The July 23 Wall Street Journal includes an article on "Now, It's Business by Data, but Numbers Still Can't Tell Future." It's all about analytics and managing by the numbers. Here's a quote.

"We've had management by objective and total quality management. Now it's time for the latest trend in business methodology: management by data."

Analytics: "the study of business data using statistical analysis in order to discover and understand historical patterns with an eye to predicting and improving business performance in the future." That's what this is about: the quest for unshakable facts.

Wait a minute! I've heard that term before.

It was a mantra of Harold Geneen to seek out the "unshakable facts." Geneen was CEO of ITT from 1959 to 1972. In that time, the company grew from a medium-sized business with $760 million sales into a multinational conglomerate with $17 billion sales. Geneen based his management style on what he called the "unshakable facts."

There's only one problem with that: facts, by themselves, don't tell you much. If you know that the sales in the Southeast Region were $2.4 million in the second quarter, or that days sales outstanding are 61 days, or that labor turnover in the Galveston plant is 12 percent, you really don't know much. Data, raw facts, by itself, is essentially meaningless.

To know more, you need to combine the facts you have with other bits of data. That's how you get information. Information is facts with context. How were sales in the first quarter or a year ago? Are days sales outstanding trending up or down? How does the Galveston plant's turnover compare with the industry?

That's about as far as you can go with sheer analysis. Even then you don't have much because you have to know what to do.

That's where knowledge comes in. Knowledge is information with guidance for action. Your experience may tell you that an upward trend in days sales outstanding, coupled with increasing sales means that you need to take two actions. You should mount an aggressive collections effort from the regional sales offices and you should check to see if sales are being bought with slackened credit terms.

Only people can make those kinds of choices. Systems can offer alternatives and even model outcomes, but it's up to human beings to make the call.

But which choice is the right choice? Is it one no one has thought of before?  That's where wisdom comes in.

The problem with all the emphasis on analytics these days is that there's very little mention of the people who will make the judgments about what to do. They're the important part and a system that isn't built to human scale will topple of its own weight.

Even with all the analytics in the world, people are still the most important part. Even with a dashboard filled with measurements and the ability to drill down to the molten center of the earth, people are still the most important part.

By all means, give us data of all kinds, but help us understand the two or three most important measurements. By all means give us computing power to manipulate all our data, but help us move toward action instead of more analysis. By all means, bring on the sophisticated systems, but remember that people make the judgments.

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