Managing with Data: Lessons from the General Counsel's Perspective

by JD Supra Perspectives
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Many leaders misunderstand how to use data insights to drive their business, sometimes to disastrous effect.

Nearly every action we take during our personal and professional life generates data, to be vacuumed up by the apps and systems that define our modern environment. More data has been created in the last two years than the entire previous history of the world. 

This explosive growth of data and the massive rise of analytics is changing our world forever, shifting our expectations and altering how we work and live. Much of that data is used to influence our own behaviors and experiences in ever more complex ways.

I value data and embrace its use. I lead my team, serve my customers, and develop my organization with data. As much as I believe in its power, however, I recognize it must be used in the right way.

Many leaders misunderstand how to use data insights to drive their business, sometimes to disastrous effect. Here are the lessons I’ve learned – some at great cost – on how to apply data to my team.

Identify the right data

This is much harder than it sounds. If you measure the wrong thing it is useless at best, dangerous at worst. To decide what to measure, you must determine what matters most to your business. There is an inherent degree of subjectivity here. 

If you measure the wrong thing it is useless at best, dangerous at worst...

I can choose to measure my team’s performance many different ways. I could track the number of deals completed (or lost), or the relative value of deals, or the time to complete each deal, or just the taxonomy of the deals, or some other measure. If we decide that what is most important is cost control and efficiency, then we’ll pick metrics that address that. If our focus is more on enabling the business or minimizing risk, we’ll need to look at other measures. There is a choice, and wherever there is a choice there is the opportunity for error and bias. 

We actually collect a lot of data, probably over 100 separate metrics just in our commercial group. We use that larger set of metrics to hone in on what matters the most, distilling down to a few core metrics that best serve our business. 

Measuring the right thing isn’t enough; you also have to measure in the right way.

You can inject inaccuracy or bias in any number of ways. One obvious way is through benchmarking. The exact same metrics can show my business in a very different light, depending on which peer set I choose as a basis for comparison. Should I evaluate my business against all other high-tech companies? Against California companies? Other FORTUNE 500 companies? Each set will lead to a very different result. Cost/revenue is a classic measure for law departments, but it doesn’t begin to explain huge nuances even for similarly situated and sized peer companies.

Data triggers strong reactions

“Data has no emotion.” We’ve all heard this common aphorism in defense of metrics. It is summoned as the rationale for making emotionally tough decisions and blunting resistance from others. But the truth is that data triggers powerful emotional reactions. Wait until a consultant tells you your organization is way outside of benchmark and see how you feel. 

When the numbers reveal the need for change, there is always someone who feels challenged or defensive.

I use metrics to assess my team, my vendors, and even myself. When the numbers reveal the need for change, there is always someone who feels challenged or defensive. The “victim” will find every way to reject the result. Example: if my analysis says that a team has too many people on it, the manager will argue passionately that her team is “different” and shouldn’t be held to that standard. You need data to bolster the case for change, but it usually will not win the argument by itself. 

Expect resistance

Ultimately, how people experience data depends almost entirely on their context. A customer experiencing a quality problem with your product does not care that your latest release has the best quality metrics ever. A service provider who is doing a great job for you will not happily reduce fees when you show comparative data indicating they are too expensive. A team you manage is not likely to work harder simply because “benchmark” data shows other peers are more productive. Indeed, the data in these contexts will produce hostility and may create barriers to productive engagement.

...how people experience data depends almost entirely on their context.

When the data “supports” the view you are advocating (“I am efficient,” “I am productive”), you feel validated. When the data suggests you are not as efficient or effective as you saw yourself, you can experience other extreme emotions: anger, rejection, defensiveness, hostility, apathy. 

Here’s one story that shows how hard it can be to get others to accept data: 

In reviewing billing rates with one of our law firms, we showed our data – median comparative rates of a composite of peers – suggesting that this firm was charging 10-20% too much for services. The result: a painful meeting where they challenged the data, suggesting that we had selected the wrong peer group for comparison. In other words, they challenged the “how.” So we re-ran the data with a peer group that they agreed to, only to come back with the same conclusion. So now they chose to challenge the “what.” They argued that perhaps hourly rate is not the true measure of the value they bring. Guess where this relationship is headed?

Look at the data – but never lose sight of your people

Remember, change goes through people. I worry that many managers get a false sense of certainty from data, which can lead to making extreme decisions. Data is simply a means to an end – a way for us to understand our business better so that we can improve over time. Ultimately, however, all change and growth needs to go through people. And if you just hit people over the head with metrics you may discourage the exact behavior you want to achieve. I want everyone in my organization to have access to the data, to understand what we are measuring and why. I also want them to understand that the data is not meant shine a spotlight on specific individuals but rather to help us get better collectively.

Data is simply a means to an end...

The lesson: emotion and data are closely tied together. Yes, data is essential for measuring and managing complexity, but far from being the emotionless asset that drives you through highly charged decisions, data can evoke deep passion and foment strong disagreements that may even damage relationships.

So, embrace data. Measure, measure, measure! Run your business with metrics… but pick the right ones and beware the adverse reaction. Forewarned is forearmed.

*

[As senior vice president, general counsel, chief compliance counsel, and secretary for NetApp, Matthew Fawcett is responsible for all legal affairs worldwide, including corporate governance and securities law compliance, intellectual property matters, contracts, and mergers and acquisitions. He has overseen the development of NetApp Legal into a global high-performance organization with a unique commitment to innovation and transformation.]

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