I was once talking with an executive about her frustration over her team’s data-driven decision making skills.  Despite organizational improvements in collecting, analyzing, and reporting data, her leaders’ decisions didn’t seem to improve.  She wasn’t sure what to do next.  In her mind, she was already handing her leaders the answers, “I’m not sure what else we can do.  We provide a dashboard that clearly shows which metrics are at red, yellow, and green status, yet they aren’t taking action.”  She thought that perhaps her leaders needed to attend my Rethinking Data workshop.

I have these types of conversations quite a bit.  It seems that in many organizations the ability to produce data (and reports) has out-paced the ability to consume them effectively.  Many organizations have built competency models focusing on data-driven decision making.  Once complete, their next step often involves setting up some data-driven decision training.

In some cases the problem is with data-driven decision making.  There are a core set of important skills required to frame problems, generate hypotheses, set decision criteria, and translate the results into a decision or action.  There are another important set of skills that involve knowing how to actually communicate those decisions and actions in an effective way.  When those are the issues, workshops like mine can be very effective at improving data-driven decision making within the organization.

However, very often the problem is more simple.  It’s not that the leaders don’t know how to make decisions using data.  They fundamentally don’t understand their business well enough to make sense of and act on the data.

I asked the executive how well her team understood the metrics on their dashboard.  Did they know the 3-5 key drivers of each metric?  Did they understand the common interventions needed to address each of those drivers?  Could they explain the dynamics between the metrics in terms of how optimizing one could impact another?  After reflecting for a moment, she realized they probably didn’t understand the business as well as they should.

Understanding the business, both strategically and tactically provides the foundation for effective data-driven decision making.  If you want your leaders to make good data-driven decisions, ensure that they know your business.  That’s the first step.  Only then will an investment in building their data-driven decision making skills pay off.