Making Fact-based Decisions

The latest issues of Information Week has a great article from Doug Henschen titled “From Gut to Facts”. In it Doug outlines many concepts that I totally agree with.  He suggests that organizations should start with goals, focus on the right measures, foster a data driven culture and look to Internet companies for best practices.  We use a model that is shown below:

As you can see we also believe that it is important to look at the right measures including the drivers of those measures (we collectively call these metrics) and that targets should come from the business plan or improvement initiatives.  We think it is very important that variances from target or best practices are quickly identified, analyzed and corrected.  There are some other aspects of this continuous improvement model that I’d like to highlight in addition to the great material provided by Doug in the article:

1.  The timeliness of the metrics is very important, but doesn’t have to be real-time (seconds or sub-seconds) and won’t be the same for individual metrics.  We use the concpet of “right-time”, which is an easy to describe the right level of granularity for each metric based on how it will be used to make decisions.
2. The performance information should not just be limited to executives and managers.  There are many people in an organization that make daily operational decisions that will impact performance and business results and they should all have access to relevant, timely performance metrics together with the ability to interactively analyze that information in order to make better decisions, more quickly.
3. Because the performance information should be in the hands of everyone making decisions, intuitiveness, ease of use and visual appeal are important to ensure broad adoption and usage.
4. We use the term “interactive dashboard” to describe our ability to visualize, understand, receive alerts, analyze performance and perform scenario analysis.  In the article Doug states that dashboards don’t tend to show pre-defined targets or goals.  We may be the exception but we firmly believe that in order to improve performance, every metric should be shown against a target, goal or best practice.

There is a quote attributed to the VP of Business Improvement (great title!) at Johnson & Johnson that I think is just brilliant – “It comes down to fact-based decision making.  In tough economic times you want the best available data and analysis to make better decisions.”   This is absolutely true and the extension is that everyone making operational decisions needs this in a highly visual, interactive, intuitive way that encourages them to apply that data and analysis to making better fact-based decisions.