Do you have the information you need to run the business? Five questions to ask
The quality of our decisions depends to a great degree on the quality of the information we receive. The better the information, the more likely we are to make the ‘right’ decision.
In this article, I will suggest some questions to ask about the information you and your colleagues receive. These questions can be used by the board, executive management, operating management, or any individual responsible for making decisions.
1. Is the information reliable? How confident are you that the information is complete and accurate? Does it come directly from the corporate systems, where it is secured and subject to internal controls, or is it ‘massaged’ in spreadsheets before it is given to you? Are ‘adjustments’ made based on your or some analyst’s judgment as part of the reporting process? If it is a report from a data warehouse, is that data store secure and can you be sure that the reports are working the way they should?
There are many stories of meetings where, for example, the CFO addresses a group of executives to discuss the period’s results. When he shows a slide with the revenue pipeline by region, there is a chorus of dissent as the head of sales and the regional sales executives all say that the numbers are wrong – but each has a different number. I have seen situations where sales executives keep pipeline information on spreadsheets and don’t enter them in the corporate systems immediately. I have also seen situations where an executive ‘corrects’ the numbers in the corporate system because he has “special insight”.
So, when you consider the process for providing the information, what is the level of risk that it has errors that matter? If this is high, perhaps something should be done.
2. Is the information current? Is the information up-to-date, reflecting the current situation? Or is it based on financial statements that are weeks, if not months old?
Some years ago, the CFO at my company told me he was tired of “managing through the rear view mirror”. If he had a decision to make, he would ask his staff for the information he needed to base it on. But, none of the information was current. The company’s operational data was only updated monthly, in most cases, and financial information was not only monthly but not finalized for several days after the end of the month.
What his team did, which took time as well, was to take the last set of information in the corporate systems and then project what they expected to be activity since.
How old is the information you use to make decisions? Is it too old to be valuable? What is the value of changes that might give you more current information?
3. Is the information timely? Do you get the information you need quickly, when you need to make your decision? The speed of business is accelerating; can you afford to wait even hours to get the insight you need? Taking this one step further, sometimes the first set of information you receive only gives you a rough idea of the situation and you need to drill down into the data. How long does that take? Can you ask multiple questions and get the answers fast enough to make quality decisions?
Is there a risk that while you are waiting for information you might lose a window of opportunity?
4. Is the information useful? When you have a business decision to make, you don’t want a stack of reports. You want the answers, the information you need, clearly presented and easily understood. Do you have that, or do you need an analyst (or yourself) to pore through the reports and try to find the information you need? Do you then have to run additional reports or call other people because the information is not clear, or even raises more questions than it answers?
It’s an old expression, but still true: there is a huge difference between data and information. What do you have?
5. Is the information where you are? If you are traveling and trying to run the business from an airport lounge, is the information there – with you? Or is it with your assistant in the home office, who is trying to read it to you? Wouldn’t you rather see it yourself?
Not only do we have a global business that is running faster, but executives and managers are global travelers that need to make fast decisions from all kinds of places. Can you afford not to have access to the information you need, when you need it, where you need it?
As I said, these five questions can be asked at any level of the organization, by decision-makers in any part of the organization. In fact, it might be useful to answer them for yourself, then have each of your direct reports answer for themselves – and so on.
You might want to ask just one more question:
6. Are you satisfied with the information you receive to run the business?