Jackson Miller

Someone found my site today searching for “Business Intelligence and explain it like a second grader”.

Unfortunately, I don’t think they found what they were looking for, but that does sound like a fun challenge.

Here is the simplest definition I can come up with:

Business Intelligence – knowing when numbers will help you make better choices.

I think there are some examples that a second grader can understand too…

When buying valentines cards for your class, it is important to know how many kids are in your class. If you don’t know that number, you might buy too many (and waste money) or buy too few (and fail to have enough cards).  It sounds simple right? You have to be careful to really understand the numbers. A second grade math quiz might have a question like: “If there are 25 students in your class, and you have 3 teachers, how many valentine cards would you need to buy in order to give a card to every one of your classmates and teachers?”

At least some of you answered 28 (maybe most of you).  That is wrong. You only need 27 since you don’t need to buy yourself a valentines card and technically you aren’t your own classmate.

So business intelligence is knowing that a number will help you know how many valentines cards to buy, and how to figure out what that number is.  The number of classmates (students in class – 1) plus teachers (3) is the best kind of business intelligence. We call it “actionable information” because you can take action based on the number.

Another big topic in business intelligence are “key performance indicators” or KPIs.

A KPI is a number that tells you how close you are towards making your goal. A second grade example could be saving up allowance in order to buy a new scooter before Summer is over.  The amount of money in the piggy bank each day would be a KPI. Is it going up or going down? How close are you to your goal?  Will you you be able to buy your scooter by the end of the Summer? Can you afford the scooter now?

Unfortunately, business intelligence is not always easy. Take for example the schoolyard practice of trading toys.  A year or two ago my kids were huge fans of a toy called Bakugan.  Bakugan are pieces that can be used to play a game based on each piece’s score and their type.  While that might appear to be a number that could be used to make a decision, the real value of a Bakugan piece is based on it’s rarity.  Basically, if it is the only piece like that in the school, it is valuable.

It would be awesome to be able to look up the rarity of a particular piece (and that may actually exist on the internet), but it is easy enough to just gain a feel for rarity through experience. You might make some bad trades, but eventually you will get it.  However, if you are the kid that uses the internet to look up the rarity of a piece you might be the best trader on the schoolyard.

As long as you have that information handy when it is time to make the decision.

And that is business intelligence for a second grader.

If you have a small business in the Nashville area and want to figure out your KPIs or actionable information, give me a call