If a tree falls in the woods and there is no one there to hear it, does it make a sound? How about this one? If your business is running on a daily basis but there is no data to measure it, does it have successes and failures?

Smarter people than me have pondered the first question – I’ll leave the answer to them. I’m more interested in the second question.

The answer obviously is “yes”. Your business has successes and failures, good decisions and bad decisions, and good luck or bad luck whether you have data to measure it. Data provides a way to capture the story of your business. But, it is not the story.

Too many leaders rely solely on data to tell them the story of their business. Data, of course, is important. But a good leader doesn’t allow the data to lead him or her. A good leader leads with the data as a supporting tool.

I once had a group of leaders review some generic marketing marketing data and come up with a “story”. All of their stories were identical. They simply summarized the facts in marketing presentation. Because their story only summarized the data, it could have been told by anyone, even someone with no knowledge of their business.  So what value did they provide in analyzing the data?  I’d say, not much.

They failed to tell the real story. The real story wasn’t one that could be found in the data.  The real story was the one that was happening in the business and the one to which the data applied.

I asked them to revisit the data. But this time I had them start by thinking about business. The data in the presentation was going to be used to fill in the details of that story. How well were they positioned to capture this segment? Did their current business model align with how this particular segment made buying decisions? Was this segment worth capturing – it was big, but was it profitable, and if so, at what cost? What would they have to change in order to capture the segment? What might they lose? Were the needs of the new segment consistent with the needs of their existing customer base? If not, how would they reconcile the two? (Their original “story” didn’t even acknowledge their existing customer base). Where have they had success in attracting this new segment?

Most of the information they needed to tell the real story wasn’t in the data. It was in their existing understanding of the organization. They used the data to confirm or refute their existing beliefs about their organization. In other words, they told a story about their business that was supported by the data in the presentation. This is where they added value.  Their new story couldn’t be told by anyone who didn’t have knowledge of the company. This was their story.

The new story raised several questions and key issues that could drive decisions and actions. It was relevant. Also, in the process of coming up with that story, the leaders had much more powerful conversations about their business. They questioned assumptions and challenged one another. That didn’t happen the first time.

A good leader should always be thinking about the story that is unfolding in his or her business, the market, and the economy. That story is governed by internal decisions, customer behavior, and external factors (such as a recession). And, that is the story that drives the success or failure of a business.

Data might clarify some details of the story but it shouldn’t be a surprise. A leader who is surprised when a financial report tells him that his department is over budget is not paying attention to the story. Similarly, a leader who didn’t realize that her team was providing poor customer service until those scores went down is also asleep at the wheel.

Good leaders use data to tell a story. However, they don’t allow the data to set the scope and context for that story. They use their understanding of the business for that. The data should just fill in the details.