This entry is the first in a series of four on developing leaders who lead with data.
Organizations are scrambling to improve their people’s ability to use data to lead their business better. But many are focusing on the wrong thing. The problem is that they often focus on the data part rather than the leading part. Roger Martin, Dean of the University of Toronto Rotman School of Management, summarized the problem in his March, 2011 HBR column, “Don’t get blinded by the numbers”:
“Over the past couple of decades this management-by-numbers game has gained currency. The huge amount of data captured by IT and the growing sophistication of econometric modeling encouraged nearly everyone to believe that a firm’s success was driven by the quantity of its data and the ability to model them…More and more we’re coming to see that strategy is as much about interpreting as it is about analyzing. This kind of approach requires completely new abilities. The successful strategists of the future will have a holistic, empathetic understanding of customers and be able to convert somewhat murky insights into a creative business models…”
Courses in Six Sigma and business statistics provide an important foundation. But they aren’t enough. It’s not just about the numbers. Leaders need more.
People who lead with data have three key skills or attributes: Critical Thinking, Leadership Courage, and Business Acumen. Placing your bets in these three areas will increase your organization’s success at using data to drive decisions and actions.
Critical Thinking
Leaders often tell me that if they could just get a hold of the right data, they’d be able to make the right decisions. Data and facts make leaders credible; they don’t necessarily make their insights valuable. Too many leaders look at a number and attempt to jump into action. The problem is that the insight generally isn’t sitting within a number on a page. The insight requires, to use Roger Martin’s term, some interpretation.
Current neuroscience research has found that our unconscious minds often squish, squash, re-arrange, and re-configure data many times before we actually become aware of it. “Seeing is believing” just isn’t true. More often than not, “Believing is seeing”. Your experiences, thoughts, expectations, and memories often have a greater influence on how you view the data than data has on your thoughts and experiences.
Given these issues, a good leader must have the ability to think critically about what he or she is seeing. Is it really what it seems to be? Is it somehow being distorted? Is there more to the story than meets the eye? Leaders who just take data at face value often miss important insights. Those insights tend to be hidden deep within the context surrounding that piece of data.
Leadership Courage
I once worked on a project to help a client assess their readiness to serve a new market demographic. The data couldn’t be clearer. They were not even close. Yet, no one was willing to put that statement in their final report. They were too concerned that they might be wrong, look bad, or “rock the boat”. So, they passed the data along in a neat little package to their executives. The executives then had to wade through the data to come to the conclusion that everyone else already knew but wouldn’t say.
These leaders weren’t unique. Few leaders are willing to go out on a limb and state their interpretation of the data. There is just too much risk. It’s always easier and safer to pass along facts. It’s also less efficient.
Companies that drive decisions and actions, talk about decisions and actions (not data). They don’t keep passing off the responsibility to make those decisions or recommend those actions.
Business Acumen
There are many reasons that leaders don’t draw conclusions or build a story around their data. However, lack of a thorough understanding of the business is one of greatest contributors.
Many organizations still promote people to leadership positions because of functional or technical ability, not understanding of the business. Often these leaders continue to view their world through the myopic lens of the function or role from which they came. They can report KPIs and process metrics but often don’t fully grasp how those numbers impact the overall goals of the business. The result is that they speak in numbers rather than insights, decisions, or actions.
It’s simply not possible to draw conclusions or insights from data if you don’t deeply understand the business to which that data apply. How can a leader ask questions about correlation and causality, if he or she doesn’t understand the dynamics of the business?
Business acumen comes in three parts: understanding how businesses work in general, understanding your company, and understanding your industry. All three can be further broken into content and context understanding. Content is facts about how something works. Context is what is currently happening relative to those facts.
A good leader is able to add content knowledge and contextual knowledge to data. This enables him or her to tell a compelling story about what is happening in the business and what to do about it.
Leading with data isn’t about numbers
People who “lead” with data don’t actually let data play a leading role in their conversations. Instead, they lead with insights, decisions and actions that are supported by data. If your development programs aren’t building Critical Thinking, Leadership Courage, and Business Acumen, don’t be surprised if all you get are numbers.
The remaining articles in this series look at each competency in greater detail:
Leading with Data Competencies – Critical Thinking
Leading with data competencies – Leadership Courage
Leading with Data Competencies – Business Acumen
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Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.
