Business reviews play a vital role in data-driven operating cultures, yet they often suffer from "metrics overload," resulting in confusing narratives and decision-making paralysis.
The "metrics overload" phenomenon emerges as the C-suite endeavors to collate metrics from across the organization. Over time, this process tends to:
- Inflate the number of metrics to encompass more business processes.
- Foster inconsistencies as departments alter their reporting methods.
- Yield confusing narratives as each function gravitates toward their specific slices of metrics, despite the inter-connectivity of the business model.
Consequently, connecting the dots to discern key trends becomes increasingly challenging. In response, there's a tendency to swing to the opposite extreme—focusing on a limited selection of consistent metrics.
While this approach may seem appealing, it often leads to reviewing only high-level output metrics, sacrificing valuable insight into the impact of input metrics and work streams on outcomes.
The crux of the issue lies not in the sheer volume of metrics but in how they are organized, pre-analyzed, and presented to steer discussions toward key trends and actionable items.
The primary objective of the business review process is for the leadership team to develop a robust shared mental model of how to influence business levers and measure progress. This entails executing a few key elements effectively:
1) Reviewing hundreds of metrics organized into inputs and outputs against established targets and ongoing initiatives.
2) Continuously learning and unlearning the input-output relationships—repeated reviews should reveal which metrics influence outcomes and which are beyond control.
3) Explicitly connecting metrics to the holistic business model. While much analytics focuses on disaggregation, it's essential to re-aggregate metric connections at the leadership level to shape tactics and strategy.
4) Conducting extensive pre-analysis to root cause the right trends and develop hypotheses ahead of business reviews.
Unfortunately, the last two steps are impractical for many organizations due to the arduous nature of executing basic data collection and organization in time for these periodic reviews.
Nevertheless, I remain hopeful about the transformative potential of software to revolutionize the business review process, marking the next frontier in business intelligence.
At Trace, we are genuinely excited about the potential of metric trees, leveraging metrics-as-an abstraction, to tackle this challenge head-on.
