The season where we all start to look at our numbers will quickly be upon us. The end of the year. The context that those numbers are in matters, so take a deeper look this year until you understand what your numbers are really telling you.
Let’s say you brought in $200,000 of revenue this month. Is that good or bad? It depends. If you brought in $100,000 last month, it’s good. If your expenses were $400,000 this month, it’s bad. Everything in context.
Context is the use of related measurements to provide additional information about the data you’re looking at. In the example, knowing your revenue isn’t very useful without additional information. Knowing last month’s revenue and this month’s expenses provides Context, giving you a clearer picture of your actual situation.
Aggregate measurements almost never tell you anything useful. Aggregate measures are worthless when it comes to making tangible improvements because they lack context. A pet peeve of mine is when someone cites the number of visitors to their web site. Most systems don’t just count human visitors. Most systems treat visits from search engine programs as “visitors”, even though they aren’t people and were never going to do business with you. Search engine spider programs visit a web site many times a day looking for new information, so counting those visits as “visitors” overstates the human activity on a web site by a significant margin. Knowing there were 2 million visits to your Web site this month tells you absolutely nothing useful. Without context you can’t determine change, or effectiveness, which limits your ability to improve the system.
Try to avoid the temptation to focus on a single “magic number” when tracking your results. Relying on a single number sounds like a useful simplification, but it’s not – removing context blinds you to important changes in the data. Knowing your “total quality score” or that revenue went up or down a few points won’t tell you why it happened, whether or not it’s important, or if it’s due to random fluctuations or a significant change in the system or its environment.
As a general rule: Examine no measures in isolation – always look at them in context with other measurements. Look for trends, but most of all look for understanding. Why is the number what it is? What made the difference? What should you keep doing, and what should you stop doing?
My hope is that as you come to the season of numbers that you find 2015 to have been a great year. If you need help in determining what to do differently in 2016, book an appointment for a coaching session. January 2016 will be here before you know it…..and the end of 2016 not long after that. Make time to work “on” your business not just “in” your business and you’ll have better results and a better understanding of all those numbers!
Happy Thanksgiving –
