INFORMATION TECHNOLOGY

Home > IT > Recommended reading for performance management pros

---

Recommended reading for performance management pros

April 2008

What’s on your business bookshelf? If you’re looking for better performance, chances are you’ll want to read up on how data and information can help you improve results.

More organizations realize that the best decisions are driven by data. Fact-based decisions are the key to growing revenue, reducing costs, and managing long-term assets.

Analytics and reporting are at the heart of it: by leveraging data, they create an information environment that fuels critical insight and better decision-making.

So it’s no surprise the body of literature on the topic continues to grow.

Herewith, our recommendations for some of the best books in praise of reporting, analysis, and data-driven decisions – a compendium of interesting facts and compelling reading that no business should be without.

Challenge conventional wisdom: Moneyball

In many ways the book that started it all, Michael Lewis’ Moneyball (W.W. Norton & Company, 2004) is an object lesson in using analytics to challenge conventional wisdom and beat better-funded rivals at their own game.

“It began, really with an innocent question,” writes Lewis: “[H]ow did one of the poorest teams in baseball, the Oakland Athletics, win so many games?...A poor team could afford only the maimed and the inept, and was almost certain to fail. Or so argued the people who ran baseball.”

The answer, explains Lewis, lies in two areas: first, by understanding how teams actually score runs (through players with high on-base percentages), as opposed to how they’re believed to be scored (players with high batting averages); second, that it’s not how much money you spend, but how you spend it. Armed with the second-lowest payroll in the majors, Athletics’ general manager Billy Beane focused on acquiring players with high on-base percentages (among other statistics), thus building a team that was could generate runs (and win games) better than any other.

It's easy to see how Beane's approach was pure performance management: simply view scoring runs as the team's core business process, and players with high on-base percentages was a new source of value. From there, it's simply a matter of properly allocating your financial resources to the players who will help you out-perform the competition.

How to out-think the market: Competing on Analytics

Marriott, Harrah’s, Capital One, and Honda are examples of companies that dominate their fields by deploying industrial-strength analytics across a wide variety of activities.

In Competing on Analytics (Harvard Business School Press, 2007), Tom Davenport and Jeanne Harris differentiate between organizations that may have reports and analytics; and those, like Google and Barclays Bank, that compete based on them.²

For instance, while many organizations may know what products their customers want based on sales reports, analytical competitors know what prices those customers will pay, how many items each will buy in a lifetime, and what triggers will make people buy more.

The book offers many examples of the link between analytics and business performance, including this one:

“Capital One’s analytical prowess has transformed the organization into a Fortune 200 company with an enviable record of growth and profitability.

“The value of its stock has increased 1,000 percent over the past ten years, outpacing the S&P 500 index by a factor of 10.”

Weigh the facts before you leap: Hard Facts, Dangerous Half Truths & Total Nonsense

Why do some organizations perform worse than others?

It may be because management is constrained by biases, flawed thinking, or ingrained beliefs. So say Jeffrey Pfeffer and Robert Sutton in Hard Facts, Dangerous Half Truths & Total Nonsense (Harvard Business School Press, 2006).¹

Instead, business practices and decisions should be subject to the same scientific rigor as other disciplines.

That means weighing the hard evidence and following the principles of thought and analysis to make better judgments.

Evidence-based management requires two components.

“First, willingness to put aside belief and conventional wisdom and instead hear and act on the facts; second, an unrelenting commitment to gather the facts and information necessary to make informed and intelligent decisions,” write Pfeffer and Sutton.

The book is a history of organizations sidelined by conventional thinking.

Among them: U.S. automakers who copied Toyota’s production techniques, but failed to adopt the corporate philosophy that is the real hallmark of its success.

Meanwhile, others are using data to challenge prevailing ideas and improve results.

Companies like Harrah’s, one of the world’s biggest and most profitable gaming companies; and the Oakland Athletics, a major league baseball team that consistently makes the playoffs even with the smallest player payroll of any other team.

Connect the dots: Freakonomics

While it’s a little less orthodox, Freakonomics (HarperCollins, 2006) illustrates how information can give us valuable insight and even change how we look at the world.³

“Knowing what to measure and how to measure it makes a complicated world much less so," write Steven Levitt and Stephen Dubner. “If you learn how to look at data in the right way, you can explain riddles that otherwise might have seemed impossible. Because there is nothing like the sheer power of numbers to scrub away layers of confusion and contradiction.”

Levitt and Dubner show how correlating disparate data can reveal unexpected connections: the Klu Klux Klan and real estate agents, teachers and sumo wrestlers, good parenting and education, and the socioeconomic effects of naming children.

The unusual results come from Levitt's creativity in asking the right questions and pairing up data in new ways.

For example: Which is more dangerous to your child's health: a gun or a swimming pool? Why do drug dealers still live with their mothers? How did the legalization of abortion affect the rate of violent crime?

For example, analysis of students’ answers to multiple choice questions suggests there may be cheating in the Chicago school system.

But first Levitt asks: What would the pattern of answers look like if the teacher cheated?

The answer: difficult questions at the end of a section will be more correct than easy ones at the beginning.

Data visualization and the search for meaning: The Ghost Map

In 1854, London was hit with an outbreak of cholera. Six years later, with the death toll rising, Dr. John Snow took an innovative approach. He plotted the location of cholera deaths on a map of central London.

With this technique, Dr. Snow observed that deaths were concentrated in the area around the Broad Street water pump. He ordered the handle of the pump removed, thus containing the outbreak and proving his theory that cholera was spread by contaminated water.

The story is told in The Ghost Map (Riverhead Books, 2006) by Steven Johnson.⁴ More than a compelling history, it illustrates how Dr. Snow used hard data to overturn the widely held but erroneous belief that cholera was caused by miasma, or bad air.

It is also one of the first examples of using data visualization to convey meaning. By keeping things simple, the cholera map revealed a previously unknown relationship (cholera and water) that led to direct corrective action.

According to consultant and data visualization expert Stephen Few:

“This story is important in the history of data visualization, because it is one of the earliest accounts of how a visual representation of important data was able to bring to light evidence that might have otherwise remained obscured for much longer if relegated to a tabular display.”⁵

Every picture tells a story: The Visual Display of Quantitative Information

Now considered a classic on data presentation, The Visual Display of Quantitative Information (Graphics Press, 2001) is for anyone who wants to understand or depict data graphically.⁶

Author Edward Tufte discusses the finer points of visual graphics such as bar charts, time-series graphs, histograms, and relational graphics; and how they’re used to depict a range of data, everything from traffic deaths and government expenditure to the properties of chemical elements.

The idea with all good design is to give the viewer “the greatest number of ideas in the shortest time with the least ink in the smallest space,” writes Tufte.

The corollary to graphical integrity is distortion: using visual or statistical tricks to skew the data.

In some cases, they can present information that runs completely counter to the facts. An example is Britain’s national debt during the war of American Independence, which shows graphs going up when in truth they should be going down.

In the end, it’s about using effective communication to reveal the truth.

“Excellence in statistical graphics consists of complex ideas communicated with clarity, precision, and efficiency.”

From information to better performance: The Performance Manager

Finally, The Performance Manager (Cognos Press, 2007) offers strategies for turning the demand for information from a challenge to competitive advantage.⁷

It draws the connection between information, decision-making, and performance. The idea is that, with the right tools, people in any organization can become performance managers.

Performance managers look at metrics, plans, and reports to draw out critical ideas and make the best possible decisions.

They also use this same approach to connect with others.

For example, if marketing decisions improve demand, then sales and operations need to know about it to ensure the supply is ready. In this way, good decisions feed other good decisions.

The end result is better performance.

“Decision-makers need integrated information at their fingertips to focus on winning, rather than the distraction of gathering information.

“The right information at the right time can make all managers better; but more importantly, it can make good managers great.”

Find Out More See a Performance Management Web Demo Order your free copy of The Performance Manager White Papers by Stephen Few Podcast with Jeanne Harris

---

Sources

¹ Jeffrey Pfeffer and Robert Sutton, Hard Facts, Dangerous Half Truths & Total Nonsense, Boston: Harvard Business School Press, 2006.

² Thomas Davenport and Jeanne Harris, Competing on Analytics: The New Science of Winning, Boston: Harvard Business School Press, 2007.

³ Steven Levitt and Stephen Dubner, Freakonomics, New York: HarperCollins Publishers, 2006.

⁴ Steven Johnson, The Ghost Map: The Story of London’s Most Terrifying Epidemic – and How It Changed Science, Cities, and the Modern World, New York: Riverhead Books, 2006.

⁵ Stephen Few, The Ghost Map: Data visualization in the 19^th century, Perceptual Edge, April 29, 2007.

⁶ Edward R. Tufte, The Visual Display of Quantitative Information, Cheshire Connecticut: Graphics Press, 2001.

⁷ Roland Mosimann, Patrick Mosimann, and Meg Dussault, The Performance Manager: Proven Strategies for Turning Information into Higher Business Performance, Ottawa: Cognos Press, 2007.