is easy to see why it is crucial to have context when looking at the numbers on your dashboard. But getting that context applied takes effort, requiring attention and resources, and there are many distractions when you are working. So, how do we make sure that your numbers get the attention they deserve? Well, there are some very straightforward and obvious options here, the first of which it to ensure that everyone in your business knows the importance of the dashboards.
It is very easy for someone to ignore something that they don’t understand. So, ensure that your people understand that the dashboard is the instrument panel, the dials, the cockpit (whatever you like) that you and they will be using to drive your business forward and give it the best chance of survival, and them their ongoing employment.
Rotten eggs have no place in baking a tasty cake
You must implant in everyone’s mind, including your own, the message that failure to pay attention to your dashboards is the equivalent of driving with your eyes closed. One of the ways to do this is to build the gathering of numbers and sorting of your data into your business in a way that makes it integral to your day—to—day activities. Ensure that you make time in your calendar, and those of your teams, to collect the numbers (make the measurements), to review your numbers on a regular basis, to have meetings (see Chapter 3: Planning Properly) where the review of the data takes place, and so on. In this way, you dedicate time in your working day, week or month, for you and your team to read your dashboards. By setting aside the time and agreeing that it is not only an important activity but a crucial one, you reduce the chance that it’ll be deferred, delayed or forgotten. Without such dedicated time it is a safe bet that other business activities will take priority and looking at where you are going will be forgotten, until it’s too late.
As we saw in Chapter 4: Getting Stuff Done, it is good management practice to delegate responsibility and authority to specific individuals. Do the same for collecting and analysing specific data, and producing the required information. This doesn’t mean necessarily, that the person with responsibility has to gather the numbers or do the analysis themselves, it means simply that they are responsible for making sure that it happens, for managing the process. Allocating specific responsibilities to specific individuals keeps them focussed and reduces the chance that they will forget about their responsibility because they’ve assumed that someone else will do it.
If your analysis is to produce the information required to steer your business through survival to success, then the data that you use must be in the correct format. If you take any old set of numbers in any order, then your information will be poor, and so will be your thinking. It’s the equivalent of using poor ingredients when you are cooking; rotten eggs will not help you to bake a tasty cake.
Given that you’ve set up your business systems correctly, you’ll be receiving data from various parts of your business at suitable intervals that you can then analyse to determine what information is there to help you manage your business correctly. So next we’ll cover how to analyse your numbers in a way that produces that valuable meaningful information.