[D105]Decision Making In Business

But what makes the difference?
There are many reasons for a business to be inefficient, but perhaps the most common is the lack of understanding about what is going on in the business. After all, if you don’t really know why the business is successful, you’ve probably got to that point more out of luck than judgement. Now being a success without knowing why is one thing (and not a bad position to be in I suppose), but being a “failure” and not knowing why is another thing entirely.
Being a “failure” does not necessarily mean that the business is bust, no, there are many degrees of failure and the one that I am going to concentrate on here is where the business could be so much better “only if…”
The “Only If” issue
The “only if” is all about having a problem, that if solved, would make the business so much more profitable. For instance, perhaps the cost of production is too high, so making it cheaper would make the business more money. Simple, but before you can fix this problem, first you have to recognise that it exists and then you have to find out why the cost of production is too high.
Recognising the problem
In some cases recognising the problem is easy, in other cases it can be very hard, but in most, if not all cases, these issues can be easily spotted if you have access to the data that the business produces. However, there lies another problem, as these days, businesses can produce so much data that the business owner cannot make ‘head nor tail’ of it all. In fact, all the data can make matters worse as time is then taken up ‘trying to understand’ what it all means.
Turning the data into information
The first step here is to turn this raw data into understandable information, so that you can at least see what it means, however, this will only give you the raw data in a more understandable form, you still have to convert this one more time, if you are to use it to improve your business.
Turning information into knowledge
So, you have a set of wonderful graphs saying this and that, but you still have not carried out what is really necessary, you have not turned this information into ‘knowledge’, as you see, you have to ‘know’ what is going on before you can improve matters.
The Oxford dictionary’s description of the word ‘know’ is “perceive with certainty”, while ‘knowledge’ is described as “all that is or may be known”, and that is after all what anyone running a business has to be able to do, they must “perceive with certainty” what is going on, and must (at least to some degree) know “all that is or may be known” about their business.
Help is at hand
However, all this fancy talk is of no help to the beleaguered business person, no they need concrete help in taking this data and turning, into information that will allow them to ‘know’ what is going on. But help is here in the form of various pieces of software, backed up of course by people with vast amounts of experience as to how to best use it. The common name for this area is “Business Intelligence” the software being supplied by such famous names as Business Objects, Crystal and of course Microsoft, while the knowledge of how to implement it is supplied by companies such as Contemporary.
Business Intelligence does not cure problems
No, BI does not cure a businesses problems, but it does allow the managers of that business to see where they lie and as importantly, track to see how the changes they make affect the performance of that business. So, if you want to improve your business efficiency, first think of finding out what is going on in the business, and for that there is no better way than “Business Intelligence”