I was deep in conversation with an executive about how to make scorecards more actionable when he said something like:
I understand that I should focus on KPIs that are red and trending down but, honestly, I don’t trust the data.
This is perhaps the true Achilles Heel of Performance management. If end users don’t trust the information they receive, they are unlikely to take any actions – and performance won’t improve.
This particular exec isn’t unique. A survey of C-level executives by the Economist Intelligence Unit showed less than 1 in 10 believe they have the information they need to make critical business decisions and only 1 in 2 believe the information they do have is reliable. The result is management by intuition rather than management by facts.
Turning raw data into trusted information is the domain of Enterprise Information Management (EIM). True EIM is more than just data integration and data warehousing — it focuses on three areas:
- Lifecycle management – from source, to consumption, to retirement
- Unified information – structured transactional data typically associated with BI but also unstructured data like text in call center notes and master data typically associated with customer or products
- Data lineage – exposing the user of information to where it came from, how it was computed, and when it was updated
Adopting EIM can help with lots more than just having executives trust their scorecards. It allows everyone in the organization to make better business decisions. For example, imagine a PC manufacturer that receives an order from a consumer for a disk drive that is out of stock. With trusted information, they can compare the fully-loaded cost of back-ordering the drive (including the cost of a separate shipment) with the cost of delivering a larger drive without charging more to the consumer. In many cases, the second option is financially preferable, even though the raw material is more expensive.
It may be counter-intuitive but it’s good business. And probably helps with customer satisfaction. Performance Management needs trusted information.
EIM, welcome to the performance management family.
In your conversation with the customer, he said he should focus on red KPIs trending down. Why is it that so many managers turn into bulls when they see red and start rushing after it?
The past notion of business is like the old stage act of spinning plates atop thin sticks. Each had to be maintained separately and trick was to get into a rhythm to keep all the plates spinning. Focusing on individual plates (or KPIs) to keep them spinning (or green) loses the interdependencies that really are active in business. A strategic approach is less about spinning and more about balancing.
In your example, merely replacing out of stock hard drives would be the spinning plate approach. Looking at connections rather than individual “plates”, a balanced decision arises that brings about a better outcome.
More information to make better strategic decisions might help stop that stampede toward any red flag, because we all know about the bull in the china shop. When a bull sends plates spinning – look out!
Information management also includes data quality, of course — tracking the quality of data in corporate systems, stopping bad data from getting into systems in the first place, and cleansing it if it does…
A fun example of what can go wrong, even with a single stupid data entry error (true story): Why Data Quality is Important
Yes, EIM includes data quality. Without quality, end users don’t trust the information that they get. I once ran a Web seminar titled “All Data is Dirty; The question is whether yours is filthy”.