4 Questions Every Dashboard Should Answer
Any small business leader wanting to implement a dashboard can find dozens of examples via a simple Google search. While many of these dashboards may be gorgeous representations of data with fancy looking charts like gauges, when I look at them it is not clear to me what conclusions I should draw from them. If I am a leader of a business then I want to know how the business is doing and what we need to do to get better. My philosophy is that standard periodic business reports should tell a story about the business. This means knowing not only the “what” but the “why” and the “how” as well. What is our business doing? Why is it doing it? And how can we execute better? And to build a story I think there are 4 critical questions that must be answered for each goal-aligned KPI in your business dashboard.
1. What is going on?
The dashboard should clearly communicate performance and trends for each KPI. This means the trend over time benchmarked against prior periods and targets. There is a place for visuals in a dashboard and this is it. But don’t get too fancy. A gauge may be the best representation for a given KPI, but don’t do it just to do it. In the end, we want to clearly show the trends, not cause confusion.
2. What is the impact to the business?
In my experience, what is missing from most KPI reporting is the impact to the bottom line. It is great to know that conversion has declined in recent weeks, but what is the impact in terms of dollars? If your business is under-performing for several KPIs, how do you know where to prioritize the limited amount of resources? By employing variance analysis and incremental impact models you can make your dashboard more actionable by communicating KPIs in terms everyone understands.
3. What is causing these trends?
This is where we get into the real insights of your dashboard. The previous two questions ask what is going on, but we also want to know why it is going on. Your dashboard should have context that helps you understand the trends. What sources are driving the increase in site traffic? What products are hurting gross margins? This should be the real meat of your dashboard and where your analysts add true value.
4. What is the plan to maintain or get better?
So your dashboard tells you the “what” and the “why”, but wouldn’t it be great to know what the plan is? In other words, what steps are being taken or are planned to impact performance? Site traffic is doing great, so how are we going to maintain this growth and get better? Product margins are down? What are we going to do to counteract this? This will require input and engagement from leaders and managers and thus makes the dashboard more relevant.
Now again, I love a great visual as much as the next data analyst. But I love actionable reporting even more. There is a place for great visuals, but your dashboard should be an actionable snapshot, and it will be by answering these four simple questions.