Archive

Mapping data - where did that come from?

Sometimes insight really does slap you in the face.

Do your organisation's activities have a geographical element?

Of course they do. Different skills at different locations, colleagues travelling between sites, vehicles on the road, projects across the country, goods being transported, customers being visited.

Do you know where they are? What can you learn from showing this on a map? And with a street view?

Often quite a lot. Clusters of activity with common characteristics. Areas where you're unrepresented. Emerging trends, both good and bad. Efficient travel and areas to avoid. A geographical organisation that matches skills with needs, or not.

Often, in other words, the reason why. And once you know why, you can make things better.

Our sister company, Map Insight, can show you how. Quickly. Get in touch at info@mapinsight.co.uk

Hans Rosling - this man knew how to present numbers clearly

http://youtu.be/jbkSRLYSojo

Is big data too big a challenge?

'The problem CFOs face ... winning business advantage from big data is what to do first ... there is likely to be information that could deliver answers to a bewlidering array of business problems. The difficulty is formulating the right questions.' Extract from Financial Management, March 2017.

Executive Intelligence can help. Formulating the right questions is what we do.

Our challenge then is to present the problem so clearly that the solution is obvious.

Decisions based on data?

In an article headed "Time for the government to make decisions based on data", Charles Tilley, CEO of CIMA, suggests that "...many government decisions appear to be based on a hunch and not evidence...central government...is awash with facts and figures but lacks data that can be honed...certainly politicians must continue to make political decisions but they need to know the facts first...".

Here at EI we can only agree. Over almost twenty years of supporting public and private sector executives making difficult decisions in complex environments, we have seen by far the most successful leaders make the greatest impact when they have access to clear, concise, relevant information.

In a challenging political and economic environment, their survival has depended on it.

Staggering Income Tax

As Management Today says, income tax can already be pretty staggering. But its proposal is income tax bands that rise and fall according to your age.

Start at a low base of maybe 10 per cent for those under 25 and increase to a peak of perhaps 60 per cent for those between 60 and 65.

This, it suggests, would tackle the huge imbalance in wealth created by the property boom of the last 15 years, which has led to a glut of empty nesters sitting on a fortune in bricks and mortar. Their children, in contrast, are the first generation in living memory to be poorer than their parents.

This young generation should then be better placed to play a more active role in the consumer economy, get on the property ladder, start investing in their pension - all those grown-up things they say they can't do now...

What a great idea.

Is Artificial Intelligence smarter than us?

Not yet, according to 'Financial Management' magazine.

"...it should have a decision support role ... clarifying information, identifying patterns and highlighting relationships that humans can then act upon ... even today, IBM's super-computers have 150,000 processors and 144TB of memory - yet can only equal the brainpower of a cat ... it is crucial to remember that humans are still better than machines at learning from complex experiences and dealing with ambiguity ...".

Although some cats are pretty smart ...

New techniques for graphical communication

Familiar techniques stand the test of time because they are so effective ... but occasionally along comes a new one that seems just right.

The traditional approach to temperature contours:

http://dl.dropbox.com/u/3476601/tcoe%20graphics/world_temp_07x21x2010.gif

and a cleaner approach to a similar problem:

http://www.noaanews.noaa.gov/stories2010/images/map-blended-mntp-201006.gif

Hilarious and too true - the heirarchy of digital distractions

http://www.informationisbeautiful.net/visualizations/the-hierarchy-of-digital-distractions/

Managing dynamically in a complex world...depends on excellent information

http://www.ft.com/cms/s/0/d57bebe0-c27b-11de-be3a-00144feab49a.html?nclick_check=1

Why insight is essential and technology can�t provide it

[reprinted from the Institute of Business Consulting's Body of Knowledge]

Essential: vitally important, fundamental

Insight: penetrating and often sudden understanding, as of a complex situation or problem

The recession and its causes have reminded us to take nothing at face value - when things seem too good to be true, they usually are. The credit crunch is a salutary reminder that, in good times, as well as in bad, we need to know the real health of our businesses: where we are, where we’re going, and the risks we’re taking.

If, armed with such insight, managers can make informed and balanced decisions about cost-cutting, risk reduction and investment, businesses will emerge, not only unscathed, but stronger than ever.

So how can we best inform these tough decisions?

What’s the challenge?

I once challenged the inventor of a sophisticated search engine to build a business analysis engine - a software machine into which gigabytes of the latest business data could be poured. I wanted him to come up with something that, in response to a series of broad business questions, would produce valuable insights to inform executive decision-making.

He declined on the basis that artificial intelligence wasn’t yet up to it, unconvinced it could shed much light on an organism as complex as a business. But what about so-called Business Intelligence software? Couldn’t we just enhance that? Make it a bit more intelligent?

On reflection, he was right to say no. There are two main reasons why computer-based business ‘reporting solutions’ fall short.

Firstly, they rely on models that simulate the way a business reacts to inputs - with built-in priorities, structures and behaviours. Such models are rigid and crude. As the business and its environment change, rapidly flexing and evolving, the model can’t keep up.

So, what happens? Well, either there is no model - diverse measurements are reported and little attempt is made to connect them - or the model flags a Red when it finds two Ambers, and so on, until it becomes obvious that the model is wrong.

Ultimately this is a Catch-22 problem: to gain insight from the system we must first programme insight into it.

Secondly, even if we do make the most of these imperfect models, we’re often hit by poor implementation. Typically, making data and software the starting point rather than users and their needs produces a result that is out of line with the priorities of the organisation. As for the vital ‘user interface’, it more often displays a fondness for gimmicks rather than the sound principles of graphical communication.

And when the system is used? Just don’t ignore the Business Intelligence small print when it says, “this software won’t totally remove the need for people to think.” The business case may promise a “headcount reduction”, but what happens when the few people who remain are too busy to look at - let alone think about - the output?

The typical outcome is expensive failure: long implementation time frames and high expenditure, approved by senior executives who rarely see the benefits.

So, should we dismiss technology altogether? Of course not. It can play a highly valuable role - in enabling managers to discover what is going on.

What we do need to do is distinguish between management information - accurate, pertinent business data - and a report, which should add insight by analysing this management information and presenting conclusions.

So, the ideal ‘reporting solution’ is a balance of two things: the technology, to provide consistent, efficient access to information, and the people who have the knowledge to interpret this information.

How do we put a reporting solution in place? What do we need to know?

The right approach forgets about technology and first thinks hard about what the organisation wants to achieve, how it does this and how it knows it is succeeding.

Again, events have reminded us that apparently sensible performance measures can lead to unintended (and unwelcome) behaviours. “Maximise shareholder value and share the benefits” can be interpreted as “maximise immediate return and get rich”. And whilst investors are warned they can lose as well as gain, remuneration schemes have been less symmetrical.

To incentivise the right behaviours, we need to focus on the right measures. If growth is the key to success, then both business development and growth indicators will be important, i.e. contract wins or revenue growth, not revenue itself. If the customer experience is key, looking at the efficiency of internal departments misses the point. But a single view of performance from the customer’s perspective will hit the spot.

Next, how is the organisation structured to achieve these objectives? This is the organisation as a single body, not independent organs. For example, customer feedback is connected to research, the resulting new products require production and sale, after which support will lead to further customer feedback.

Managers already receive objectives specific to their functions so the task here is to define measures that encourage the connections between functions to work well. Do we have a match between production resources and what the sales team has sold? This can often expose weak connections - where things are thrown over the fence from one function to the next and it’s the final, customer-facing department that takes the flak.

If the relationship between functions is mature, success will relate to efficiency. If it is brand new, then to effectiveness - simply making things happen.

All organisations are subject to external influences, so reports must also include relevant information on suppliers, customers, regulation, the economy and so on.

And finally a completeness check: do we have a balanced suite of measures that will encourage the organisation to achieve? A mix of current and forecast performance? Of financial, operational and project measures? Across products, people and geographies? Internal and external? Highlighting opportunities as well as issues and risks?

If so, we can progress to the next step. No, not technology yet.

How should this content be presented?

Here we need clear, concise reports. Information that jumps out. Reports that communicate problems so clearly that decisions become obvious.

Unfortunately, this is not most people’s strength. The most common presentation medium is out-of-the-box Excel, which leads to randomly-selected 3-D graphs, garish colours and dark grid lines.

The standard financial reports are tables of figures - variance to budget, forecast, last period and last year, for one figure after another, on and on.

Then there are vague project essays, listing what has been done but - crucially - not what hasn’t, the implications and what is needed to bring things back on track.

And finally, there is the technical approach. Business Intelligence dashboard gimmickry - simulated fuel gauges where the least prominent feature is the ‘needle’ showing performance. As Stephen Few¹ suggests, “insisting on sexy displays similar to those found in a car when other mechanisms would work better is counterproductive”.

Like the weather forecast, we lose interest in current reports long before any relevant fact emerges - sometimes the writer’s intended outcome.

So how do we find precisely the right form of presentation?

In most cases, the financial report is not for Finance, nor is the project report for the project team. Their purpose instead is to enlighten others. So it is important to employ the most suitable form of presentation to communicate each type of information. Too much has been written on this subject (and generally ignored) to do it justice here, but a few words might be useful.

When we just want this and last month’s numbers, a table of figures is efficient (if not very enlightening); if it must be a table, we keep borders pale so the key facts stand out.

But if we want to spot trends or present forecasts, a graph will reveal what even the most skilled financier can’t find in a table. Stephen Few again, “graphs ... give shape to numbers and ... bring to light patterns that would otherwise remain undetected.”

In many situations it is of course these patterns that are of interest - are sales or costs rising or falling? Programme delays random or systematic? Staff or customers staying longer or deserting sooner?

We have already mentioned the (mis)use of garish colours. Particular care must be taken to use colour appropriately in graphs. As Tufte² says in the context of map design, “aggressive colours ... render the map incoherent”, whereas the standard “grey lines are a miracle of information design”.

With the traditional red, amber, green traffic light system for performance measures, green (“OK”) is often superfluous and distracting. Instead the use of just two colours, say red and pink, is very effective, with red strictly limited to where there is a problem.

The discipline of project management is well established, but project progress reporting is a typically neglected element – hence the essays mentioned above, or the endless and impenetrable gantt charts. Effective one-page alternatives include commented milestone charts and strategy charts (the latter hinted at in the picture below).

So, it is possible to communicate complex messages effectively. With subtle emphasis - bold text or some colour highlighting areas for attention - the right mix of text and graphics will communicate performance and trends at a glance.

Here it is also worth noting that much of what is monitored should not be reported - otherwise, key messages can too easily be drowned out. This requires a systematic approach, not simple exception reporting. First, an analyse-prioritise-distil sequence and second, careful attention to context - presenting related information together, so connections are clear and key points are more easily absorbed.

Finally, and most importantly, what brings life to a report is commentary - something software can’t yet do - so we leave space for that.

The outcome is a report structure: concise headlines of performance and key messages, clearly presented supporting information and analysis, and a final pointer for readers to sources of detail.

How do we produce it? And make use of it?

Now we know what we want, how do we put in place a process and ensure it continues to provide regular value for decision-makers?

This is where we take advantage of technology - its ability to collate data from diverse sources, perform rapid calculations, and present the results in a consistent format. To tell us how things are.

So we automate, lightly.

We need a reporting tool that will sit on top of powerful systems and large data sources. But we don’t need the tool itself to be powerful – just flexible.

As we said earlier, priorities are unpredictable - we don’t know in advance where issues will emerge - and the business will in any case evolve. This must be reflected in the report, so its producers need a tool that enables them to flex content at speed and control how it is presented.

The degree of presentation flexibility this requires is absent from much of today’s off-the-shelf business software. But it is absolutely feasible to build a robust, user-friendly tool - and a small ‘library’ of reusable graphical elements - from familiar desktop software.

Most managers are familiar with the MicroSoft PowerPoint report format, so an MS Access-based tool works well. Data from disparate sources across the organisation is collated each month and quickly imported into an Access database; the tool then populates template pages with the latest data and exports these pages to a PowerPoint outline with gaps for commentary.

With careful design, this tool can be very user-friendly - used by non-technical people not only to produce reports but also to analyse the data (often data that is held in a single location for the first time) and to make rapid changes to report content and layout.

This approach has proven suitable for FTSE100 businesses - don’t let the IS team tell you otherwise!

The speed brought by automation frees time for the report producer to interpret the information, identify emerging issues, drill into them and form conclusions. And finally to prioritise and present this insight for decision-makers in a clearly-accessible format.

Leaving no excuses for poor decisions.

So, my feelings about technology? Think first about what you need, not how it will be produced, and you won’t be constrained by technology. Human/machine teamwork can bring real business benefits, as long as we don’t expect too much of the machine.

Until, that is, we really do have artificial intelligence.

¹Few, Stephen, 2006. Information Dashboard Design. Sebastopol (CA): O’Reilly Media Inc.

²Tufte, Edward R., 1997. Visual Explanations. Cheshire, Connecticut: Graphics Press

What's so clever about evidence-based management (EBM)?

Bernard Marr* suggests five steps for organisations to take in the quest for objective and effective decisions:

1) define goals and information needs - articulate what the organisation wants to achieve and the information that will support this.

2) collect the right evidence - find sources where the evidence (the data) isn't available today.

3) analyse the data - analyse it, put it into context and convert it into relevant insight.

4) present the information - communicate this insight in the most appropriate form.

5) make evidence-based decisions - convert information into action.

Nothing particularly radical there.

So why are Tesco and Google - who use this 'evidence-based' approach to decision-making - unusual? And very successful.

Perhaps they don't, as Robert Sutton of Stanford University suggests, do what everyone else does or continue to do what their own company has always done.

An approach that is back, in fact, to Jim Collins', "honest confrontation of the brutal facts".

*Chief Executive of the Advanced Performance Institute, in June '09's 'Financial Management' magazine.

What really drives organisational change?

The UK government’s Chief Whip, Nick Brown, was interviewed by the BBC yesterday about the MPs’ expenses scandal.

One of the interesting assertions during this interview made sense in the broader context of organisational change.

That was this.

The critical driver of the imminent changes to the expenses system has been transparency. The absolute urgency - essential for significant change - has come simply from the public’s awareness of, and then reaction to, what has really been going on.

There are many reasons for avoiding transparency. And for sticking to ‘the way we have always done things’.

What is sure is that while transparency may not always lead to organisational change, such change is close to impossible without it.

Cutting costs - optimising reporting and decision-making processes

The current economic crisis is driving some companies to slash costs wherever they can. But this will quickly prove counter-productive, weakening the businesses and threatening their future.

In our experience, companies often take these drastic steps before exploiting opportunities to focus on effectiveness - opportunities only revealed after they have optimised their reporting processes.

Companies can improve operational performance by 5% - 25% after optimising reporting and decision-making processes.

In many cases we can achieve this improvement quickly, with the three-step approach we have developed that starts with the following questions:

1. Does current reporting focus only on the most relevant business numbers?

2. How are these numbers used in decision-making?

3. How well does action follow decisions?

We start these assignments only when confident of achieving the kind of performance improvements mentioned above - aware our clients need fast results - and as a result are open to performance-related compensation.

We deliver our initial analysis free of charge.

Controversial views from Tom Gonzalez on Business Intelligence and dashboards.

http://dashboardinsight.com/articles/new-concepts-in-business-intelligence/the-future-of-bi.aspx

Some thoughts on report content and performance measures.

The right content is essential. The wrong information can produce 'perverse' behaviour - sometimes very quickly.

"I have only made this letter rather long because I have not had time to make it shorter." Pascal, 1656. The concise communication challenge has also been round for a while ...

... but 'as few measures as possible' (simple exception reporting) isn’t the way to achieve it. Effective monitoring requires completeness and communication requires context.

The ‘post it’ approach to defining performance measures - writing everything you can think of on ‘post it’ notes, then grouping them - is easy. And flawed. A good suite of measures takes effort. Its value becomes evident later.

We start with the information universe: what must we take account of in our decision-making? What information best represents our organisation - its objectives and structure, its activities and output - and the environment in which it sits.

Our decisions can only influence the future, so we need measures that will learn from past performance and inform the forecast.

Reports can also provide more general communication. But be careful to separate this from the more focused decision-support reports.

Data consistency is often more important than absolute accuracy (and even availability), at least in the short term. We define what we need and can’t afford to wait until perfect data is available before starting to report.

"If you are doing any sort of analysis, there might be hundreds of available data points – many of which can be measured with precision. And you may get precisely the wrong answer." Abby Joseph Cohen, CFA Institute

Data collection may well have to change - the annual staff survey is interesting, but too infrequent to be a useful performance measure.

A few thoughts on report format and communication

An insightful report is useless if not communicated clearly. Bad design can really get in the way.

The financial report is not for the Finance team. They need much more detail.

Be wary of technical gimmicks. Bouncing needles on dials will quickly begin to irritate.

Trends are best shown graphically, not as a spreadsheet.

Avoid the standard colour palette.

A new report will take time to become familiar. When it does, readers will grasp its key points very quickly.

The corporate logo is not a performance measure. Don't give it much space on the page.

A long report provides a reason not to be read. Or, at least, an excuse.