At the most basic of interpretations all of business is a numbers game.
It isn’t success if there isn’t a score.
Certain business functions, like sales and finance, are easier to score than others such as customer service or product management. Other functions like business ideology and culture are even more difficult to understand and rank.
The more tangible the business initiative, the easier it is to assign a score — the easier it is to turn it into a numbers game.
Emotional goals and philosophical initiatives pose a difficult challenge when trying to break down results into wins and losses.
Which leads to another challenge.
You can only manage and improve the things that you measure.
And you can’t measure everything.
The raw amount of time and attention that measuring demands makes it impossible for you to know all the numbers, all the time .
But even that’s not the biggest issue.
Sure you have to decide what to measure and how to measure and when to measure. That by itself creates confusion.
And, yes, playing the number’s game requires that there is a score and sometimes the score might be wrong. Which also creates confusion.
The biggest problem with the number’s game is that the score really doesn’t matter.
And by all logical explanations of business, that statement seems counterintuitive.
“Of course the score matters,” you are thinking. “That’s how you stay in business.”
But maybe that’s wrong.
The reason why the score doesn’t really matter is part of a larger, deeper issue.
An issue with interpretation.
The numbers game isn’t just about gathering numbers. It is about using those numbers to create the change that you want from your business.
And that’s key; because numbers, by themselves, serve no purpose other than providing position and direction.
We measure so that we know where to move.
The confusion around numbers comes from the fact that we interpret the measurements incorrectly.
Without even trying, our basic defense mechanisms kick in and hide us from the reality that someone else less attached to our data might see.
Here are a few of the flaws around interpreting the numbers game:
- Using averages to avoid admitting screw-ups — You can make just about anything look amazing when you average out the bumps. For instance, you and Michael Jordan have an average of 3 NBA Championship rings. Never mind the fact that you probably didn’t contribute to earning any of the six of them. The data made you appear more talented than you probably really are.
- Stretching trends into unrealistic expectations – You can find a positive “upslope” in just about any data set. But what about the time between the points? And the reproducibility of the slope? If it takes you longer to achieve profitability than your financial runway, does it really even matter that you were “headed in the right direction”.
- Only measuring the “good” data — You can adjust your Key Performance Indicators so that you only keep track of positive metrics. Sales is one of those metrics. If you just log closed revenue and throw away the potential revenue, there are no problems. It looks like you have everything put together. But all the ways you can improve are missing from your analysis.
- Misguided priority on quantity — You might think that more means that you are improving. That things are getting better. That you’re headed in the right direction. But that might just be a ridiculous assumption. For instance, there are more chickens on earth than humans. Does that have anything to do with who eats who?
- Outdated or lazy number collection — You can’t use yester-year’s data for tomorrow’s decisions. Since it takes considerable time to build data-gathering systems, it can be easy to adopt a “set it and forget it” philosophy. But that might be a dangerous precursor to defensive, short-sighted strategy.
Opinions matter. Not the numbers.
Just having a handful of numbers on your dashboard might be a foolish business initiative. And more than a little confusing.
The score isn’t the numbers you have.
It’s how well you interpret the data in front of you.
