Wednesday, 6 August 2008

Manage by the Numbers

About a year ago, I made a post decrying the way people ascribe meaning to numbers. Well it seems Tom Vander Well over at QAQnA thinks along similar lines. He is specifically looking at the world of call quality, but in my experience the flaws he points out are epidemic in today's business world.

People want to hear the number. "What's our market share percentage?" "What's our employee satisfaction index?" "What is our customer satisfaction score?" But businesses really need to know the meaning behind that number. Saying you have 100% of the market doesn't mean much if your market is for left-handed tent stake hammers. Having an employee satisfaction index of 5 is useless if the survey was conducted by managers walking around and asking employee's if they are satisfied with the company. Believing that 95% of your customers are satisfied doesn't mean much if your churn rate is 50% a month.

I believe that companies desperately need to learn to use business intelligence more effectively. The first step of that process, though, is to understand that a number only has meaning when it is arrived at by a solid and consistent methodology, is based on clear definitions that bear some relation to common sense, and when everyone using that number understands the methodology and definitions.

Otherwise, you might as well take Tom's suggestion and just use the same report forever.


Tom Vander Well said...

Thanks for the link, David. Most of all, thanks for your excellent post. Right on!!

David Badilotti said...

Thank you Tom,

QAQnA was required reading for my team when I was in the Quality Field. You bring a great deal of insight to the work.