The Problem with Dashboards

Your company dashboard is only as good as the data it pulls and successfully interprets. Many dashboards are misleading because of flawed data or simply not useful because of the lack of good metrics.

Here is an excellent whitepaper on this subject:

Why Use Dashboard Metrics? (direct link to pdf)

An excerpt:

“The major problem with dashboards, however, lies in the fact that many are based on flawed measurement techniques and metrics that are not predictive of success. A dashboard is only useful to a company if the data behind it are accurate measures of consumer behavior and the best predictors of organizational success.”

A useful dashboard will be tailored to the company and include unique measures that best predict its success (Harvard Business School, 2007). A “one size fits all” dashboard is not beneficial for the company. Conducting research to discover the measures that are specific to your company will create a dashboard that will provide actionable information.

Another potential problem with dashboards is focusing on only one aspect of the company, such as marketing activities. A successful dashboard will integrate all departments within the company in order to get a more complete picture of company health. Also, some dashboards only show short-term targets and results, such as sales figures, rather than focusing on critical, long-term predictive indicators (MacDonald, 2006).

The major problem with dashboards, however, lies in the fact that many are based on flawed measurement techniques and metrics that are not predictive of success. A dashboard is only useful to a company if the data behind it are accurate measures of consumer behavior and the best predictors of organizational success.

When creating a dashboard, it is not useful to throw up values haphazardly or only include those figures that make the company look good and keep the CEO happy. This way of thinking can prevent companies from staying focused on the metrics that actually predict success. In the book, “Moneyball,” baseball managers focused their decision- making on indicators that were better predictors of success rather than the traditional metrics that managers would focus on (Lewis, 2003). The author, Michael Lewis, shows how Bill James and Billy Beane transformed major league baseball by demonstrating how improving efficiency can leverage limited resources and create success. What James and Beane did was to redefine the metrics used to evaluate the value of each major league baseball player to a team. Instead of looking at traditional indicators like batting averages and earned run averages, Beane re- focused baseball on walks, on-base percentages and other metrics—because they are a better predictor of success (i.e., winning baseball games). This way of thinking can also be applied to marketing. But what are the metrics that should be measured?

Read the white paper to find out.