It takes forever to read our monthly management reports. Do we really need all this info?
I was reminded of this the other week when an enormous package landed on my door. The big bundle was last month's management report, accounts and "supporting schedules" for a business which, to give you an idea of size, employs about 30 people.
Because I was short on time I needed to prioritise the long reading list. I called the CEO to ask him which reports he looked at first and where I should focus my time. He laughed and said he only ever looked at the first five pages and guessed that the rest of the stuff must be produced for the other guys on the management team.
So I spoke to the other five executives. Four of them confessed to spending hours each month dutifully wading through the reports but not really understanding why they needed much of the information. The fifth executive was the CFO, John, who had been at the company for nearly two years.
When John joined the business he was a little in awe of his predecessor - the CEO had spoken very highly of him - so when it came to producing management information John was loathe to change any of the reports that his predecessor had created. So he didn't. He just supplemented the existing reports with lots and lots of extra information.
Periodically members of the management team would ask for specific information for a project. John would assume this information was required monthly and so he would start to include it as a regular item in the reports.
So that is how, over two years, the monthly information swelled to hundreds of pages.
John's line of thinking was that one could never have too much information. But that's not true.
The human brain loves finding patterns in data; we do it subconsciously. But when our brain is presented with too much information it can't find the pattern subconsciously, instead we have to go searching for it. It's a little like the colour-blindness test. Remember the circles with the coloured dots? If you aren't colour-blind you can quickly pick out the "hidden" number. If you are colour-blind the circles look like a jumble of dots with no pattern. That's what too much information looks like.
Because of his deep understanding of the business, and years of experience, the CEO was able to select the information that he found useful and be confidant of ignoring the rest: he could still spot the patterns. The rest of the team however felt obliged to pore through all the information, and in doing so were actually jeopardising their ability to interpret the data.
Yes, the CEO should have indicated that the business needed less management information; but he thought that the rest of the team found it beneficial. Yes the rest of the team should have said that they were overwhelmed by all the data; but they didn't because they were worried about looking stupid. Sounds ridiculous I know, but this is exactly what happens in daily life.
So my suggestion this week is that you pick one piece of management information to review at each monthly meeting and ask:
Do we need this?
Why do we need this?
What story is it telling us?
And if it's not completely useful, chuck it out!
Julia is on break for a week.This article first appeared on April 14, 2010.
Julia Bickerstaff's expertise is in helping businesses grow profitably. She runs two businesses: Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of "How to Bake a Business" and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).