Originally published in American City Business Journals
By Boyd Bell
Under-analyzed data is un-mined gold. It sits in the caverns of your expensive servers and awaits its opportunity to generously reward any executive who is willing to exploit its benefits.
Growing firms have incredible amounts of archived and real-time data to tell them where the company is headed, where pain points exist and where the profits are hidden.
But too often, businesses fail to marshal that data and create an invaluable playbook that could drive efficiency and profit.
Instead, what gets generated is a massive monthly report that doesn’t create action. It’s like a coffeetable book that collects dust. But data used the right way can compel action, drive accountability, and yield results.
That is why smart executives set key performance indicators (KPIs) for their direct reports and hold regular meetings to gauge progress against those goals. As the Harvard Business Review notes, research proves “not only that small businesses benefited from the precision offered by customer data, but also that exposure to data encouraged owner-managers to share insights with employees and get them involved in companies’ competitive thinking.”
Executives want to turn to data — generally static, archival data — when things are breaking down or customers are complaining. But, when they do examine the data, they do so in a counterproductive way.
Managers convene monthly meetings, demanding “deep dives” into specific parts of the business. Such meetings can produce an off-putting “vomit of data” displayed on spaghetti-style charts that leave staff dreading the next meeting. That experience is not followed up with a focus that will help improve the business and provide the much-needed lift.
Heed the 3X rule
Start by rethinking meetings. I developed the 3X Rule that plays out this way: if you meet on a problem or outcome monthly, it will take three months before you can see if you are making progress. However, if you meet on that same problem weekly, you will know where you stand after three weeks.
That’s because the first week you are collecting the data, then identifying and analyzing the problem; the second week you are implementing the solution; and by the third week you begin to see (or not see) results. Instead of unwieldy, monthly meetings that search for fixes to big problems, 3X trains managers to set in motion an action plan hold a specific person responsible for an identified action over a defined time frame.
Our approach begins with framework that organizes data visually. Picture a rectangle divided into four quadrants. The top left quadrant shows the overall trend being discussed.
At a chain of restaurants, for example, this might be the time taken to turn a table in all the business locations. The top right and bottom left quadrants reveal more detail, perhaps time-per-turn at each location, and value-per-turn for each location. Finally, the bottom right quadrant is actionable – setting out actions to mitigate the issue with a manager named as owner for each action, the status of each item, and a due date for completion.
Whether the business is a restaurant, a manufacturer, or a customer service call center, the visual presentation of information is easy to digest and encourages ideas from staff.
A proven process speeds improvement
The key is to use your data to identify trends and variations over time – capturing those trends that propel the company forward and eliminating the variations that impede that progress. Focus on the changes that will result in continual improvements to these trends, and as a bonus, you also eliminate the distractions that allow perceptions and rumor to seep into decision making rather than data-driven facts.
Companies that adopt rigorous operations meetings with metrics to drive action and accountability typically have common characteristics.
The meetings last an hour or less, with each team having 10 to 15 minutes to report on their issues and what they are doing to improve performance against goals. Meetings must align with the company’s purpose and have focus and discipline.
The meetings cover a wide range of activity — for example, all stores, factories, or delivery teams. And, rather than trying to fix everything, energy is focused within each team on first fixing the worst issue, then moving onto the next.
They produce results immediately because setting actionable goals with timetables enables focus and change. Metrics are empirical, auditable, and tied to process. When the metrics are used internally (e.g. operations reviews with employees) they are defect oriented (i.e. commitments missed) and conversely when the audience is external (e.g. customers or investors) they are positive (i.e. commitments met.)
The purpose for this is that the audience for internally used metrics will have heightened urgency to improve when you show 1 percent missed commitments versus 99 percent met. They also show trends over time to drive improvement.
Meetings are consistent, executed the same way whether at lone or multiple locations. The format is non-negotiable with required attendance by all key stakeholders or their representatives. Consistency is critical. Monitoring is easy because events can be observed and tracked in real time, providing opportunities for testing and feedback.
Finally, meetings include accountability, most importantly what happens if plans fail.
So resist the temptation to create that attractive coffee table book and instead coach your teams to success with a playbook that uses data and examines tendencies that drive positive results. That data is there. It’s all in how you use it.
Boyd Bell is founder of Useful Rocket Science.