Two years ago, I had all the operations in my business put together dashboards — metrics on many aspects of our business (from sales calls to retention) — that could help us understand what was working and not working before we saw the results in our P&Ls. Since then, the dashboards have been extremely helpful in focusing our attention and adding more energy and resources where needed.
But dashboards, as helpful as they might be, are no substitute for thinking broadly. Dashboards (or metrics, or formulas or whatever set of tools you have which measures your business) are constructed based on your business model, your knowledge of the model and your ability to gather data with respects to that model as it exists today. Dashboards do not discriminate between good or bad models; they simply describe it.
And what they describe are the hundreds of critical tasks that managers and employees need to pay attention to every day. These are the “Critical but not Important” tasks Stephen Covey writes about. You can’t ignore them. They need to be done. However, these tasks may not be the ones needed to deal with something unforeseen or to exploit the next new opportunity.
Most financial dashboards did not describe the financial collapse of 2008 because they were not built to describe it — it was not in their models. Likewise, many health insurance brokers are scrambling to define themselves in the new world of Health Care Reform; a world in which the old dashboards did not anticipate.
Clay Shirky writes in his blogpost “The Collapse of Complex Business Models”, that businesses begin to fail when they become too complex to deal with changing realities. I actually think it’s simpler than that. Businesses (or individuals) begin to fail when they misread the processes and metrics used to describe the success of their model for the world itself. They fail when they focus too much inward. If complexity is an issue, it’s an issue if it impedes the ability to communicate with (and receive communication from) the world outside the model. It doesn’t matter if you’re AT&T or the florist on the corner. If you’re not paying attention to how people are buying and how their buying activities are beginning to change, your business will suffer.
Don’t get me wrong. Dashboards are important; they are good at telling you whether a process is on track or not. But they can’t be confused — and they often are — as an accurate forecast tool to predict how your business overall will fare in the future. A dashboard is no substitute for strategy. Dashboards are linear, specific, measurable. The world is nonlinear, chaotic, and challenging to determine ahead of time which cause will lead to which effect.
The key is to do what is critical, but raise your eyes to look over the dashboard and really look around you. Leave time to play around with what the world tells you is important. And “play” is the operative word, because if you want to predict something which cannot be predicted, you’ll have to make up a lot of stuff (and test them out in your make-believe world) as you go along.