All tagged business understanding

When we look at cost curves, often we notice they have a U shape which is the result of two opposite effects on the same driver. For example, the quality cost curve and the logistic cost curve.

Quality Cost Curve

If we put the quality level on the x-axis, from 100% defect to 100% perfect, say 1 to 10 in terms of quality level, the cost of achieving the different quality levels increases as we approach perfection. Something like this:

Say you want to achieve a certain output, like controlling your weight, for example. Then you would like to know what kind of actions and inputs are needed to get there. The output can be either a target, like losing 10 kg, could be controlling variability, like keeping your weight variation within certain boundaries, or maybe trying to understand where your weight will be given future changes in your environment. To make things easy, let's assume you want to lose 10 kg.

Some say you don’t truly understand something until it actually happens to you. And there is a big difference between knowing something and understanding it. I imagine that people who are really good at what they are doing are so because they truly get it, they understood that part in a way others didn’t. But how did they get there? Is it their passion, their spark, what is it that got them there?

We tend to believe that the more we know, the more we will understand. We want more facts, more details, more numbers, more of whatever that would make us smarter. But what really makes us smarter is thinking and thinking is hard. Seeking data is easier than thinking, so we tend to go that way.

I used to be a big supporter of the idea that the more information I have at hand, the better I will understand how things come together. And so I dig in, get the data and figure out how that number became what it became. At this point I have already the first issue.

It’s a fact of life, you can’t explain everything to everyone. But many times we ignore it and we try to do exactly that. Maybe we think that the more we explain, the more likely we are to get our message through. Or maybe we just do it because it’s easier than explaining less.

Business controlling is a lot about understanding the effects of decisions and actions and sharing that understanding. When presenting results, I want to keep the focus on what is most relevant and trigger the right discussions. But how to get there?