Business owners have plenty of data. You can run reports from every system. You can generate measurements and ratios of all kinds, chart and graph everything and create massive, highly impressive spreadsheets with unlimited tabs. We can pivot, slice, and extrapolate information in every direction and view it from almost every angle.
But what do you do with that data?
Does it help you make better decisions? Change behaviors? Determine how to address a customer request? Do your teams know how their actions support whatever financial results you are trying to achieve?
We believe in the power of numbers to inspire different outcomes, to drive change at the individual level, and to increase team motivation. But in order to do so, leaders must shift their focus from creating volumes of data after the fact, with no context, and largely disconnected from both corporate objectives and individual actions to uncovering critical insights that help them make better decisions.
Making the Shift
For data to become actionable insights it must be:
- Connected to Corporate Goals
- Timely
- Relevant
The first requirement is to establish clear corporate goals. KRD uses a series of tools to help businesses build alignment first among leadership, and then throughout their organization. We consider defining the organization’s “WHY” (based on Simon Sinek’s TED Talk ) a critical foundation for any financial plan. Only after your high level WHY statement is captured, can you begin to engage your teams in helping envision the ideal outcomes for the business — from a financial, customer, operational, and people perspective. This leads to the identification of concrete departmental goals and critical success factors. Only after these are defined can you get teams involved in identifying the actions that need to be taken and in creating measures that can serve as key performance indicators.
While many companies are skilled at having leadership create measures and then applying them to teams, fewer companies are actually involving their teams in identifying the most critical activities and determining what to measure. As a result, they end up with volumes of meaningless measures and waste countless hours organizing data.
It is more valuable to create a few key measures that provide the kind of predictive insights that change outcomes than to have countless measures that record what has already happened.
Once measures are created, they must be made visible to everyone in the organization and shared on a timely basis. Rather than wasting time manipulating data, building the perfect visual, or waiting for every number to be reconciled, we need to get information in the hands of workers as it happens, during the course of the day if possible, and definitely before the end of the month. This way individuals can make corrections in support of business goals as needed.
What if you were the quarterback on a football team, and the only information you received in the middle of the game is that your score is “21”?
Is that good or bad? Who is winning? What’s the other team’s score? How much time is left in the game? Without relevance and context, this number has no meaning.
That’s how many employees feel. They are given a financial goal and have no idea how they are supposed to impact it. They don’t know how it relates to them and their job. They don’t know until the month is over if they have achieved their goal. In order to get employees on our team, we need to educate them about the numbers we are measuring and help them understand how they can impact them. Only then can we get them engaged in driving the kinds of outcomes we seek.
KRD Can Help
If you would like assistance in reviewing your reporting and measurement systems, engaging your teams, or creating the kinds of measures that lead to actionable insights, contact Lauren Clawson at lclawson@krdcpas.com.
