In Chapter 6: Reading Your Dashboard Correctly (Analysing — from Data to Information) we covered how to take data and put it into context, thus generating information that you can use for your informed decision making. You can measure everything in your business and collect all the numbers that you like, but if you don’t analyse what those numbers are telling you, then the process is largely a waste of time. Collecting the data and formatting it into a dashboard that you can use to steer your business, keeping it on the road to survival, is a good tip that will help to embed analysis into your day—to—day behaviours.
In Chapter 6: Reading Your Dashboard Correctly (Analysing — from Data to Information) we covered how to take data and put it into context, thus generating information that you can use for your informed decision making. You can measure everything in your business and collect all the numbers that you like, but if you don’t analyse what those numbers are telling you, then the process is largely a waste of time. Collecting the data and formatting it into a dashboard that you can use to steer your business, keeping it on the road to survival, is a good tip that will help to embed analysis into your day—to—day behaviours.
Proactive management is better than reactive coping
Some of the analysis that you’ll be doing within your business is comparing your numbers with the targets that you set. Why is this important? Well, if you know that you must run at 50% of your production capacity to be profitable and your analysis tells you that you are running at 40%, then you need to be doing something about it or you won’t survive. If you know that you have a maximum production capacity and you are operating at 90% of that capacity, then taking on extra work that would take you to over 100% is not something that you should do lightly.
You can, of course, take on extra work, but you must put the thought into how to increase your capacity before that extra work arrives. If you don’t, and you choose the expedient solution (‘Just tell the customer that we’ll do it and we’ll figure it out later!’), you are in danger of not delivering the customer’s order on time and that is a good way to the failure abyss. If you are doing your business thinking correctly, then your analysis will include you checking that what your business is doing is what you think it should be doing, and you do that by setting your prior expectations as targets.
You can view your data as a snapshot of how your business, or a specific part of your business, is doing at that particular point in time. However, it is vital to remember that in order to see the whole story, the snapshots have to be viewed in the right order and at the right speed. For example, think of your weekly measurements as individual frames within a film. There is certainly stuff to look at, but there is little in the way of a narrative. Instead, imagine stringing those individual snapshots together and running the film. Now you have an order, you can see the development of the story and can understand the narrative journey of your business; this is analysis. Are you doing well? Are there things that you need to change? And so on.
Analysis covers a multitude of activities from simply casting an eye over the figures through to detailed statistical analysis that will tell you whether a change in a data set is significant or not. However, be mindful of the phrase ‘Lies, damn lies and statistics’. If you are not an expert in statistics, then anything beyond simple analysis will require you to get help.
Now, I’m not saying that simple analysis won’t be sufficient, it depends upon your business, but reading false information off your dashboard can sometimes be worse than having no information. For example, if your total sales are increasing, but you only sell to each customer once, you will reach a plateau and, sooner or later, your sales will decline. Getting excited about the increasing sales is fine as long as you keep your perspective, analyse your data in the correct context and pay attention to the information that you are then extracting.
One of the behaviours that you should consider embedding within your business is checking. We all make mistakes because we are all human, but if you implement a checking regime within the most critical parts of your business, then these errors will be reduced. Just imagine how you would feel if your dashboard says that you have £200,000 on deposit at the bank, but because someone put the comma in the wrong place, you in reality only have £20,000. Paying £50,000 in salaries at the end of the month will suddenly present you with a real problem. When it comes to analysis, make sure that you are looking ‘upwards and outwards’ not ‘inwards and downwards’ and have people check each other’s calculations.
Using the dashboard metaphor can be very useful as people in general respond well to visual images rather than simple lists of numbers. Establishing dashboards in different areas of your business, under the control of particular individuals, can, therefore, be highly motivating. If the manager of one of your business’s departments knows that you have given them responsibility and authority for informed decision making within that department, they will pay far more attention to their dashboard than otherwise. Embedding a system of analysis where you insist that all data comes to you is daft because people will then adopt a ‘fire and forget’ attitude; ‘Here are our numbers. It’s your problem now. Bye.’
As a general rule, the people in charge of collecting the data should be, at the very least, party to the analysis of those data, if not in complete control. If people can see that decisions are being made using the data that they have generated, then it will help to reinforce the importance of those data. Conversely, if you insist on collecting together all the data yourself and analysing it on your own, then the link between the numbers and your decision making may well pass some of your team members by. A visible link between achievement, measurement, data and decision making will show everyone how their action (their cog) fits into the machine that is your business.
Ultimately, however, you are the driver of your business and extracting useful information about your business journey from the numbers on the dials of your dashboards is one of the most important tasks you have. Again, I’m not saying that you have to do everything yourself, but you have to make sure that it happens and you must have links to where that information is originating. Those links are most usefully provided by members of your team as speaking to a colleague is usually far more informative than reading a sheet of numbers.
Focus on looking ‘upwards and outwards’ rather than ‘inwards and downwards’
In summary, TINA’s Analysing sector prompts you to analyse the data produced in various parts of your business to provide the information required to fuel the thinking that you must do if you are to avoid the failure abyss. The best way to get high quality information is to make those people who are in charge of the numbering activities also be responsible for extracting the information from the data; the same people who are responsible for the achievements that take your business forward. To increase the probability that the information with which you are being supplied is based on sound data, you must embed within your whole business an ethos of responsibility for informed decision making. Don’t ask your people to guess, give them the tools to analyse correctly. That way, you’ll increase the chances of your business surviving its early years.