by Andrew White | February 5, 2018 | Comments Off on The Maddening thing about Metrics
The Schumpeter article in this last week’s Economist was titled, The Fog of War: If they are to save the firm, General Electric’s bosses and board need far better information. In a nutshell, the article argues that the firm’s leaders are not able to make effective decisions because they do not have useful data, at least data that provides a basis for sound decisions.
Yes they have lots of metrics and KPIs and the like. The author suggests, with examples, that leaders at GE, may have either the wrong data, or too much of the stuff. Some examples include different methods and definitions for what might assume to be a good analytic. The eight examples for what is going wrong touch on everything from capital structure, investment, profit, performance and risk. It is quite damming from a corporate perspective.
It might be that GE is just too complex as a business. It might be that each firm has an effective set of local KPIs and effective data governance, but at an aggregate level it seems the muddle of metrics descends in spades. The article implies that investment decision, based on ROI, are untrustworthy and now investor action is erratic since the underlying numbers might be untested too.
GE is a household name and American Icon. We all hope the firm puts its house in order but the maddening thing here is that the message of the article is not unique to GE; it may just be magnified by its size and complexity. Many firms struggle with meaningful metrics. Having the wrong signal can lead to the wrong decision. Additionally the lack of data, or if the data used to create the analytic is untrustworthy, so is the result. This situation is widespread.
What to do?
We tend to focus on advice that touches on:
On the analytics side:
- Focus on the senior most outcome first. This will help test its validity and organize all supporting efforts
- Focus on one outcome, not more. You have to start small and grow scope overtime.
On the data side:
- Govern the least amount of data for the maximum impact. Aligned with the outcome above, govern only that data that matters. This again means you start small and grow over time
- Not all data is equal. So determine the most important data first, then graduate ‘zones’ or rings of importance.
At the end of the day we even say, “Don’t even talk about data and analytics as that is getting over-used abused, and mistaken for AI and ML (just the latest silver bullet). Focus on decision making and outcomes first. Data, and analytics, will follow. Check out our most recent research in this here: Build Your Digital Business Platform Around Data and Analytics.
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