A dashboard can tell you what's happening without telling you why

Most leadership teams can see more about their business than they could a decade ago. Dashboards refresh daily, sometimes hourly. And yet the same meetings keep happening: a number has moved, everyone can see it, and the discussion turns into competing explanations of why.

The dashboard is doing its job. Consistent, current visibility is valuable, and hard to run a business without. But visibility and understanding are different things. A metric is a result. It tells you what happened. It doesn't tell you what produced it, or what it would be worth to change.

Three layers, and we usually see one

A decision about a metric really needs three layers of understanding:

• What's happening: the measure itself, and its trend. This is what dashboards are good at.
• Why it's happening: the operating conditions that produce the number. The handoffs, rework, capacity and habits underneath it.
• What it's worth: the economics of changing those conditions, in cost, revenue, capital, risk or speed.

Most reporting stops at the first layer. The other two get filled in during the meeting, by experience, intuition, or whoever argues best.

The decision actually gets made in the two layers most reports leave out.

When activity stands in for value

A quieter version of the same fog shows up when the only things that are easy to measure are the things a team did. At a large bank, a multi-billion-dollar digital budget was spread across many teams, each with its own business case. Results were reported as launches, traffic and new features. All accurate, all visible, and none of it drew a consistent line to sales or deposits.

So funding followed last year's budget and the best-argued case. Once every investment was put on one outcome basis, tied to the P&L against one baseline, the picture changed: a few initiatives drove most of the measurable result. Planning cycle time, from proposal to funded decision, fell by about 60%. The bigger change was that the argument moved from whose case was most persuasive to what the evidence showed.

The discipline

The discipline is to draw the chain from the work to the number, and from the number to the money:

• For every metric that matters, write the middle layer. Name the two or three operating conditions that actually move it. If you can't, you have visibility without understanding.
• Trace one finding all the way through. "Client details are keyed three times" becomes rework, slower billing and errors. Those become hours at loaded cost, days added to cash, and error rates. That's a number a leadership team can decide on.
• Report value moved, not activity completed. A launch is an output. What it changed in sales, cost or risk is the result.
• Treat the dashboard as a question. When a number moves, start with the work that produced it, not with a theory about it.

A test for this week

Take the three metrics your leadership team watches most closely. For each, write one line on what operating condition drives it and one line on what a 10% improvement would be worth. If either line is hard to write, the dashboard is giving you visibility, and the fog is in the layers below it.

Lessons from the Fog is a series on where capable organizations lose sight of how they really work, and the disciplines that bring it back into view. Previous lesson: Your organization chart isn't your operating model.