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September 22 2019.
Information pollution

CEO's love data: figures, reports, forecasts, graphs, spreadsheets, Power points — more is better. And, as a result, many organizations have an elaborate system that collects & circulates data on a regular basis. They also acquire data from external resources for analysis & research. But what's the proof, that all this data is worth the effort & resources being put in, is leading to better business decisions? Is some of the data collection unnecessary, perhaps even damaging by creating complexity and confusion?

I've observed, in many situations, most of the data does not add value to the decision making or add insight into the operations, it then leads to "Information Pollution".

Let me share my experience: For many years the CEO of a leading industrial organisation was religious on the monthly review process which was highly data-intensive. The major data was on Cost, Sales, Current enquiries & Invoicing data for every product sold, with break-up by business unit, channel, geography, and consumer segment. This data (available in excel sheets) ran into 30-40 pages. It was produced each month by a group of people from finance & field sales, who had to spent hours collecting, & sorting the data.

No one really dared to question whether all of this activity really was worth it, although many complained about the time required. When a new CEO came two years back, he decided that it would be just fine with quarterly reviews and deviation-only reporting. Suddenly the entire data-production system was reduced substantially — and the company worked fine (many told me in private- more efficient)

It's a fact that different CEO's have different needs for information & data. Some want their decisions to be based on as much hard & real time data as possible; others may need just enough data to support or challenge their decision; or some of them may like combination of these.The preference of type of data at the decision making level has a major influence on the "data system" that is created.

However, in all the situations, the management seeking information/data should ask themselves four critical questions about their data system, so that the data collected adds value to the decision making.

Does it help us look into future or history?
Most of the data collected tells how we performed in the past— its not effective in forecasting performance. Therefore it is important to seek data, of different time frames, to help us get a good picture of the future.

Is that the right question?
Many companies collect the data that is available, rather than the data that is required to make decisions. So it is critical to ask right questions. Few key questions are sufficient to get the right data you need.

Does it give right mix of quantitative and qualitative data?
Quantitative nor qualitative data in isolation cannot tell us tells the whole story. e.g., for better product and pricing decisions, its important to know not only what is being sold to whom, but also why some products are selling more than others.

Does the data tell a story?
Majority of the data comes in bits & pieces. To make sense of it, the bits of information needs to be put together into a coherent explanation of the business situation,It requires integrating data into a "story". So its important to know which data is required to convey the story, that they will be required to tell.

So what's the situation in your organisation- do you have "Information Pollution" problem?

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