Is Your Executive Dashboard Telling You What Happened—or What Will Happen?
Executives have more data available today than at any other time in business history.
Dashboards display sales, costs, quality, delivery, customer satisfaction, productivity, safety, and dozens—or even hundreds—of other key performance indicators.
But there is an important question that is rarely asked: Is your executive dashboard primarily telling you what happened, or is it helping you understand what is likely to happen?
That distinction can fundamentally change how leaders manage an organization.
Most traditional dashboards are excellent at displaying history. They tell executives what happened last month, how the latest number compares with a target, and whether a KPI is red, yellow, or green.
Unfortunately, historical reporting alone does not necessarily provide the information leaders need to make better decisions about the future.
A predictive executive dashboard offers a different approach.
Predictive Executive Dashboard: Moving Beyond the Rear-View Mirror
Consider a typical executive dashboard.
Last month, on-time delivery was 94%. This month, it is 96%.
Is that improvement?
Revenue increased 4% from the previous month.
Did something fundamentally change?
Customer complaints declined from 47 to 39.
Did the process improve?
Traditional dashboards encourage executives to compare one period with another and then explain the differences.
But every process has variation.
A number moving up or down does not necessarily mean that anything fundamentally changed in the underlying process.
This creates the danger of what might be called rear-view-mirror management.
Management spends considerable time explaining yesterday’s numbers without gaining a clear understanding of what the existing process is likely to produce tomorrow.
The better question is: What is the process telling us about the future?
Executive Performance Reporting Should Distinguish Signal From Noise
Effective executive performance reporting should help management distinguish meaningful change from routine variation.
Suppose a metric changes from 94% to 96%.
A conventional dashboard may color the 94% result yellow and the 96% result green. Management might congratulate the responsible department for improving performance.
But what if both numbers are simply routine variation from the same underlying process?
Nothing actually improved.
Conversely, an important process change might be obscured by conventional reporting because management is concentrating on whether individual monthly values reached their targets.
This can create two costly management behaviors:
- Taking action when no fundamental change occurred.
- Failing to take appropriate action when the underlying process really did change.
Executives should not have to guess which situation they are facing.
Performance reporting should provide insight that helps them make that distinction.
Predictive Performance Metrics Answer a Different Question
Traditional KPIs typically answer: What happened?
Predictive performance metrics seek to answer: What can we reasonably expect to happen if the process continues operating as it does today?
That is a much more useful management question.
When a process demonstrates an appropriate region of stability, its historical performance can provide a basis for describing expected future performance.
Management can then evaluate that prediction against what the organization needs.
If the predicted performance is satisfactory, intervention may not be necessary.
If the predicted performance is undesirable, management has a very different message:
The process itself needs to change.
Instead of firefighting individual monthly numbers, leadership can focus resources on improving the process that generates those numbers.
30,000-Foot-Level Reporting Provides a Process View
Smarter Solutions’ 30,000-foot-level reporting methodology was developed to provide this higher-level process perspective.
The name reflects the idea of viewing a process from high enough above the day-to-day activity to understand its overall behavior.
The methodology separates two important questions.
First: Has the process been stable, or is there evidence that something fundamentally changed?
Second, when an appropriate recent region of stability exists:
What level of performance can we expect from this process in the future?
The resulting report can provide management with a concise statement about expected performance.
This differs significantly from dashboards that simply present a collection of numbers, gauges, arrows, and stoplight colors.
The objective is not to create another prettier dashboard.
The objective is to provide information that leads to better management decisions.
Future Performance Prediction Changes the Management Conversation
Consider what happens during a conventional management review.
A KPI moved from green to red.
Someone is asked: “What happened?”
A manager explains the number. Corrective action may be requested. People leave the meeting with assignments.
The following month, the KPI moves back to green.
Everyone feels relieved.
But suppose the entire red-to-green movement was simply routine variation from a stable process.
Management may have spent time and resources reacting to noise while the underlying process never changed.
A future performance prediction creates a different conversation.
Instead of asking why every number moved, leadership can ask:
- Has the process fundamentally changed?
- What performance is the current process expected to deliver?
- Is that predicted performance acceptable?
- If it is not acceptable, what must change in the process?
- Where should improvement resources be focused?
These questions move the organization from reactive reporting toward fact-based management.
Why Red-Yellow-Green Dashboards Can Mislead Executives
Red-yellow-green scorecards are popular because they appear simple.
Green is good. Red is bad.
But that apparent simplicity can create misleading signals.
Imagine a stable process in which normal variation causes the metric to move periodically above and below an arbitrary target.
The dashboard may repeatedly switch between green and red even though the process itself has not changed.
Management can then find itself repeatedly responding to individual outcomes rather than improving the system responsible for those outcomes.
The issue is not the color.
The issue is the management behavior the reporting system encourages.
A better reporting system should help executives understand whether they are observing a meaningful signal or ordinary process variation.
From Dashboard Reporting to a Business Management System
Predictive reporting becomes even more powerful when it is integrated into the organization’s overall business management system.
A metric should not exist merely because someone decided it would be useful to put it on a dashboard.
Metrics should connect to the organization’s processes, strategic objectives, financial goals, and improvement activities.
This is a fundamental component of Integrated Enterprise Excellence (IEE).
IEE connects performance measurement with strategy and process improvement so that organizations can identify where improvement efforts can have the greatest enterprise-level impact.
When a strategically important metric has an undesirable predicted response, the organization has a logical basis for evaluating and initiating improvement.
When improvement work is completed, the same reporting methodology can help determine whether the process actually changed.
The result is a closed-loop management system rather than a collection of disconnected KPIs.
Executives Need Foresight, Not More Data
Most organizations do not suffer from a shortage of data.
They suffer from difficulty converting that data into information that leads to the right action—or deliberate non-action.
Adding more KPIs to an executive dashboard does not necessarily solve that problem.
Artificial intelligence does not automatically solve it either.
If AI analyzes a performance reporting system that encourages reactions to routine variation, it may simply enable the organization to analyze misleading signals faster.
The underlying management system still matters.
Executives need performance reporting that helps answer three basic questions:
- Has something fundamentally changed?
- What performance should we expect from the current process?
- If that predicted performance is undesirable, where should we focus improvement?
Those questions are much more valuable than simply asking whether this month’s number is higher or lower than last month’s.
Turn Your Executive Dashboard From a Rear-View Mirror Into a Windshield
Traditional dashboards have value. Organizations need to know what has happened.
But executives also need a view through the windshield.
A predictive executive dashboard can transform performance reporting from historical scorekeeping into information that helps management understand the behavior of the business and determine where action is actually needed.
The objective is not to predict every future event.
It is to use process behavior and data more intelligently so management can understand what the existing system is likely to deliver if nothing fundamentally changes.
That perspective can reduce firefighting, discourage reactions to routine variation, focus improvement resources, and create a stronger connection between performance reporting and enterprise strategy.
Learn More About Predictive Performance Reporting
Smarter Solutions has developed extensive material on 30,000-foot-level predictive performance reporting and its integration within the Integrated Enterprise Excellence business management system.
For additional information, explore:
- Why KPIs Don’t Predict Future Performance
- How to Create Predictive Performance Metrics
- Key Performance Indicators Reporting 2.0
- Business Management System 2.0 for Executive Leaders
Would you like to see what one of your organization’s existing KPIs looks like when converted to a 30,000-foot-level predictive report?