A business can’t be managed based on data alone
As much as we rely on figures for making business decisions, you shouldn’t sanctify KPIs
Shaul Olmert | 18:47 24.01.2021
Managing a tech company nowadays is more a science than an art. The managerial culture that has taken root in the industry sanctifies data at the expense of intuition, with everything becoming target driven and information-based. When an artist sets their canvas on the easel and starts painting, they don’t need to know too much about how the painting will end up. They can go with the flow, get started and see where the brushstrokes take them. In the worst-case scenario, they throw away the painting and start again. The costs and operative impact of throwing out a sketch are usually negligible so there’s nothing stopping them from carrying out trial and error, there’s no imperative to plan everything in advance and manage the process according to use and consumption figures. A company that employs tens, hundreds, or thousands of employees, which operates in a highly competitive and fluctuating market and manages a high sales volume, meanwhile, doesn’t have the luxury of going with the flow and because of that must adopt a strict and calculated operating style, based on precise data. This management imperative is not limited to tech companies, of course, but in the digital world, where every action that takes place on the product is recorded, it’s possible to closely track every step of interaction, allowing for a high degree of monitoring. “Anything that isn’t being monitored isn't being managed,” many managers, who are quick to install screens displaying performance charts and graphs at every corner of the office so that employees constantly have their fingers on the pulse of the system, would say. Automatic usage reports concentrate ungodly volumes of figures in a wide range of formats, present them, analyse them and send out alerts when volumes deviate from what’s expected. It's gotten to be so that employees spend most of their time examining and analyzing the information and most of the internal communications and investor and partner relations are carried out based on those figures. In modern tech companies, data is king. The more mature a company gets, the more the data becomes akin to religion.
Another example from my days at Playbuzz takes me back to the days when the main indicator we monitored was the number of exposures to pieces of content produced on our platform that featured on leading websites. All of our partner sites (there were several tens of thousands of them) embedded content created on Playbuzz on some of their pages, and anytime someone would visit a page with our content on it, our counter went up by one. One day we were fretting because the number dropped or didn’t climb in accordance with our expectations and we started to come up with solutions. We suggested training the teams of our leading partner sites in order to make it easier for them to produce and embed content, we suggested to add more options to the product in order to make it easier and faster to create, and a variety of other suggestions aimed at increasing usability that would eventually lead to our indicator tracking exposures returning to climb. But nothing prepared us for a sudden increase of hundreds of percent that took place one day mostly from a small number of partners. When we examined more closely what had happened, it turned out that one of our eager and creative salespeople was able to convince some of our partners that they would benefit from having a Playbuzz feature embedded at the bottom of every one of their pages. As a result, the number of exposures skyrocketed. But the volume of exposures was never the actual goal, only an indicator of the true value which was things like higher levels of interaction with the content produced on Playbuzz platform or content of greater importance that was created on it. Of course, none of that had changed just because we artificially inflated the number of exposures by being featured on the bottom of more pages, and the boost had no real value to either our company or our partners. It was a classic case of confusing the method with the goal: the number of exposures was merely an indicator to attest to a high degree of usability. When it is turned into a goal unto itself, it can be raised, but it won’t reflect the true value, the number of interactions with our product, which didn’t actually budge. We praised the sales manager for his ingenuity, but kept on looking for solutions to generate actual value. In addition to all that, while it is indeed important to keep your finger on the pulse, to monitor and analyze and understand where your business is heading, sometimes you can’t “see the forest for the data.” Good management is about more than just data-analysis, it's about having a strong emotional connection to your organization, your product, and your clients. A good manager must be good at reading, investigating and analyzing figures, but should also give respect to gut feelings. At the end of the day, the answers aren’t always hidden in the numbers, sometimes they’re hidden in the sentiment. Businesses that serve a large number of clients (in the case of Playbuzz, tens of thousands of partners and more than a billion monthly users) can’t really tell what’s going on without sticking to a few guiding indicators. The challenge is identifying the right indicators, ensuring that they are free from external influences that may cast doubt about their credibility, and above all, remembering that an indicator is just that - an indication of something, not the thing itself.
Shaul Olmert is a serial entrepreneur and the co-founder and CEO of mobile app developer Piggy. He formerly founded interactive content company Playbuzz Ltd. You can find his previous columns here