7 Ways to Make Data Work For You

by adam on May 19th, 2011

Most of our clients are comfortable working with numbers, and they love the reports we build for them. Whether in finance, procurement, or certain kinds of marketing, these Numberphiles live and breathe data on a daily basis. But when they want to share their reports with others in their organization that may be less comfortable with quantitative data, often those beautiful reports just get ignored. Their phones continue to ring with questions, even though all the answers are in the reports they just distributed. But even worse, their organizations don’t take the appropriate corrective action because their personnel never really understand the data that’s presented to them.

We also have clients and friends who are scared to death of numbers – Numberphobes. They cringe every time the Finance Department or their accountant gives them a report; they look at a list of numbers and their heads explode. They WANT to understand the data. They know they NEED to understand the data, but they haven’t taken a math class since they were 18 and they really, REALLY don’t get it.

So how do you bridge the gap between the Numberphiles and the Numberphobes in your organization? What can you do to make sure that the data is clearly communicated to the people who can help correct course, whether or not they love working with numbers?

Here are Seven Ways to Make Data Work for You

1. Stop Banging Your Head Against The Wall (Be Confident / Be Humble)
2. Be Transparent
3. Ditch Your Decimals
4. All Numbers are Not Created Equal
5. Tell a Story
6. A Picture is Worth a Thousand Numbers
7. Tie it to Compensation – Cautiously!

1. Stop Banging Your Head Against the Wall

When reports get distributed they are often accompanied by the steady thump of skulls banging against the office walls. The Numberphobes are banging their heads out of their frustration with the numbers (“Why can’t I get it?!”) and the Numberphiles are banging their heads out of frustration with the Numberphobes (“Why can’t they get it!?”)

Stop banging your head against the wall (or the desk, or the fridge, or the palm of your hand…). Take a deep breath. You’re going to be fine.

1A. Numberphobes

1B. Numberphiles

We would do well to remember that everyone has different skills, and a lot of those skills have absolutely nothing to do with quantitative data. Numberphobes aren’t stupid – they just think a bit differently. It’s our job to communicate the data to them, so we have to find a way to get through. A little humility is a great way to begin fostering better communication.

2. Be Transparent

Numbers are just a method of communication, so if your communication isn’t honest then nobody is going to pay attention to your numbers. Numberphiles often believe they can’t tell everyone the whole truth, especially in finance. “What if they knew how much that really costs?” “If they see the real numbers will they dispute their bonus?” Valid points – but again, people aren’t stupid. They’ll sense when they aren’t getting the whole story, and they’ll begin to shut down, or worse.

And while Numberphobes often think that transparency is mostly about those rotten Numberphiles confusing or manipulating them with data, they would be wise to remember that when you point a finger, three point back at you. Those who are less comfortable with data need to honest with themselves about what all those numbers mean in the real world. It’s not always easy to accept that one of your products isn’t selling, or that some of your favorite sales reps don’t produce enough business. Numberphobes often hide from data because they’d rather not deal with reality.

3. Ditch Your Decimals

Lots of detail is not synonymous with lots of meaning. When financial statements display detail down to the penny or the third decimal that doesn’t necessarily indicate accuracy – it just means the system ties out. Having a working system is important, but tying out isn’t the same as being true. Human beings are still imperfect – invoices are missed, systems don’t always post, rates are entered correctly… Just because it all ties out doesn’t mean nobody screwed anything up. So with all that potential for error we need to ask whether those decimals actually mean anything.

But it’s not just about human error. We often create financial reports with tons of detail even when they are talking about the future, like in budgets and forecasts. Are we soothsayers now? How is it in any way meaningful to say that our expenses will be $240,002.23 next December when that’s 15 months away? Wouldn’t a nice round number with lots of zeros – say, $250,000.00 – tell everyone a lot more about the inherent inaccuracy of the budget process?

4. All Numbers are Not Created Equal

We all tend to focus on the things that we’re able to control – like the overweight cyclist who obsesses over the 10 microgram difference between titanium pedals while ignoring the 30 pound “spare tire” he’s lugging around with him up every hill. The overweight cyclist focuses on the wrong number because it’s a lot easier to buy the latest, greatest accessory than it is to do the more difficult and time-consuming work of losing that extra weight (and keeping it off…).

It’s the same thing in business. If you’re running a school and you don’t have enough students, making sure the lights are off at night might save you a few bucks but it isn’t going to get you where you need to be. If you’re on Wall Street and the M&A market is headed south, locking the supply cabinet isn’t going to make the difference.

So figure out the couple numbers that ACTUALLY matter, focus in on them, and tune out all the background noise.

5. Tell a Story

Telling a Numberphobe that you have a 5.2% variance on food cost isn’t really meaningful to him or her. It’s far more effective if you can find a way to tell them a story. What’s the story of your business – not the story that’s made up of numbers and data, but the one that sounds, you know, like a story: “This Quarter we bought some things, and we sold some things. We had to store some things in the warehouse, and ship those things once we sold them. We lost a few things, and had a few defective things as well. Of course we had to pay people. And here’s how the whole thing worked out…”

Like the fast food restaurant owner who was wasting money on ketchup, figure out how to tell the story behind the numbers.

6. A Picture is Worth a Thousand Numbers

Human beings have evolved over hundreds of thousands of years to take in the vast majority of our information in a visual fashion. After all, it doesn’t take a whole lot of complicated numeric calculation to get a fire started or to hunt for your next meal. The complex math that Numberphobes so despise has only been around for about 5,000 years – a tiny blip on the human timeline.

Information that you can convey visually will have a stronger and longer-lasting impact than a list of numbers and data. Here’s a very simple example: Which has more impact, a LIST OF NUMBERS:

Or a BASIC CHART showing the same information:

Use visualization to achieve emotional impact leading to corrective action.

7. Tie it to Compensation – Cautiously!

Tying performance to compensation is often the primary means by which management encourages employees to look at their reports. That’s a fine strategy with one HUGE caveat. Know that whatever you measure you’re going to get more of, like the Chief Justice in Malaysia who decided that the number of cases cleared from the docket was the salient KPI.

If programmers are compensated on billed hours, they’ll probably be sure to bill a lot of hours but they won’t be as concerned about watching the budget or keeping the customer happy. So you need to carefully choose what it is that you’re measuring so that you not only have busy employees, but also happy customers. The first numbers you choose to focus on may not be the right ones, so be prepared to adjust.