… and any fool will mind it”. ~ Henry David Thoreau. The EPA was in my neighborhood several weeks ago testing well water - never a good sign. It was determined that the subdivision just north and upstream of us had once been the site of a farm contaminated by the dumping of fuel, pesticides and…
OECD data shows the per capita cost of health care in the U.S. at twice the OECD average, with a lower measure of outcome (average life expectancy). I’ve no qualm with health care costs rising as a percentage of GDP; efficiencies in agriculture, mining and manufacturing are going to show up as higher spending levels elsewhere in the economy, with improved health care a clear priority for additional resources for most citizens. But at twice the cost?
This is what the combination of analytics and visualization does best – together they filter out the noise so that you are left with the core concerns. Decision making under uncertainty is tough enough – no sense wasting time and effort striving for precision and accuracy around the WRONG variables or issues. No matter how you choose to mix your metaphors, data visualization turns down the noise so that you can hear yourself think.
It came as a bit of a shock that some customers just weren’t going to pay you. For no good reason. I would ask if perhaps the delivery had been short, or was late, or something went wrong with the implementation, or they were trying to use it as leverage on another deal, or maybe they were having cash flow problems themselves. If so, we could work something out. No, it wasn’t any of those things, this was simply how they treated all their vendors, they’d pay us when they felt like it, or maybe they wouldn’t pay us at all.
Are you a Data Hoarder, or a Data User?
Just as there’s gold in them thar hills, there’s insight hidden in that data, insight that can make a difference, and there are some pretty straightforward applications that can have quite an immediate impact.
“The Finance Talk. When I sit you down and explain that if you miss your income statement, you might get chewed out a bit, but if you miss your balance sheet, you get fired”. In layman’s terms, that means that if I missed the forecast there was a chance I’d get a tongue lashing, but if I was hiding things on the balance sheet, that was cause for dismissal.
Which brings me to the subject of values and corporate strategy. How do you go about communicating these things in your organization?
While the first use of the term “business intelligence” was in a 1958 paper by IBM researcher Hans Peter Luhn, it was Howard Dresner in 1989 (later with Gartner) who defined the term and the practice as we now recognize it. Even I could have invented the concept in 1999, but it was Dresner’s talent that he recognized a decade earlier that the disparate data warehouse, analytic and reporting projects and initiatives needed to be unified under a single umbrella.
The fundamental problem that BI addresses is: scarce IT resources.
What type of data do our brains need to evaluate one of the most important aspects of business planning, ie The Forecast?
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As leaders and managers of human beings with million year-old brain structures, as part of our managerial toolkit we need to keep ourselves knowledgeable about psychology and the cognitive science of how people make decisions. You have undoubtedly read about how innately bad we are at making certain types of decisions, especially those involving risk, probabilities and shifting time horizons.
Part of the reason for this difficulty is the structure and function of our three-layered brain. The complexity and size of the neocortex, especially the pre-frontal cortex, is a very recent evolutionary development. Prior to this development, our mammalian ancestors still made decisions, but they did so relying heavily on the more intuitive, emotional limbic layer. It would be fairly accurate to say that our emotions are simply a different way to make a decision. It’s quick, can still be trained by experience and learning, and can be wired directly into rapid motor responses that most likely saved our ancestors lives countless times, who faced more binary decisions than probabilistic ones. Gut-feel is really “brain-feel”.
When you begin your career your most important skills are your hard, technical skills; the finance and accounting, the statistics and economics, the physics and chemistry, the engineering and calculus. But as I tell my business school mentees, as your career progresses, the emphasis changes such that much sooner than you might initially think, the most important courses you took in college turn out to be psychology, philosophy, literature, sociology and anthropology.
We all bring important skills to the myriad of different conversations we participate in every day, and while confrontation and intervention might not be your cup of tea, applying the right type of analytics to the problem, consistent with its level in the Conversation Pyramid, can immediately make you and your team valuable in either catalyzing your own organizational transformation, or simply improving your organization’s value creation or mission effectiveness.
Whether you know it or not, you are already doing driver-based budgeting and forecasting with your spreadsheets today, but in a very restricted fashion, with only one primary driver, typcially ‘headcount’ for most line items, and defaulting to a weighting of 100%. Not terribly sophisticated, not at all transformative, but ever since VisiCalc it’s been all we’ve had to work with.
Those days are now over.