Thoughts on Data Analysis

One of my volunteering goals for this year has been to train to be a volunteer emergency medical first responder.

I found it quite eye-opening to go through the two weeks of medical training to become a Wilderness First Responder.

(Wilderness defined as more than one hour away from a hospital.)

The instructor constantly drilled into my head the importance of taking, writing down, and continually updating a patient’s vital signs to determine trends.

The big ones are:

• Pulse
• Breathing Rate
• Blood Pressure

Initially, I spent all my time trying to memorize what the normal ranges were for each of those metrics (which varies based on whether the patient is an adult, child, or infant).

In the middle of the hands-on practice with other classmates playing the role of patient, I had a major “a-ha” moment.

Vital signs in medicine are the exact same things as “Key Performance Indicators” (KPIs) in business.

As a first responder, I look at pulse, breathing rate, and blood pressure to grasp how well my patient is doing. Is he well? Is he struggling? Or is he near death?

As a board member and advisor, I look at the profit and loss statement, balance sheet, and cash flow statement to answer the exact same questions for my “patient” — which in this case is my client’s company.

It finally dawned on me that certain patterns of vital signs tell a “story” of what a patient is experiencing… which is exactly the same thing that I see when reading financial statements.

For example, if a patient with a physical injury has low blood pressure, with very fast breathing and pulse, you’re trained to ask, “Why?”

This is not normal. Not only is it not normal, but it’s not normal in a particular pattern. The specific pattern of how these vital signs aren’t normal turns out to be quite significant.

In medicine, these three vital signs tend to compensate for one another.

When blood pressure is too low, your brain isn’t getting enough oxygen. It knows it needs oxygen to survive.

So your body automatically tries to get more oxygen, quickening your heartbeat to circulate your blood more quickly.

With faster blood flow, all of that de-oxygenated blood needs more oxygen. You start breathing faster to supply this oxygen.

The body tries to compensate when a particular subsystem isn’t functioning well. Certain patterns of metrics prompt suspicion of certain kinds of injury.

For example, the vital sign pattern above combined with a significant physical injury sufficient to cause bruising in the midsection would lead to suspicion of internal bleeding from a vital organ.

A physical exam of the abdomen that reveals pain in those areas would be even more suspicious.

If I were in a wilderness setting and encountered the particular scenario above where vital signs are declining, I would likely request a helicopter evacuation to get this patient to a higher level of care as soon as possible.

Vital signs play an important role in figuring out when a patient isn’t well and getting worse versus isn’t well but is recovering on his own.

In business, key performance and financial metrics provide the same role.

When I work with a new portfolio company or client, I always request a full set of historical financial statements and a set of key performance metrics that the management team looks at weekly or monthly.

When you truly understand what the metrics convey, they form a story in your mind about what’s going on.

It is difficult for me to imagine an effective executive that isn’t able to correctly interpret the key metrics in their functional area.

Storytelling isn’t just with words. It’s with numerical data too. The key to looking at numbers isn’t to look at them for the sake of looking at them. The reason for looking at them is to figure out the story behind them.

Even if you don’t currently look at performance metrics as part of your work, I would suggest you ask your boss to see the ones most relevant to your functional area or department.

It’s one thing if your boss would prefer to keep those numbers confidential. It’s a different thing if your boss doesn’t track any metrics what-so-ever. It would be useful for you to know into which category your boss falls.