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Why interacting with the data in your MIS can help you achieve your business goals
There is a veritable treasure trove of information in your MIS, potential chunks of gold ready to be prospered, that will help you make the best strategic decisions and steer the direction of your business.
But if you and your team don’t really understand that information, those chunks of gold become undiscovered and worthless.
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The difference between seeing data and understanding data
I’m going to use a study from the book ‘Smarter, Faster, Better’ by Charles Duhigg to illustrate the difference between seeing MIS data and understanding it.
In 2008, South Avondale Elementary School was the worst-performing school in Ohio. But it wasn’t because it was short of funding – it had millions of dollars of funding from the city of Cincinnati, and additional support from local companies such as Procter & Gamble. They didn’t face the challenges many schools do of having limited resources, in fact, they had some of the best tools including sophisticated software to measure and track students’ performance and display it on dashboards for teachers to view.
Yet in 2008, 63% of South Avondale’s third graders failed to meet the state’s basic educational benchmarks. What intrigued me about this was that 90%+ of teachers admitted they never even looked at the dashboards. I’ve always seen such positive results for businesses who use their Management Information – If you can measure it, you can manage it. So why not so here?
Well Cincinnati's Board of Education thought they knew, and so they tried something different. They targeted South Avondale and 15 other low-performing campuses with the ‘Elementary Initiative’, which was a reform built around the idea that data can indeed be transformative, but only if people know how to use it.
They asked teachers to use a ‘data room’ where they had to transcribe test scores onto index cards, draw graphs, and run impromptu experiments. ‘Do test scores improve with smaller reading groups?’ for example. They would then scribble the results onto whiteboards.
“Something special happened inside those data rooms,” said Principal Yzvetta Macon, who served as Turnaround Principal during the school’s transformation.
Nine months after the initiative first started, teachers were visiting the data room every day to try new experiments, and the school’s overall test scores had more than doubled. The school advanced three ratings in the 2010-2011 school year - the largest gain of academic achievement in the history of the district.
“South Avondale shows there’s a difference between finding an answer and understanding what it means,” said Principal Macon.
Rather than just receiving information, teachers had been forced to engage with it, which made them understand it. And it was only when they understood it, that they realized what they had to do to improve things.
Why does interacting with data make a difference?
One strong possibility is when we’re surrounded by too much information, it makes it harder to focus on the important stuff. We get ‘information blindness’ – when our minds are unable to absorb data because there’s too much to take in.
Professor Martin Eppler from the University of St. Gallen in Switzerland studies information overload and says that: “the quality of people’s decisions generally gets better as they receive more relevant information. But then their brain reaches a breaking point when the data becomes too much.”
Have you ever been to a restaurant and been faced with a menu packed with choices? Felt hungry and knew you really wanted food but found it difficult to choose what you actually wanted to eat?
Studies show that when people are trying to choose their pension plans, and are given more than 7 options for which type of fund to put their investment in, they are significantly less likely to make a decision and often neglect to choose any plan at all. If you keep adding more options, people will be less likely to make a decision and more likely to just put the information in a drawer and forget about it.
Our brains crave a maximum of 2 or 3 options, so when we’re presented with lots of information to make a decision with, we cannot process it all and we end up leaning towards a more binary decision…
Option 1: “Should I try to make sense of all this information?”
Option 2: “Or should I ignore it?”
Avoiding information blindness
To avoid information blindness it is suggested that you need to interact with the data, break it into smaller pieces and understand each one, before putting it all back together.
We basically just need to choose Option 1 above (or make it a requirement for your staff to do so, just like they did with the teachers at South Avondale Elementary School).
To illustrate this point, Professor Adam Alter at NYU says that when conducting experiments, he sometimes provides his subjects with instructions in a hard-to-read font, because having to struggle to read and process the words actually increases their understanding and retention of the instructions.
The key takeaway here is that you can’t just send round MIS reports to your staff and expect them to understand the full connotations of the information within them. You need to make sure that they understand how any figures are calculated and where the data has been pulled from. This will help them to really understand what it is that they should be expecting to see in the report, and what needs to be done if the reports don’t show what we’re hoping for.
Getting your team to understand and interact with key MIS data
To put this into practice in the real world, I recommend having a review of the reports that you currently produce from your MIS data and highlighting the important KPIs for each department e.g.
- Year-to-date sales
- Value added %
- Estimate conversion rates
- %OEE
You should then sit down with each of the relevant teams, explain why their KPIs are so important to the business, and demonstrate how they are calculated, before providing them with real MIS data and getting them to perform the calculations themselves. Consider repeating this on a regular weekly/monthly basis with the latest data. You can increase understanding even more by asking them to manually plot the monthly figures on a whiteboard. There’s something about manually interacting with data that makes it easier for us to absorb.
Collaborate and talk about it
I believe a secondary point that might be overlooked in the study about South Avondale School is the hidden benefit of staff getting together and collaborating. Sitting in a data room and recording the results together fostered an environment for the teachers to talk about the reports they were compiling. It allowed them to share different ideas and ways to group the data and tackle the problems to see if it improved the results.
Duhigg refers to another working example of a consumer debt collection call center for an American bank, where the team handling the oldest debts were outperforming any other team in getting payments made and getting positive feedback from the customers too! Traditionally the older the debt the more unlikely it’s ever going to get paid. So why the unexpected results?
It was all down to the fact that the team analyzed their data collectively and talked through ideas they wanted to try out to see if they improved results. They’d then go away and try the ideas out, measure them, and review them again. This helped them to identify the best time to call different profiles and how to talk to them, depending on their circumstances. For example, calling the home number for female homemakers mid-morning because women are more respondent to paying off debt, and there was a good chance they would be home at this time. And calling business people around lunchtime on their cell and verbally recognizing they were catching them in-between meetings to help make them feel important… The different ideas were often subtle but by tracking and talking through the results they continued to refine and improve their approach and results.
The opportunity here is to consider having meetings to discuss results, and maybe from that compile a summary. Maybe even use live reports, or dashboards that you can interact with as a team to discuss what the results mean to the business and come up with innovative ideas of what changes could be tried to affect performance.
Start with your North Star
A North Star Metric is a powerful concept that has emerged in recent years from Silicon Valley. It’s a way of focusing on the one single metric that best captures the core value that your product delivers to customers. Focusing on just one key metric makes it easier to get your team thinking about the one thing that is most important for driving growth for your company. It can also help with decision-making and prioritizing, knowing that any choices or actions need to be aligned with your key metric or goal.
As a starting point, you could consider using your contribution/sales% (c/s%), a ratio that measures the amount of sales available to meet your overheads and thus provide for profits. If you get your team to really understand the calculation behind the ratio, they will understand why it’s so important to focus on jobs that provide the best c/s% for your business. They may even start to devise ways to increase this percentage, the way the teachers at South Avondale Elementary or the team at the American bank did with their data.
