How Do You Know How You're Doing?

“Without data, you’re just another person with an opinion.” – W. Edwards Deming

We hope that you enjoyed summer… we did! Now that most everyone is back to work and can focus on loftier pursuits, we continue through the management system with attention to managing data and organizational knowledge.

One of the 12 principles on which we base the management advantage is the need for facts and opinions. Facts inform opinions, not the other way around.

Management by Fact is a critical success factor for every organization. Facts are objective evidence usually deriving from measures. Numbers don’t lie. The interpretation of their significance can be all over the place, but the metric itself must be beyond question. In too many businesses, the path to individual success includes challenging or fighting the scorekeepers until they capitulate to report the result you want.

We’ll talk more about this in an upcoming post about the work system, but reliable measures are frequently unavailable because they are the product of a separate process (measuring) and not the byproduct of core and support processes themselves. So for most organizations, metrics become yet another thing to do and consequently don’t get done.

Comprehensive measures help you see the entire management system – how the place operates -- and processes generate results in one area that flow through to others. At a minimum, measure demand and supply; getting that wrong only leads to big trouble.

Beyond demand and supply, you want a broad set of metrics of how the entire organization performs. Kaplan and Norton introduced the concept of the balanced scorecard almost 25 years ago, but most organizations either ignore it or have implemented it badly. It combines leading (customer satisfaction, process quality, learning and innovation) with lagging (financial) indicators. Any measure can be equated to money, but financial indicators are better at dimensioning the impact of past decisions and actions. Leading indicators, to which we would add employee satisfaction/morale, give a better view of current and future health of the organization.

An initial set of measures forms a baseline against which progress can be judged and new targets set. Comparison of current measures against the baseline, or subsequent targets, inform correction and preventative action as well as goals for further improvement. Measures apply to progress on daily operations, but also strategic initiatives.

If metrics define the what of performance, knowledge management addresses the how of achieving results. Most organizations operate through the tacit knowledge of its people. Writing off most things as tribal knowledge is a cop-out, but ignoring many people’s preference to pick up the phone and ask somebody who knows rather than read a context and procedure is foolhardy. Even if you can’t codify most work processes, foster communities of practice to share the best approach for making things happen. Collaboration is the core of knowledge work, which steadily grows as a percentage of the workforce.

This being the 21st century, managing data and knowledge is impossible without information technology, especially since we’re generating more data on an exponential scale. Because we are increasingly dependent on IT, make sure you have it available for a complete continuity of business under all circumstances. Having robust, reliable, resilient infrastructure is necessary but not sufficient for your success: Having it may not be important, but not having it is unbelievably important.

Alas, because IT and telecommunications are so important to our businesses and our lives, so too are data security and privacy. By all means, safeguard your data, but not at the expense of accessibility by the people who should truly have it. IT enables processes, and good data makes processes seamlessly integrate. Poor data complicates or inhibits processes. As a colleague of ours says, ‘no data is better than poor data’.

Data and knowledge tend to be inwardly focused. Take every opportunity to capture the voice of the customer, which changes rapidly as the pace of change accelerates. And spend time on capturing comparative data to benchmark how top performing organizations within and outside your market segment perform. There’s a lot of learning there.