A lot of our clients understand the value of their data, have spent the time to connect to all their data sources, and teams have spent resources to visualize data in real-time but they still feel lost and don’t know where to go with the information they have.
The first thing that we tell these clients is “Great Job!”,the hardest part of building a data-informed ecosystem is getting started when you have no visibility into the data. After that congratulatory moment – we ask harder questions.
What metrics drive the value of your business?
Clearly the metrics vary for different companies but it also varies based on the life-stage of your business. For startups, net income is the wrong measure. For growth companies, revenue is more of a lagging indicator and doesn’t truly tell you the health of your business. For late stage companies, profit may be a deceptive measure since it doesn’t give you the full picture. So how do you determine the right metrics to look at?
The most pragmatic advice that we at NuView tell our clients is twofold; (i) look at what other similar companies are measuring and (ii)what would an investor/acquirer want to see.
i. Look at What Similar Companies are Measuring
If you have the benefit of publicly traded competitors, investor relations websites are a good source to see what they are sharing with their research analysts on a quarterly basis. This usually remains the same for a couple reporting periods thus you can see the trends that are occurring for those metrics.
Unfortunately, most of our clients are venturing out and creating new types of businesses and tackling huge markets without clear incumbent competitors. Thus, they can’t glean insight from what is share publicly. For these companies, we tell them to look at similar business models or related industries. They may be serving a different market than you but they are running into similar problems that they are using data to solve.
ii. What Would an Investor/Acquirer Want to See?
If you have a board or investors already, be confident enough to ask them. Yes, it is daunting to tell your board you don’t exactly know what metrics to look at but done correctly, this will show you are self-aware enough to know what you are missing.
If you don’t have the luxury then go ask others. There are lots of advisors who talk to investors and acquirers on a constant basis. They can help inform you on what they’ve heard them say. But also get it straight from the horses’mouth. We have found that investors are open to giving you advice on metrics because they know it will help your company do well and in turn make you a better investment opportunity.
What does good look like?
Measuring your metrics is not enough for success. In fact,by having real-time metrics in front of your team all the time without clear goals, distracts your team from achieving what’s important. The most successful data-informed companies have clear goals for each key metric. Each team that has a impact into any metric understands “what good looks like” for that metric. Thus, in all-hands meetings, when a CEO shares a metric, everyone understands that this number is good (at or better than the “good” line) or bad(below what good looks like).
Human nature prefers status quo so introducing a goal that most likely is not the status quo is difficult for employees to lean into. Make sure you incentivize employees to being data-informed. Financially incent them to hit specific metrics as a team. Motivate them by connecting your mission to the metric goals you placed in front of them.
Who is in charge of which metrics?
Companies with a ton of dashboards have a high correlation with unclear ownership of metrics. At the leadership level, the best data-informed companies assign certain metrics to each leader. Operations is in-charge of all the productivity metrics. Finance is in charge of all the cash flow metrics. Marketing is in-charge of all the funnel metrics. All of this sounds rudimentary but we have found that without a clear delegation of these metrics, departments will blame other departments and no one person or department will have true ownership of the performance of specific metrics.
What does the data say? What actions are you taking because of what the data says?
A typical executive who has real-time data visualizations will pull-up the dashboards that he/she has every day. They take a brief glance every morning through an email report but nothing is done from there. This highlights the need to build data visualizations that are pertinent to each recipient and interactive so that they can dive in if necessary. Too many times we see clients build dashboards but still rely on excel worksheets to diagnose the problem they have identified. This creates a non-scalable data insights process that often times also include errors from data crunching. Providing the right metrics to the right users with the right capabilities to dig-in will increase the chances of insights that will inform actions. There needs to be a clear path for data and action to connect. Each team member should have the responsibility and flexibility to draw insights and invoke actions.
Ultimately understanding what the data says is not a matterof “what” but when. Most companies we deal with for our fractional data sciencework need help because their teams and individuals with the abilities to drawdata insights are swamped with requests and projects. Too often we’ve seen (andexperienced) companies failing because they delayed insights from their data.Figuring out what actions to take based on data insights shouldn’t be abackburner item on a to-do list. Building value in your business is reliantupon it.
Answering these questions will be a big step into dataanalytics versus just data visualization.