What is Visibility?
In my previous post I’ve established why visibility is very important in running and growing a business. And how the lack of visibility if both a vicious cycle that can result in the decline of a business, and that visibility is both ways, top-down and bottom-up.
Now let’s explore further what exactly do we mean by visibility? In other words, what needs to be visible and to whom?
The short (and useful) definition of visibility:
Being able to see at anytime what is going on in the business that is relevant to the question or task at hand
From Top to Bottom
Executives have the task of making strategic decisions that should affect the business positively. From this vantage point, visibility is being able to see what is going on to make not only good decisions, but timely ones. In practicality, this translates to knowing what trends are in effect within the business. In other words where are things going based on the events that happens at certain periods of time.
NOTE: Sampling of data taken at certain intervals is a common way to get this kind of visibility. The cross-section of the company where the sample is taken can also provide important insights.
From Bottom – Up
Employees doing daily tasks are the main source of data in which the sampling can be performed. Every aspects of the tasks that can be measured should be measured. Visibility here means more than just being able to perform the task, but also to know why a task is required and how the task affect other areas across the company.
The more successful a company in providing this visibility, the more it can work as a unit rather than disparate departments busy protecting their own interests.
This is truly what is meant by the term Business Intelligence.
What do we do with visibility?
When we can see clearly what is going on in the business, we can decide which action to take and the timing of which the action is taken. So the main motivation to increasing visibility is to know what to do when certain things transpire in the business that needs attention, way before it becomes a problem.
More importantly, is the long term effect of visibility:
The increase in the overall performance of the company in conducting business. At the extreme level, this could mean becoming a game-changer in the industry. I don’t need to belabor why this is important, it’s what makes a company valuable, to anyone who deals with it.
Enough with Theory!
Let’s take an example, let’s say company A found out that the revenue is increased over the same period previously but so does the cost. Let’s use the concepts we learned above about visibility to find out why.
In this situation, the first step is to find out what caused the revenue increase. Let’s say that the increase of revenue is caused by more new customers purchase the products.
Then we take measurements across departments in the company on how much each department either contribute or is affected by the increased revenue (new customers).
NOTE: This is a good example of looking at things differently, instead of focusing on the Sales Department vs Accounting, we start to get the feel of what is taking place at other departments because of this known fact (increased revenue).
Upon analyzing the result of the measurement, we noticed that the Customer Service calls spiked up during the period and the procurement department also are busy sending out part replacements.
I turned out the new customers are not equipped with enough knowledge about the product, resulting in higher refund rate (dissatisfaction) or parts replacement due to damage.
Knowing that, the company tasked the marketing department to come up with materials that can be incorporated with the product packaging, so the customer has to go through them in order to enjoy the product.
The above scenario sounds like an easy and typical problem to solve. But consider this:
- What raised the red-flag and triggered the “investigation” ?
- How did the company found out quickly that the revenue increase is caused by new customers?
- How long would it take to take the measurements out of each department in the company? Without a conscious and concentrated effort to gather the data, this can take months or longer
- How long would it take for Accounting to approve the budget for the new marketing materials?
Interesting questions, isn’t it? And it’s a set of questions that is rarely talked about. Let’s consider some answers:
- What triggered the investigation is the Executives having visibility to what happened to both revenue and cost over a period of time. Contrary to what most believe, this is not the job of the accounting department. Without a conscious and concentrated effort, no one would have time to do this
- The company quickly can pinpoint the source of the revenue increase because it knows the customers. Only companies who took the time to know their customers via analyzing their data would be nimble enough to use the insight when the need arises
- The reason this company were able to analyze the situation is because of the visibility across different departments. Each of the department has indicators that everyone can see when their tasks (and cost) spiked up
- Lastly, the reason this company were able to address the problem quickly is because the accounting department has visibility to what the marketing department is capable of in terms of designing the new packaging, and the ability of the production department to dole it out.
As we can see clearly, without visibility, this whole process would be much slower if it happened at all.
Now let’s make this closer to home. Were the above story to happen within your company (or the company you work for), what would be the outcome?
Do you have enough visibility?
In a form of a list, this is Visibility for starters:
- Periodical sampling of data to discover trends
- Transparent cross-department measurements
- Customer tracking and scoring
- Employees performance scoring
- Vendors tracking and scoring
- Documented Time
Visibility is something that we don’t miss until bad things start to be noticeable. Companies who are proactively putting in place a system — Business Intelligence tools such as a Data Warehouse, Dashboards, fall into this category — that allows for visibility to be achieved, will find out that the more they use it, the more effortless for them to not only react, but also to anticipate changes and “roll with the punches” so to speak.
Next post, we’ll see what is the make up of a good system that provides the 6 aspects of Visibility listed above.