Stockpiling data is as bad as piling up a large inventory of products in a warehouse. Managers are routinely tasked with reducing physical inventories. So why do they spend large amounts of their time dutifully reporting information to be added to an ever growing pile of business data?
The cost of computing technology has tumbled each year following the inescapable logic of Moore’s law. As a result, increasing amounts of data are collected and stored. But just because you can store information easily and cheaply does not mean that you should. While the cost of data storage has declined, the hidden cost of collecting data has not. Management time is a finite resource and is wasted when consumed reporting information for other people who do not use it.
Reducing inventory is a cornerstone of lean management not just because inventory represents capital that is tied-up non-productively, but because inventory hides inefficiencies and makes it difficult to see the root-causes of waste. The unnecessary reporting of information is waste. The time required to sift though unnecessarily complex data archives is also waste. Moreover, when managers are tied-up with the administrative task of reporting information for others in the hope that it might be useful in the future, they frequently lose the opportunity to help their teams improve performance right now.
What front-line managers really need to know is what to do in the next 15 minutes, based on what happened in the last 15 minutes. The information needed to make these types of decisions has greatest value now. So rather than reporting this information for future use, it needs to be made visible and acted on immediately. This is called Short Interval Control (SIC) and is an important component of a performance management system. This can be done simply with a few well chosen metrics and basic tools such as a whiteboard. It may not even be necessary to capture and report this information as other metrics may be better suited to monitoring long-term trends and doing root-cause analysis in the future.
While the cost of storing data declines, the cost of collecting, reporting and then retrieving it does not. Collecting data just because you can, or just in case, can create waste and may actually divert managers from more valuable activities to improve performance.