Quote by Christopher Lah, Revenue Cycle Senior Director at Cincinnati Children’s Hospital.
Putting the right information into one place should enable better decision-making, but first you need to avoid the most common design traps.
If you’re driving a car, you probably only glance at the dashboard every now and then — you know, to check your speed vs. the speed limit, to make sure you have enough gas and so on. No one expects the dashboard to tell you how to actually drive. Financial dashboards are no different. Or at least, they shouldn’t be.
According to a professor of analytics writing in the Harvard Business Review, however, dashboards can be full of potential traps that ensnare unsuspecting executives. These include what he calls the “importance trap” (that IT or others in the organization design the dashboard based on what they believe is important information), the “context trap” where we fail to look beyond the numbers, and the “causality trap” where we make superficial conclusions based on a dashboard.
The overall problem is summed up as follows:
“Moving from description to prediction to action requires knowledge of how the underlying data was generated, a deep understanding of the business context, and exceptional critical thinking skills … The simplicity and elegance can tempt managers to forget about the all-important nuances of data-driven decision making.”
Where Analysis Begins
Some of these traps could be avoided as dashboards become more mature and common in the enterprise, of course. It’s worth keeping them all in mind as they are designed or evolve in a particular organization, especially the notion that dashboards are a starting point for analysis.
A piece about dashboards on Smart Data Collective provides some helpful examples of how the journey to data-driven decision making should unfold:
“If your dashboard displays product returns, it should also let the user drill down and see where products are being returned, reasons for the return, and any other pertinent information,” the article says. “An effective dashboard starts with a high-level view, and provides drill-down capabilities.”
Beyond the capabilities in the dashboard itself, a key element is who’s using the dashboard and how. That was one of the takeaways from a recent Q&A with Jason Gabauer, controller at real estate firm Halstatt on FEI Daily.
“One of the constraints that you see is that someone looks at it and says, ‘Well we can’t do that because we did it in Excel and there’s no way to do that in the software.’ You have to have somebody that’s a change agent, that looks at everything a little bit different to put the dashboard together,” he said.
Fortunately, it’s now a lot easier to continue working with Excel and actually make it a foundation for modern-day dashboards. That means more opportunity for change agents to focus on the data that’s really important, build in context and identify true causality in dashboards that make a big difference to the way decisions get made.