Don’t Forget The Most Important Principle of Performance Measurement

SIG just ran a great article on the Three Guiding Principles of Performance Measurement that hit upon a key point that is regularly and repeatedly overlooked. Simply put,

Your data is good enough. Really, it is.

As the author says, your data will always be murky. No matter how many times you clean it, massage it, enrich it, transform it, and polish it up, there will always be errors. There will always be omissions. There will always be inaccuracies.

But that’s okay. Remember the 80/20 rule, which is just as appropriate here as it is everywhere else. (In fact, more appropriate.) The law of the vital few states that roughly 80% of the effects come from 20% of the causes. This says that only 20% of your data is vital anyway. And since it is expected that at least 80% of that data will be clean, it’s going to be quite straight forward to spot important trends. (That go just beyond who your top suppliers are, but which items are ordered the most. What types of purchases are regularly bought off contract. What products are really selling best. Etc.)

And if the decision being made is critical or risky, the data will always come up short. There will always be some flaw, some missing piece of information. Because if there wasn’t, the proverbial pointy-haired boss could be an effective manager. Executive decisions will always require a bit of a risk, but they will be much better when there are data to base them on then when there aren’t. So measure, manage better, and manage some more.