Data has become the lifeblood of running a business. Whether using a balanced scorecard or an operational dashboard as the primary tool to review performance measures, most organizations today devote significant time and resources to ensuring the quality and availability of data. Comparatively little attention is paid to building managers capability to analyze data and turn it into decisions, which is the primary goal of performance measurement. Fortunately, the skill of turning good data into good decisions can be mastered by almost anyone once it is broken down into a set of easy-to-follow activities. I offer four steps that should be applied by anyone who has a role in supporting the decision-making process in their organization. These steps correspond to what I call the performance reporting value chain (shown in Figure 1) where the increase in value derived from converting data into information, knowledge and decisions exceeds the increase in effort that each key activity entails.
Step 1: Contextualize. The first step in working with a performance measure involves turning data into information by answering the what (what happened, where did it happen and when did it happen?) and so what (was it good or bad, favorable or unfavorable? To what extent?) .
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