Intro
Vanity, Sanity, Reality: What’s really important for your data strategy
You see them everywhere – vanity metrics plague many facets of society especially in the business world. C-suite executives and ambitious leadership often use vanity metrics to try and paint a much rosier picture of their business.
Business vanity
Revenue is vanity, profit is sanity and cash is reality.
In the business world, there are many vanity metrics. The most common one is that people get mixed up between revenue, profit and actual cash in the bank. Revenue is a vanity metric extensively used in marketing and is often misleading from what is actually happening in a business.
Profit can similarly be a vanity metric because it is a hypothetical used on financial documents. Until invoices are paid and the bank transfers go through, you don’t actually have any tangible result of your success that can be used to drive your business forward.
Cash flow is actually the most reliable metric as it shows that expenditures have been paid and the money is sitting in the bank. You can spend, invest and upgrade with cash.
Translating a similar approach to data
Artificial intelligence is vanity, data is sanity and business outcomes are reality.
Artificial intelligence is vanity
While it might seem really nice to talk about all the slick tech you have set up, what does it contribute to your business?
If you are not aware of the functionality of your artificial intelligence and how it adds to your business, it could just end up being a very costly expense.
Keep on top of your tech stack and AI to ensure that you aren’t spending on systems that are not contributing to your goals.
Data is sanity
Not all data is sanity. Good, clean, trusted data is sanity. The type that is conducive to providing in-depth insights and contributing towards the business’ key performance indicators.
Data is similar to profit: it doesn’t mean anything unless something is being done with it. You need to utilise data for a purpose that helps achieve your business goals.
Business outcomes are reality
Most people think that the most important thing for a business is to make money. While this is true, what really matters, in the long term, are outcomes.
Business outcomes are the culmination of AI and data to improve the business. The goal of any business should be to provide value for its customers so they continue to buy from them again and again. This means understanding what drives customer satisfaction and designing products and services with those needs in mind.
What’s more, business outcomes are about doing things that create value – which is the reason your business exists to begin with.
To summarise
It is easy to get swept up in vanity metrics, detracting from the core factors that drive a business. Understanding why you are in business and the end goal of creating positive outcomes for your clients and customers will keep you focused on what metrics are truly important.
