How many times have we heard that refrain from our children (or maybe from our significant other!?!) when their impatience got the best of them? Or maybe we’ve said it ourselves in different situations for the same reason. In most cases, it is because they don’t have a sense of time or speed relative to setting correct expectations of arrival.
In the business sense, whether for-profit or non-profit, we find ourselves either half way through our operational year or possibly just beginning a new one. We are likely compiling data telling us how well our business has performed over the last 6 months because of that natural halfway or transition point. Or are we? This issue focuses on the all-important role of measurements as a crucial element of effective business alignment. We are talking about not only what we measure on a regular basis, but also how we measure what we do in order to make informed business decisions.
The first place to start is to be clear on what we are capturing and the usefulness of what we capture. There are essentially 4 levels of “stuff” we measure, Data, Information, Knowledge and Wisdom or sometimes referred to as the DIKW Hierarchy. Like many topics in and around leadership, much has been written about these 4 elements so I am going to focus on the salient points of each.
• Data is what we measure directly. It is raw in nature and is the least useful element to making the level of business decisions we need to run our business.
• Information is organized Data. In a practical sense this means we import all the available data into a spreadsheet or database and sort or index the data to make it more useful to making a meaningful business decision.
• Knowledge is Information in context. While Information is useful for many business related decisions, its usefulness is limited without the context around the Information gathered. Knowledge allows us to make informed strategic decisions.
• Wisdom is Knowledge over time. When we apply Knowledge over time we create an environment in which the learning of the organization is exponential due to the richness and usefulness of each decision leading to even more useful outcomes.
So it stands to reason that addressing the Scientific Methodologies in the Business Alignment Model creates an overt means to know if we are capturing the right elements to validate organizational progress. More succinctly, it helps an organization determine if it’s making strategic decisions based on information or knowledge.
As an example, Organization A captured data from expense reduction efforts and compiled the data in a spreadsheet to see if it reduced their expenses to meet a specific target. Organization B also captured data from expense reduction efforts and compiled the data in a spreadsheet in similar fashion. However, organization B will also ensure there were minimal reductions in area critical to its long term Vision and Strategy with the balance coming from less critical parts of the business. Organization A made strategic decisions based on information, potentially crippling their future with across-board-reductions. Organization B made knowledge based strategic decisions and did not lose sight of the contextual impact of their decision. Which organization do you work for?