It’s an accepted fact in a number of industries that more information is always better. Many companies have taken data gathering to extraordinary levels, going to great lengths to document and catalogue vast amounts of painstakingly gathered and categorized pieces of information. Other companies use commonly available numbers with regularity to make important strategic choices about personnel, spending, and other business decisions. One of the things that we have learned in years of digging deep to identify new efficiencies (and deliver more value for lower costs) is that oftentimes opportunities to learn and grow from information are missed. And, even worse, businesses—even some successful companies with well-respected leaders—rely on the wrong data all too often.
I think decision-makers everywhere need to make it a point to ask themselves if they are keeping data, statistics and key performance indicators for a specific strategic purpose, or just for the sake of it. Are they actually willing to make substantive changes based on that information? They also need to determine if they are gathering the right information, and drawing the right conclusions from that information. Because, ultimately, if you do not utilize information correctly, it has no value—gathering data without change occurring is a waste of resources.
Drawing the wrong conclusions from the wrong data is not just a waste, it can be actively counterproductive. I recently read an insightful and thought-provoking article by Michael Mauboussin in the Harvard Business Review (http://hbr.org/2012/10/the-true-measures-of-success/ar/1) that explores some of the common mistakes that many businesses make with regard to gathering and acting on data. As Mr. Mauboussin puts it: “The metrics companies use most often to measure, manage and communicate results—often called key performance indicators… have only a loose connection to the objective of creating value.” He goes on to point out that “We tend to overestimate the importance of information that we’ve encountered recently, that is frequently repeated, or that is top of mind for other reasons.”
Even worse, we have a tendency to try and make the data fit our preconceived assumptions, using information selectively to support our decisions. To me, the bottom line is this: we have access to vast amounts of data, but in many ways that actually makes things harder for businesses. If we don’t use it, understand it or act on it correctly, we should probably not spend the time to track it!