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BI from a Century Ago: Is Your BI Better?

Even though the term 'Business Intelligence' is barely 15 years old, BI, as a function, has been practiced for well over a century. By looking back 100 years, we gain a very important perspective on what we do today. Furthermore, we can ask: How much better (or worse?) is our BI today?

A robust definition of BI ... relevant for today and at least the last century:

Since many definitions of BI rely on 21st century technical terminology, we need an understanding that is robust enough to apply to the business environment of 100 years ago. Thus, we could plausibly assert the following definition:

BI is an interactive process for exploring and analyzing information to discern trends or patterns, thereby deriving insights and drawing conclusions. The BI process includes communicating findings and effecting change. The domains of BI may include customers, suppliers, products, services, and competitors.

Achieving this goal was just as important for management in the 19th century as it is today. By the turn of the 20th century, effective 'BI' was considered a critical competitive advantage, just as it is today. Beginning in the railroad and steel industries, it quickly spread through engineering consultancies to the nascent automobile and electrical power industries. By 1908, even dairies were plotting milk production curves of individual cows, and by 1913, the term "Executive Control Curves" was in common use.

The development of a functional 'BI' system around 1900

As accounting became more standardized in the early 1900s, the data for a functional BI system became available. Management found, though, that they needed more than what they perceived to be offered by the accounting data-only the bird's-eye view of the whole business at any one period of time. They needed a cross-index of that accountant's information, so they could see over a longer period of time the whole history of the business across different financial metrics. In response to this need, graphic methods for presenting these facts were developed, and increasingly adopted, in the first decade of the 20th century.

By 1914, the Westinghouse Electric and Manufacturing Company of Pittsburgh, then an up-and-coming industrial powerhouse in the American economy, regularly plotted about 4,000 of these graphic 'BI' curves which recorded the activities of all departments of the business. The majority of the curves had one more point added each month, but some of the curves were updated on a weekly basis. Another company, then an engineering consultancy (and still in business today), was plotting 8,000 curves in 1914, and had a major influence in bringing the use of this functional 'BI' approach to many American factories and to the construction of the Panama Canal.

Figure 1 shows a 4 x 6 card specially prepared for these 'BI' curves. At first glance this may look quaint, by today's multi-color/multi-font PowerPoint standards. It actually has some features, though, that are not often found in today's BI systems. The BI features in this card system are highlighted below.

Figure 1

The features of a functional 'BI' system in the early 1900s

Customized for long-term archival storage and the then-current copying technology:

The quadrille was pre-printed on the lower right of the Curve Card with 11 horizontal lines and 13 vertical lines. A special card-stock was selected to be "guaranteed absolutely against any deterioration for twenty years." Furthermore, it was transparent enough to allow the later copying of the card, after data and labels had been added with India ink, with the 1910 copying technology of blue-printing.
  • In today's BI: Is your data store "guaranteed absolutely against any deterioration for 20 years?"

Numeric data table with sub-totals presented:

The sales, valued in dollars, of automobiles produced at one plant, are plotted on the Curve Card in Figure 1 for fiscal year 1911. Each month is numbered across the bottom, and the data for each month is written at the top. The quarterly sums are also shown for the convenience of management.
  • In today's BI: When viewing a data visualization, can you easily get at the underlying numbers and also cyclical totals?

Thirteen data points per fiscal year:

In Figure 1, while the fiscal year began in August 1910 (month 8), the data point for the previous month is also plotted, to give a context for whether August is beginning to trend up or down. This previous-month's data is redundant to what was presented as the last data point on the previous-year's chart. This is why 13 vertical lines were specifically included. With 21st century technology, such redundancy is rarely tolerated. Thus, management's visual perception today is often handicapped, and in this way the 100-year-old format has much to commend it.
  • In today's BI: Do your data visualizations give a context for how initial data points are trending?

Desired trend indicator:

On the right side of the chart there is an upward pointing arrow. The specially prepared Curve Card only had the shank of the arrow pre-printed. When setting up the card for a particular business metric, thought was given to the direction the curve should appropriately trend, and then an arrow-head was drawn on the shank. For example, management would desire 'total sales' to trend up, and 'expenses per unit of output' to trend down. Fluctuations in some metrics, such as 'payroll,' mean nothing unless the underlying conditions were known. For that metric, an increase in productivity would lower payroll, a desirable goal; yet, a decrease in product demand might also lower payroll, an undesirable goal. Thus, there would be no arrow-head on a payroll chart.
  • In today's BI: At one quick glance can you see a confirming indicator of the desired trend?

Consistent chart format for a particular business metric:

There is a serial number in the upper left corner of each Curve Card. This unique code identifies the metric being presented. From month-to-month, quarter-to-quarter, or year-to-year, management would always be looking at the same data presentation format for the same metric. They would get to be comfortable with what to expect in these consistent chart formats, and what not to expect. They would not be exposed, as is often the case today, to the creative presentation techniques of every analyst who wished to show how well they could tweak the chart engine of their BI software.
  • In today's BI: Do you have a common language for communication among all members of an organization? Is there one, well-thought-out, data visualization for each business metric ... and is every member of the management team fully conversant in how to interpret it?

Authorization for initial and ongoing collection of data:

On the left of the Curve Card is the pre-printed word "Authorized" with a space for a date and initials. When a new curve was added to the list of those regularly plotted for the organization, the responsible manager authorized it with initials and a date. This approved the well-thought-out data visualization in which the information was presented, and the frequency with which it was to be updated. This also authorized the expense involved in collecting and presenting the data. This authorization was repeated at the beginning of each fiscal year, as a new template card was prepared. In Figure 1, "E.S. Smith" authorized this curve format on "July 20, 1910," just before the new fiscal year began on August 1.

A 1914 source describing this system says: "The authorizing of curves periodically gives each executive an opportunity to think the matter over and to have data prepared in the manner which is most effective for his individual use." In the 21st century, do we ever have systems that may process data or churn out reports for years, long after the initial manager requesting the system has moved on, the organization has changed structure or focus, or the business need has long since disappeared?

  • In today's BI: How often does your management get involved in dialogue on: (1) the form in which data will be presented to them and, (2) the frequency with which they need the data updated?
  • In today's BI: How often is some BI computer system developed and set running in your organization, without the necessity for annual re-authorization?

Annotations/Comments on the Data Visualization:

The space between the authorization and the vertical scale values was reserved for annotations or comments on unusual circumstances that might have impacted the data, such as fires, floods, strikes, raw-material shortfalls, mechanical problems, etc. Today we might include things such as initiating and ending advertising campaigns, environmental changes (e.g. interest rates), and other market factors. There was a strong concern, then, for maintaining a corporate memory for these issues.

  • In today's BI: Do your BI systems maintain such important memories, otherwise so easily lost?

Clear data source and data dictionary:

A century ago, management was not separated from the data by the technical experts who managed the flow of electrons. It seems that management was much closer to understanding the data then, than is common today. When each Curve Card was assigned a serial number, defining its format, that number was linked with a year to identify the annual source of the data. When management wanted to know more, they just had to check that serial number on an Information Card stored with the Curve Cards. Figure 2 is an example of the Information Card for the data presented in Figure 1.



Figure 2

This Information Card describes:

  • what data is included and its periodicity, and what data is not included,
  • not only what credits are applied, but also the tricky business of when the credit is applied, and
  • precisely who furnishes the data and what date it becomes available each month.
  • In today's BI: How many of your managers can quickly get all this information for their BI data?

Discerning Trends or Patterns:

Our definition clearly states that "BI is an interactive process for exploring and analyzing information to discern trends or patterns... ." In Figures 3 and 4, Curve Cards of fiscal years 1910, 1911, and 1912 are organized to accomplish this goal. The vertical array allows an easy assessment of month-to-month changes of each year, and the impact of seasonality, among other issues. The horizontal array allows an easy assessment of the longer range historical trend. An interesting story is told by this data.

The vertical array, in Figure 3, clearly shows the seasonality of car sales, with winter drop-offs starting in January 1910, and in November of fiscal years 1911 and 1912. It seems like a 'Presidents Week Sale' may have been created as early as 1910 to jumpstart the early spring sale of cars in February.

The horizontal array, in Figure 4, may give the impression that the business for fiscal year 1911 (middle card) was much better than 1910. However, when looking at the total figures (above the chart) we see that sales for the year 1911 were only $1,435,041, while 1910 sales were $1,575,298. Not only were sales for 1911 about 10% less than 1910 but there was a notable, and unexpected, fluctuation in month-to-month sales which created a very difficult problem for the manufacturing plant operations. In the first half of 1911, because of the small volume of sales, a large portion of the workforce was discharged. In the second half of the year sales increased so rapidly, and employees were hired in such large numbers, that quality suffered terribly. Fiscal year 1911, was thus much worse than 1910. In fact, this company eventually ended in receivership.

  • In today's BI: How many managers have the facility to easily assess seasonality and trend issues in their data and, if so, the training to understand the broader implications of what they may observe?


Figure 3

Cross index by Function, Expense Account Number, Department - Allowing Comparison of Curve Cards across many dimensions or metrics:

A cross-index of all Curve Cards in an organization was carefully prepared to facilitate comparisons and a conscious decision was made to set up this system on individual cards as opposed to other arrangements, like putting them in a loose-leaf book. There was perceived to be a great advantage in having the ability to easily put any cards on a table and compare them with any other cards for another time period (as in Figures 3 and 4) or for the same time period(s) but for a different dimension or metric. To enable these comparisons it was not only critical to have a cross-indexing system, but also to have all of the time series on an identical scale. Only with identical scales would it be possible to make effective comparisons.

  • In today's BI: Technology may facilitate easy 'indexing' but do you always see different dimensions or metrics of your organization presented on the same time scales?
Click here for Figure Four

Secure Storage and Access

Figure 5 shows the way Curve Cards, and their cross-indices, would be organized and stored for an organization. The well-developed conception of secure storage and access a century ago further mandated that original cards would be in a locked Records Room and only blue-print copies were allowed out. Access in to the Records Room was allowed to the chief executive, the board of directors, and only those managers with the written permission of the chief executive. Furthermore, high-level corporate data, and data from different departments or functions, was stored in separate locked drawers so that only those with a 'need-to-know' had access.

Some organizations went further in the context of secure storage, having the Record Room enclosed in fire-proof walls, doors, and windows, and only using fire-proof file cases and furniture in the room. Clearly these Curve Cards were considered 'The Crown Jewels' of the enterprise.

  • In today's BI: Do you have a well-thought-out, and well-implemented, plan for secure storage and access to 'The Crown Jewels' of your enterprise and how is this updated when personnel or the organization structure changes?
  • In today's BI: Who controls the making of copies of your data?


Figure 5

Titles, Required Skill-Sets, and Professional Opportunities:

It seems the 'Keeper of the Record Room' had various titles in the second decade of the 20th century. They included Assistant to the President, Chief of the Record Department, or Statistician. The companies with a statistician in this period tended to be companies that also focused their Curve Cards on external data aside from the internal accounting data. Such external data often began with the pricing of raw materials and then moved on to other economic indicators searching, as we do today, for the perfect barometer of future corporate performance.

In the early 1900s, despite the perception that this functional 'BI' was clearly creating 'The Crown Jewels' for corporate management, there was also an ambivalence for spending more than necessary on such an 'overhead' function. It is instructive to compare a recommendation for filling this role in an organization, circa 1913, with the way this role is filled today, nearly 100 years later:

It would probably be best to get a young man graduated within a few years from one of the technical schools, or from one of the schools of business administration now established as separate departments in several of the large universities. If a man of the right type were told that he would report directly to the chief executive, and that he would have a confidential position with complete access to the records of every department of the whole business including both manufacturing and selling, he would be quite willing to start the work at a reasonable salary, knowing full well that the opportunities given would soon permit him to demonstrate his ability. A recent college graduate could be obtained for $20 or $25 per week, as he would see for himself that there would be chances for him to make himself worth much more inside the first year or so.

  • In today's BI: Does your organization still try to 'get a bargain,' and give away fancy titles and promises of future opportunity, in its effort to build the best BI money can buy?

How is your BI better (or worse?) than the functional 'BI' of the Early 1900s?

As we've seen, the functional 'BI' system of the early 1900s met the definition of BI proposed above. To the amazement of many in the 21st century, that system actually worked. Yes, by today's standards, our forebears were certainly 'technologically challenged.' Yet, it is clear to see that they had thought through their manual 'BI' systems and had many very useful features, some of which may not be as highly refined in some of today's 'high-tech' BI systems.

There are 14 bullets above, asking questions about what is going on "In today's BI" in your organization. Your answers will help you decide how your BI may be better (or worse?) than that of our forebears, nearly 100 years ago.


Howard A. Spielman, M.B.A., Ph.D., President of Management Semiotics International Inc., can be reached at HASpielman@ManagementSemiotics.com.

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