Knowledge is Power

You CAN Manage what you CAN Measure!

It’s true what they say … Knowledge is power! If you don’t have the right data, together with right level and quality of analytics and reporting, how do you know what the real problem is that you’re trying to solve … let alone how to solve it.

Not just in business, but in all aspects of life, for example, if you go to see a doctor, you say you have a problem, at one time, they would just prescribe you leeches!! But now, thankfully we have a bit more science behind the diagnosis. They take “measurements”, do tests, blood pressure, measure heart rate, temperature. Even when they have worked out the problem, they need to know more data to know exactly what and how much to prescribe …. It’s the same in business, or in your personal life.

Data and knowledge has never been more important in today’s volatile, uncertain, complex & ambiguous world. We all need data and for that data to be well analysed to know what problem we are trying to solve, how to solve it, exactly how much of the remedy we need to administer, and then some advice on what to do with it. So, the sentiment that has been attributed to a number of people, including Peter Drucker, Tom Peters, Edwards Deming, Lord Kelvin is true, “you can’t manage what you can’t measure” … or, to put a more positive spin on the subject, “you CAN manage what you CAN measure”.

Data + Analysis +Reporting = Quality Decisions

I see that there are 3 types of input that we need to make quality decisions and manage any problem, or opportunity:

1. The right DATA
2. High quality ANALYTICS
3. Great REPORTING to communicate the recommendations and findings on the analysed data

Without data or any quality analysis, it really is just Guess-Work … as I said “you can’t manage what you can’t measure” … hence the leeches!

If you have data, and I mean appropriate amounts of the right type of data, and accurate data, then without quality analysis of the data, that’s a Wasted Opportunity.

But with the right Data and quality Analytics, you have the Information to influence quality decision making and planning.

Add some great targeted reporting or communications, and High-Quality Business Decisions can be made.

A Real-Life Example

To put a personal lens on the fact, let me tell you with a story of my barking dogs and my unhappy neighbours!

My neighbours were always making complaints that my dogs were barking, I sought out a range of dog trainers, tips and training methods and had numerous council visits on the subject … too numerous to count! But the “problem” seemed to persist.

So … I thought I’d gather DATA … I got a recorder and recorded the “nuisance barking”. The next time my neighbour complained, I checked out the recording and for the 3 days that my dogs had been “continually barking”, it turned out there was a whole 6 minutes of noise across the 3 days!

I wrote a letter to the neighbours, and the council, with the “Analysis” of the “Data” – my “Report”.

The outcome … What You Can Measure You Can Manage …. The recommendation … train your nuisance neighbours not your dogs!

Using Information for High Quality Business Decisions

Let’s look at a simple example: Here is a simple P&L:

What do we see, large growth, good margins, reducing slightly, but no major issue? Actions and decisions could be around cost reduction or grow harder, but it is hard to be very confident what to recommend.

Add a bit more Data…

What do we now see?  Product 1 revenue has gone down slightly, Product 2 reduced hugely, and Product 3 is growing. Costs have also reduced, so it’s a bit hard to know what to recommend, particularly if you’re not a numbers person!

So … let’s add some Reporting around this Data and Analysis:

Summary of Financials

• Revenues have increased significantly over 2 years, although this growth has slowed in 2018.
• This is a result of a sharp decline in Product 2, offset by large increases in Product 3
• Product 3 has almost 9% lower margin than the other products, therefore future profits will be negatively affected if this trend continues

Hopefully this demonstrates the power of not just having Data, but appropriate Analysis and adding even the smallest amount of Reporting ….  you CAN manage what you CAN measure!

Contact Jayne at JBC here to build your Quality Decision Making Processes