Thursday, April 10, 2008

David Letterman can teach us a thing or two about BI

I've been working a lot these days with data visualizations and presentation reports. I must admit that I've learned a thing or two about how people approach data, both from the IT side and the business side. However, after looking at dozens and dozens of data visualizations and executive reports, I have realized that there are effectively two kinds of reports that you can present to an executive, and we should approach and understand them accordingly.

The first kind of report is what I describe as an "entertaining report". These reports rely heavily on data visualizations, and while they can and should convey information. Their primary purpose is to grab your attention (i.e. entertain you), over and above driving decisions. Since human beings are instinctively visual beasts, we have a soft spot for these types of reports. We rarely know what to do with the information we see in these fancy presentations, but we love it all the same as it speaks to us emotionally. The old saying "seeing is believing" is as true now as it has ever been.

The second kind of report is what I would describe as "decision driving". These reports tend to be bland ordered lists, with numbers. However, these reports are not only the most important in driving decisions, but due to their abstract nature (and lack of understanding of the decision-makers predicament) are very difficult to get right the first time. In fact, these reports tend to be an after-thought since we tend to occupy our imagination with the more wonderous data visualizations, and would rather avoid trying to understand the messy world that the decision making manager has to live in. In fact, I'm sure I've even seen some IT folk sneer at the decision makers for not appreciating their glorious art. I've probably sneered myself at one time.

Going one step further, if we ask ourselves how decisions typically get enacted in business, and look at how people take on decisions, we can see that there is s desire to streamline decision making. Managers are expected as part of their role to make decisions on a regular basis. However, because new decisions represent risk, this in turn leads to stress. So, if we can help managers make better decisions without increasing their stress, this is what we should strive for.

I believe that the top 10 (or bottom 10) list is an excellent framework for streamlining decision making. In fact it's so popular, that it is this tool we use to manage our own lives. I maintain my own to-do lists each day. If I need to go grocery shopping, I always have a shopping list in hand. If I need to get my personal spending down, I take a look at my biggest expenses and attack those in order. In other words, the top 10 list provides a framework for grouping decisions together, and therefore making each subsequent decision easier to tackle. Furthermore, since we already know that list items get easier as we go down the list, the entire set of decisions seems less daunting since we can get into a groove and track our progress.

But let's do a thought experiment to give you a better idea of where I'm coming from. Let's say you were the mayor of Toronto, and you had pledged to reduce crime. You might think to first get a grasp of where all the crime is happening. You hire a consultant to explain this to you. The consultant comes back one month later with an impressive heat-map of the City of Toronto showing in excruciating detail where all the crime hotspots are. As the city mayor you recognize all the neighbourhoods, and probably aren't too surprised by what you see. However, you will feel wiser seeing this map as you can now visualize where the crime is taking place (well you might think you can visualize it). Great! Now it's decision time. You need to make some hard spending decisions as to where you want to allocate social spending programs, improve community safety, and boost law enforcement. Is this map sufficient for you to sign into budget these decisions? Perhaps I as mayor could request more heat-maps showing different types of crime like homicide or grand larceny? Maybe an animated time-seriesed map showing the spread of crime might better help? Do you feel confident allocating millions of dollars based on moving blotches on a map, even knowing that those blotches are confiding the truth? Probably not.

I suspect at this point you will want to start generating good old fashioned lists. You might want to see: Top ten neighbourhoods, as ranked by a blended crime index. Or maybe, top ten neighbourhoods, as ranked by velocity of increase in crime over the past 4 years.

There is no shortage of these top 10 lists you could produce, but the whole time you're dealing with unamiguously ranked neighbourhoods, supported by hard numbers. As a compromise, I might say that you could add a simple bar chart visualization to help make some numeric comparisons a bit easier. Either way, you will need to boil things down to a list of some sort, since you will need to verbally articulate the decision you made. What sounds better: "I have allocated an increase spending to: Jane & Finch; Rexdale; and Regent Park, as they currently have the highest indexed crime per capita for the past 5 years standing, according to Statistics Canada". Or, would you rather say: "If you could have seen the map I saw, you would know to allocate funding to Jane & Finch; Rexdale; and Regent Park". Yes, if you're lucky, you might get to hold up the map, but then you would be forced to explain its legend. And if the three neighbourhoods are visually similar to a few other neighbourhoods from a heat-map persepective, then you might be in the awkward situation of squinting your eyes and saying "Well, in my opinion, this blotch looks slightly larger than that blotch". However, if there was a clear winner, then maybe the map wouldn't be so bad? But if there was a clear winner you could state that more clearly in verbal terms.

Show me a data visualization, and I'll show you a top 10 list which does a better job at driving decisions.

However, with all that said, you might be led to believe there are some exceptions to what I am saying. For example, experienced meteorologists are able to make reasonably accurate predictions by visually studying animated satellite imagry of weather patterns. Touche! But I'm not sure if I would even categorize this as BI, since the data never got beyond the video stage into a "fact-based" database. The same goes for military intelligence studying satellite imagry. Once again, the photos are being analyzed as-is for enemy presence.

What I am saying is that the name of the game is to figure out what the most ideal top 10 (actually top 5 might be better due to limits on our capacitative memory) lists are to drive decisions, and you will have saved everyone time, and make managers lives so much easier. However, the hard part is getting into the head of the decision maker. If you cannot understand what the decision maker is confronted with, you will just be throwing darts at a board. Who knows, maybe you'll get lucky.

Thank you David Letterman. You know us so well!

No comments: