Mastering The Principles Of Good Metrics
Understanding good metrics and data fluency is essential in our world filled with data. This is especially true in the growth industry, where the right metrics can guide decisions and shape the success of a company or a new venture. In this article, we'll dive into how metrics and best practices in their use can make a real difference. We'll explore key principles and share insights that can help anyone looking to make better decisions with data. If you're interested in how effective metrics can improve your understanding and use of data, stay with me as we explore these important concepts together.
A key point in measurement is ensuring that the metrics align with basic principles of defining good metrics. To achieve good metrics in data communication, as outlined by Data Fluency, certain key parameters must be considered. Let’s examine these parameters and understand their impact:
Data tells us stories of the past and present and can help predict the future. It informs, educates, and leads to intelligent discussions, enabling good decision-making with actionable insights. Remember, data is a language like French, English, and math, and communicating with it is crucial for making the most of this product of human knowledge. Being able to communicate with data is as important as having a good vocabulary and understanding of the French language in idea communication. The better you are at storytelling, the more persuasive you are in promoting an idea or action.
Bridging this concept to practical application, as a data author, you must create a bridge of understanding – through dashboards and reports – between your data and your audience. This leads us to consider the principles for creating an effective data product. According to the author, these are the six key principles:
Aligning the purpose between the message and the audience.
Discriminating with the presented data.
Creating meaningful and actionable metrics (the focus of this article).
Ensuring a logical structure and narrative flow.
Applying basic design principles.
Serving the public as a tool to initiate dialogue.
Common Mistakes
Having set the stage with these principles, it's crucial to address common pitfalls in working with metrics. As we have established the importance of good metrics, let's now turn our attention to some typical mistakes:
Historical Conventions: Blindly following industry conventions and past common sense can lead to biased information and poor decisions, such as the 2008 housing bubble crisis, which was influenced by historical trust in mortgages.
Simplistic metrics: This type of approach can fail to represent situations adequately, leading to shallow analyses and poor decisions. For example, 'Total Time Spent on a Website' might be misleading if analyzed in isolation.
Complex Metrics: Overly complex metrics can also hinder the transformation of data into useful decision-making information, resulting in questionable outcomes.
Too Many Metrics: Tracking too many metrics can dilute focus and lead to poor decision-making.
Vanity metrics: while looking impressive, often fail to provide actionable insights leading to bad decisions
A Four Pillar Framework.
The process of constructing effective metrics involves passing through four key pillars.
Now, let's refocus on the foundational principles of good metrics in communication and data fluency:
A good metric should be actionable, providing clear indications of what caused a change and what actions to take.
It should be commonly interpreted among stakeholders, ensuring consistency in decision-making.
A good metric is the result of a simple and transparent calculation process.
Accessibility and credibility of data are crucial since the goal of using data is to make well-informed decisions.
To summarize, for a product professional, consistently using metrics to inform decisions and strategies is critical. Understanding and implementing best practices in data handling and communication is key to success and gaining valuable insights. This, combined with the ability to communicate data effectively and transform it into collective intelligence, is fundamental in building, maintaining, and growing a successful product.