The story of a taxi driver's search for meaning... or how to get the management information your business needs.

A taxi driver from New Zealand was featured as part of a review of the future of the internet by Tim O’Reilly and John Battelle, two of the world’s recognised leaders in the sector. What caught their eye, was not his erudite views on politics or fellow drivers, but his understanding and use of readily available technology to make a real impact on his business.

For a six week period, the taxi driver kept a log of all fares (GPS, weather, passenger and three other variables). He put the data into his computer and did some analysis to work out where he should be at any given point in the day to maximise his take. The outcome? He is making a very nice living with much less work than other taxi drivers.

The ability to draw on multiple sources of information, and combine them to give greater meaning and understanding is one of the key themes for the future of the internet. It is also of significant relevance to business today.

Does your business have the relevant management information (MI) it requires to make key strategic decisions? Are you getting real meaning from your MI?

Cornerstone or Doorstop?

To answer the above question, consider how you use the information currently being prepared. Is it something that arrives at the right time, providing the answers and insight you need to run the business? Or is it a historical document that confirms what you already knew, that is given a cursory review and then quickly filed in a drawer along with the previous versions?

If the former, then the chances are you are getting the right data. If the latter, perhaps it’s worth looking again at this area.  

Four steps to take:

1 . Understand the information that you need to run the business.

Think beyond the accounting detail. Look at how the business monitors profitability - where does it make its money? How do you monitor performance – activity levels/output?

As a guide, aim to identify no more than 5 key indicators that you would like to monitor. They need not be purely financial.

2. Plan how to get this information

Having worked out the information you need, build a plan to capture the detail. Keep in mind the cost/benefit balance in gathering the data – it needs to be readily and quickly accessible if it is to be used effectively in the business.

3. Combine the information to give meaning

Look at how the data you have gathered can be compared and analysed to provide the information the business needs. Simple manipulation in a spreadsheet can often deliver valuable insights into the key drivers behind an operation.

4. Present the key findings business-growth

The temptation in a process like this is to deliver a volume of detailed information, at which point the meaning is then lost.

The output should be a review of the key indicators (as noted earlier – around five) with commentary to interpret that information. Making reference to budgets or trends will help reinforce the analysis.

Key takeaways

Management information can and should be a valuable tool used in helping to run the business. Understand the information you would like to receive and then compare this to what you actually receive.

Improving your management information need not be a costly process and will certainly deliver real benefit.