RETURN ON TECHNOLOGY: Trends can be more illuminating than fresh data

Sanford Kahn, a business trends analyst, (www.businessspeaker.biz/ ) once wrote that it is a myth that information is power, and I agree with him. If it were true, the public library would rule the world. Google would run a galactic empire.

Instead, in the halls of the real power structure in the world’s most powerful nation, our government suffered one of history’s biggest forehead-slappers after its intelligence organization confused rhetoric with reality over weapons of mass destruction. In this case, information was not power, but befuddlement.

Computers, with their speed and tirelessness, were supposed to take care of this problem. Tell a computer how to filter the signal from the noise, then sit back and feed it an endless stream of chatter. It would give you back clean, clear signals you could act on.

If you don’t recognize business data as chatter, you haven’t been listening. Every department generates hordes of results you can measure, count and juggle.

Take shipping, for example. It used to be that you could count the number of shipments per time period, and that was good enough to know if things were going well. No longer. Now you can electronically track every item in inventory, using radio frequency identification or bar code.

You can also measure the productivity of each employee in several ways. If paperwork is replaced with online forms, you can measure how quickly transactions take place, and where they hang up in the system. All of this is available in real time, as it happens.

You can literally hover over everybody’s shoulders simultaneously, watching their work unfold. All of it seems valuable. Little of it is day by day. The availability of data does not predict how useful it is, yet today’s managers seem eager to snap it up as quickly as it’s generated, and would gladly pay for a time machine to get the outcome data before the action happens.

In fact, you can now know so much from your shipping area alone that you need a computer to digest the data and turn information into things like “executive dashboards.” You can sit at your desk and watch dials that tell you how all sorts of things are going at any given moment. And if you’re like many managers who have these things, they’ll drive you crazy. The dials jump and jiggle. Do you act on this jiggle or that jump? When do you intervene in your own operations? You now know more than you ever did, and it may only confuse you.

The problem is randomness, everyday variability that pushes numbers up and down. There is a story about a consultant who accompanied his client, a corporate president, back to the president’s office. The consultant spied a longtime chart on the wall, the type that shows spikes up and down over days or weeks. The consultant pondered the chart for a moment and asked what it was for. The president replied that it showed how things were going in the factory. The consultant looked for a long time at the marching squiggles and finally asked, “So, how are you doing?” It was the president’s turn to look at the chart for a long time. He then said, “Well, we have our good days and our bad days.”

The problem here isn’t getting information, but getting actionable knowledge out of it. That’s the drawback to a lot of executive dashboards that have appeared in the past few years. The theory is that if you identify just the right metrics for yourself, you can sit in a chair in a plush office and just watch dials spin, like the operator of a nuclear power plant. You can get time series charts, spreadsheets and many other statistical gadgets, but most of them don’t add up to knowledge.

Worse, the results can come in way too fast, making it seem as if you have to act on every dip and swing. Data and information may be more valuable the fresher it is, but not in every case. Speed is not always of the essence. Trends can be more illuminating than momentary jumps.

Take the example of the president’s nearly worthless chart. The data itself is valuable; its presentation is not. If he had borrowed a concept from Six Sigma and placed upper and lower control limits on his chart, it would have suddenly leapt into relevance.

But even with those simple additions, he had to accumulate data for weeks or months for the chart to have any meaning. Watching daily fluctuations in a dashboard wouldn’t help him. Only the accumulation of data over time will give him the view he needs.

Just because data is available doesn’t make it valuable. Resist the temptation to watch too closely.