Organizations collect massive amounts of data every day. Production numbers, inventory numbers, sales, costs, customer feedback, efficiencies, process data, etc. There’s probably not a metric on the face of the earth that’s not being collected somewhere. Managers, workers, engineers, scientists, financial analysts, bankers, doctors, nurses, educators, students, etc. all digest data on a daily basis. They know how to add, subtract, multiply, and divide, yet they have no understanding of how to digest numbers to extract the knowledge that may be locked up inside the data.
Donald Wheeler in his book Understanding Variation, The Key to Managing Chaos, calls this deficiency “numerical illiteracy.” It is not a failure with arithmetic, but is a failure to know how to use the basic tools of arithmetic to understand data. The problem is that numerical illiteracy is not being addressed in our educational system, and students are not being taught how to extract knowledge from the raw data.
Fortunately, this problem is easy to correct. First, the tools to analyzed data are very simple and easy to learn. Run charts, Pareto charts, control charts, etc. are simple tools to use, easy to understand, and provide immense insight into raw data.
Secondly, organizations need to challenge their employees and expect them to understand the data they collect better. Simple data analysis of central tendency, looking at means and medians, and measures of dispersion, looking at standard deviations and variance, should be routine practices. Understanding variation in the data and what causes it should be a part of every organization’s data analysis. The power derived from this allows the organization to be a learning organization, one that makes better decisions, because they truly understand the data they collect.