¿Cómo convertir tus Datos en Estrategias?
Businesses are run on data, this is nothing new. Whether it be financial statements for the board, performance metrics for the staff, or stock movements for the warehouses, businesses are data-driven.
But data is a tool, and as with any tool can be misused. There are pitfalls most people would like to avoid, and guiding principles many would hope to follow, so how do you avoid ‘bad data’ and increase the value of your decision-making processes?
Give meaning, gain value
Not having access to the data required can cripple the agility of any business, but this doesn’t compare to working with wrong or misleading information. Not only could drawing the wrong conclusion drastically change the direction of a company, but a steep downward spiral could quite easily be reported as a steady upward trend if indeed the wrong metrics are measured.
Of course, a BI solution can solve a handful of these troubles straight off the bat, for example by providing a trusted data source, or reusable calculations available consistently throughout your reporting. Without a strong foundation to build your reports over, you’ll be fighting a losing battle.
But let’s say you have a solid platform in place. How can you give your data real value?
Let’s look at an example of how not to present data:
Statistically, nothing about either of these graphs is wrong. The data’s been reported accurately and as recorded. However, these graphs aren’t simply being used as a method of displaying data, they are being used to communicate meaning. And this can be said of all graphs, dashboards, metrics, and summaries.
They clearly highlight the common mistake of confusing correlation with causation. They suggest that the change in values on one axis affects the values on the other. So in this instance, how could we avoid these problems?
When creating any kind of analysis report, I keep three questions on hand. These three questions make sure I’m always offering meaning, and, therefore, the value in my reporting.
What question does the report answer?
This may seem like a simple one, but it can quickly align your thinking to the task at hand. Take the first graph above, had we asked ‘How many people drowned by falling into a pool, compared with the number of films featuring Nicolas Cage?’ then sure, we’d have the perfect graph for the job. Though simply phrasing the data as a question, makes it very easy to see whether the report does indeed have any value at all.
Everyone has seen reports titled ‘Sales Report’ before; classically characterized by including every figure, metric, and calculation relating to an entire sales force, sometimes going back all the way to when the company was found. But what is the data really showing us? What value does this information have to the business? These can be tricky questions oftentimes to answer. However having a question for the report to answer would clear this up…‘How many sales have we made this week?’, or ‘Who are the top performing sales agents?’
These are the important questions, so focus on presenting this information clearly.
How does the report benefit the business?
Let’s take our example ‘Sales Report’ above, full of every sales figure and metric. Ask 5 different people how it benefits the business, and you’ll probably get five different answers. Of course it’s great if your reports can be flexible, however, we’re looking here at ways to enhance your data’s meaning, and showing all your data isn’t one of them.
If however our report answered a direct question, ‘How many sales have been made this week?’ for example, it’d be much clearer how the business benefits from this information. It’d allow the business to understand whether sales targets were being met. Simple.
What action will be made from answering this question?
This final question is often greatly underestimated but comes back to the idea of presenting data because you should and not because you can. There’s a lot of data out there, so which of it should be presented? Well, a lot of it provides valuable insight and could be used to fundamentally streamline a business. But that doesn’t really matter if the business isn’t in a position to make the required changes. There’s no point in knowing how much your offices cost, if you’re tied into a long-term contract you can’t negotiate for example. Or there’s no point knowing that your customer service team is losing you money if they’re as small as they can be and an essential part of your offering.
Keeping these questions in mind as you design reports will help you provide the utmost meaning and value to your business, and not get caught out reporting on Nicholas Cage, or venomous spiders.