“Across our 10 branch offices, last quarter sales are up 7%, on average.”
This statement tells you exactly nothing.
But it sure sounds like good news in a management meeting.
The problem is that seldom does anyone ask the right follow-up question.
It turns out that four of the offices each saw their sales double, while the other six offices are struggling, or even trending decreases in sales.
That is the nuance of what’s really happening, and it is an actionable piece of information – quite the opposite of the former, which might just lead to more of the same. More of the same that lets the low performers hide for another quarter and the high achievers build resentment for the lack of recognition of a job well done for continuing to carry the company.
Averages hide truth instead of exposing issues that should be addressed
If the problem is worth talking about, it’s interesting enough to dig into it to show the true groupings and differences that the average is hiding.
Here are the follow-up questions to the announcement of a 7% increase in sales:
- What are the outliers?
- What do they have in common?
- Are there explainable trends, or is there merely noise?
Quite often these follow-up questions are difficult to answer if you’re not tracking this level of detail day to day. This requires reliable numbers when quoting, detailed job costing, or just plain accurate and consistent accounting across all branches. That provides your management team with one version of the truth.
Then comes the hard part after finding the truth about the numbers. It’s having the guts to share the truth.