In a must-read classic paper on how our brain works, “The Magical Number Seven,” psychologist George Armitage Miller explains that seven, plus or minus two, is the maximum number of pieces of information our brain can process on a given topic. Companies should keep this in mind when working with data.
Data noise is the worst disease in this new age. Companies have so much data available that they sometimes feel it’s a shame not to use it all. If you overpopulate your reporting with data, however, you risk being drowned in data noise.
Data noise is especially affected by the number of key performance indicators (KPIs). The more KPIs you have, the higher your risk of getting mixed signals. Assessing many KPIs may seem like the right thing to do, but it actually makes it more difficult to obtain actionable data.
We can supply an endless number of KPIs to users and give them endless time for analysis, but at some point the users will arrive at a point of confusion, as their brains reach the maximum capacity of data they can process to make a decision.
To prevent data noise, I recommend using not seven but up to three KPIs to keep the data actionable. Three KPIs should be enough to drive any decision and prevent data noise. Adding more data — more KPIs — will cause more uncertainty and make decisions more difficult.
Reducing the number of KPIs increases our ability to visualize the data. And when data can be visualized, our ability to process it increases to some degree. We can use this to our advantage. The fewer calculations we need to make in our heads to make sense of the data, the easier it will be to see what decision we need to make. We need to increase the end users’ confidence in their ability to make decisions. Using visualization reduces data noise and allows us to focus on results and actions.
Takeaway: Don’t let data noise overwhelm you. Increasing your use of data visualization will help you keep a clear head, better enabling you to make good, actionable decisions.