(2023-02-06) Chin How To Become Data Driven

Cedric Chin: How to Become Data Driven. In our previous piece we took a look at Goodhart’s Law, and examined how Donald Wheeler’s Understanding Variation contains a method for dealing with the Law in various organisational contexts

you must understand how the inputs affect the outputs of the system

Specifications are the Voice of the Customer, not the Voice of the Process. The specification approach does not reveal any insights into how the process works.

It turns out that Wheeler meant something very specific when he said “you must listen to the Voice of the Process.” He was talking about a particular approach to working with data — one that generalises rather broadly to all forms of business activities.

perhaps most importantly: are the current changes in your visitor numbers totally normal, and therefore just routine variation?

telling the difference between routine versus exceptional variation is the beginning of becoming data driven

The field of statistical process control (SPC) was founded on the ideas of American statistician Walter Shewhart, and spread through the work of W. Edwards Deming during and immediately after World War II. Deming liked to say that every instance of exceptional variation is an opportunity for process improvement. If you see positive exceptional variation (a massive visitor spike, for instance), you’ll want to investigate because such a spike will tell you something insightful about the underlying process; if you see negative exceptional variation (a sudden dip in visitor numbers, say), you’ll want to start digging into the causes that produced that dip, hopefully before it becomes too large of a problem.

But there are actually many more implications when you start to see variation as ‘routine vs exceptional’, and we’ll get into those in a bit. (rest is premium)