You may have heard this before - that you get what you measure. In business, this is definitely, true. However, in certain types of business there is SO MUCH being measured that it's sometimes difficult for employees to decide which measurements are really important. One rule of thumb that guides all of my thinking about using data in strategic planning is that most reasonably intelligent people can keep 6-8 things straight in their heads at any give time. Not 10, not 20, and certainly not 40.
So why do we ask people to keep track of so many numbers?
Well, first, we don't want to miss anything. Of course, this is a complete fallacy, since the easiest way to get people to miss a number is to hide it among 39 other numbers.
Second, we want to preserve the complexities of managing a business - oversimplifying might lead us to ignore some critical detail. This is true, but we shouldn't rely on a mass of numbers to convey the richness of our business. Rather, we should give human beings the ability to pick this richness out for themselves - which they surely won't do if they are overwhelmed with too many numbers.
Finally, numbers are often seen as the lifeblood of management. Now, I have a slightly different theory about this - I think customers and employees are the real lifeblood. But numbers, in many ways, are really the product or service that we provide our customers, so it's easy to see where this idea comes from.
I'm not at all suggesting you shouldn't look at numbers in managing your business. They are vital, and you will have trouble succeeding without them. But you should aim to get a “feel" for a few critical numbers that relate to your effectiveness as a manage before venturing off into oceans of data.
As an example, consider your customer retention numbers. Pretty important stuff. So, how many do you need? One. The only time you should be looking deeper than that is when there are customer retention issues and you need to explain WHY customer retention is changing. At that point, “retention of customers with less than 1 year of experience with us" might help you understand exactly what is going on. But putting both customer retention AND new customer retention on a report simply makes it longer with data that is redundant a significant part of the time. And - this is the key point - a longer report will get less focused attention from the people who really need to use it to understand what is going on.
Robert Bradford is the author of Simplified Strategic Planning and four other books on strategic management, and has created strategic plans with hundreds of organizations around the world since 1987. As a nationally acclaimed speaker and consultant, Robert has spent the last twenty years converting management theory into real-life application. Robert can be reached at http://www.cssp.com