"Death by Data" - Data versus Information
Advice from John Early, Executive Vice President
We are drowning in data, but starving for real information. Have you or leaders in your company ever said anything like that? Or have you heard, We have done many projects, but have very little to show in terms of bottom-line results?
Failures to achieve breakthroughs to real performance excellence have many causes. But one of the most significant is the failure to acquire and manage information effectively. Companies may have lots of data, but still fail to solve problems, save money, delight customers, expand revenue, and grow company value.
Those who succeed in achieving performance excellence act on a proven hierarchy of information management like the following figure.
Lets begin with some definitions of each of these elements:
Data are specific observed points in time and space, for example:
- The temperature of a mixture at 9:00 on 13 February 2008.
- The elapsed time to process the automobile insurance claim for policy number 9939 filed 4 April 2008.
- 7,000 customers switched from mobile telephone carrier A to carrier B in June 2008.
- A key leader in our company has been diagnosed with prostate cancer.
Information is a general statement about reality, for example:
- The average temperature of a mixture is 89.7° C, with a standard deviation of 0.4° C.
- An automobile claim from customers in California takes one day longer to process for every $2,333 increase in the amount claimed above the deductible.
- Of the mobile telephone customers who switched carriers, 20% said the monthly price was too high in A, 30% said that they lost connection to carrier A too often when traveling, and 50% preferred carrier Bs package of extra features.
- Each year in the United States, 230,000 new cases of prostate cancer are diagnosed and 30,000 die from the condition. Patients whose cancer is diagnosed early have a five-year survival rate of 100 percent. The survival rate for all stages of prostate cancer combined has increased from 67 percent to 92 percent over the past 20 years.
Knowledge relates elements of information to each other so that we make statements about causation and, thereby, know how to proceed to achieve a desired outcome.
- Mixture temperature (T) is determined by the relationships among three variables: pressure (P), speed (S), and concentration (C), as follows: T = 35 + 4P + 0.3S - 1.6C.
- Automobile claims over $2,000 require supervisory review before payment, those over $4,000 require regional review, and those over $10,000 require underwriting sign-off. These reviews require, respectively, an average of 1 day, 2.4 days, and 5 days.
- For consumers under the age of 25 the most important benefits for selecting a phone carrier (after coverage and price) are those that generate admiration and even envy in their peer group. For those between 35 and 45 the benefits they seek most are speed and convenience.
- Early detection of prostate cancer is best assured with: (1) annual PSA tests for those over age 50 (age 40 for high risk groups), (2) annual physicals, (3) awareness of and attention to urination habits, and (4) computer-assisted family history analysis.
Wisdom is the understanding and strength of conviction, first to ask the right questions and then to take effective action based on the knowledge created.
An organization that wants breakthrough performance must address all four of these levels of data management in the training it provides and infrastructure that supports those delivering the breakthroughs. All too often an organization, and hence its training, becomes too enamored with advanced statistical tools, job titles, buzz words, and the incidental trappings of an improvement program, by whatever name.
What is really needed is training and support for the practical work that yields results. The statistical tools are part of that work, but the most advanced tools in the world without appropriate, accurate data are useless or even dangerous. The knowledge we need to acquire includes:
- What are the root causes of a specific, measured problem?
- What is the effectiveness of a particular solution in removing the root cause?
- When does a process need to be adjusted to avoid creating waste, and by how much?
- Which product, service, or process benefits will be bought by customers? At what price?
- What is causing waste?
- How much waste will a particular improvement eliminate?
To answer these and similar questions, we must use a proven, structured approach that leads to accurate, useful answers, and hence the ultimate performance excellence we are seeking. Without a strong, structured approach to acquiring and using our data, we will get bad data, bad information, poor knowledge, no wisdom at all, and no results problem not solved, cost not reduced, customer lost, company value destroyed.
In this short space, we cannot address the full range of issues. But here is a simple way to start. No matter what else you do, start here. Dont be dissuaded by those who are in a hurry and dont have time to plan for data collection. Without the right first steps, the rest are doomed.
- Start with specifying exactly the questions that need answers.
- Identify the tools appropriate for generating the required information.
- Specify the information sources (where the data are or can be created) that will allow the tool to create the answers to those questions.
- Assure the accuracy of the data sources.
- Only then, determine the data that are appropriate to collect for the tool to generate the needed information that will answer the questions.
This same care and focus on the goal need to permeate the entire effort to achieve breakthrough performance excellence. At least since the days of Socrates, humanity has known that one must start with the right question to arrive at the truth. Unfortunately, the history of the last 2400 years is littered with the disasters of trying to take a short cut.
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