There comes a time in every growing company where the managers and executives need to start making decisions based on facts and data rather than gut feel and emotions. Typically, there is a large-scale investment in business intelligence in order to collect, process, and consume data in a meaningful way. Unfortunately, there are a slew of pitfalls that can undermine the effort resulting in no positive business result. As Business Intelligence Consultants, we run into these mistakes regularly. We are usually contacted when a company is struggling through one or more of these problems and need help addressing them. For those companies that are about to venture boldly into the world of Business Intelligence and dashboarding, here are some top hazards that can undermine those efforts.
While in your executive scorecard meeting, someone in the room asks, “Is this data right?” If there is not a quick real-time way to drill-down and verify the data, the credibility of the Scorecard is shot. At this point, it’s difficult to talk about what needs to be done. You can’t get to an agreement about next steps and there are assignments made to go figure out the accuracy of the data. Depending on the rhythm of your scorecard meeting, this could be an entire week or even a month wasted. When the managers convene again, the credibility of the Scorecard is likely still in question. It doesn’t take too many meetings like this until the meetings stop happening and everyone tries their best with their own spreadsheets.
There’s a number of root causes for inaccurate data and we will get into these reasons in a separate post. The most prevalent issues include: Data Latency, Manual Data Collection Processes, Calculation Discrepancies, Multiple Data Sources, and Metric Definitions.
We have seen Scorecards with literally a hundred metrics on it. How is a group of people going to have a meaningful discussion in a few hours about a hundred metrics? When a scorecard has too many metrics, it means that the hard work of honing down the metrics to the most critical set has not yet been done. At the top level, it’s ideal to keep the scorecard discussion to around 10 primary metrics. These primary metrics may have related supporting metrics that can be investigated in drill-downs. But, once the Scorecard grows larger than 30 metrics, it’s time to talk about winnowing down to the core strategic metrics that matter most.
Some people think that once a scorecard is put in place, it will manage itself and the business will automatically start improving. A scorecard is merely a tool to be used by the people that run the company. If there is not an owner of the Scorecard initiative whose responsibility it is to make the scorecard impactful, the initiative is doomed to die a lonely death. It needs a person or champion to make the effort successful. Most managers and executives are busy with a hundred other activities running their business and team. A Scorecard Champion needs to shepherd the users driving the annual/quarterly metric selection process, assisting users with the tools, ensuring compliance with data collection and scorecarding processes, and track action items.
The mere existence of a dashboard or a set of reports does not mean that users will come and look at the data. Because more busy managers activities are driven by their schedule, unless there is a regular cadence to review and discuss the Scorecard values, it will likely get neglected and there will be minimal business impact. To get the most out of a Business Scorecard, the team needs to agree on a regular cadence of meetings, review the numbers together, and commit to activities that will affect the Scorecard results.
If a metric has no owner attached to it, it needs not exist. It will become a neglected orphan that nobody cares about. If the metric is important and needs to improve, assign it an owner. Information does not bring about business results. People bring about results by using information and taking action on it. The metric owners need to be engaged and come to each scorecard meeting prepared to talk about their metrics, why it is the way it is, and what they are going to do about it. If they have made previous commitments, then they should also discuss the progress of those commitments.
Affirma Consulting has helped numerous clients set up the appropriate tools and processes to start having meaningful discussions about their business. An ineffective scorecard tool or process is akin to driving blind. Avoid missing opportunities to increase revenue and/or delight your customers. Contact us and let us help you start making impactful decisions based on your company data.