BIG DATA & YOU: Are You Getting High Quality Information? A Report, A Rant, and A Survival Guide

Big Data. The Internet of Things. The World in the palm of your hand! Daily we read or hear of the newest way to make our lives better through access to information. At the same time, this incredible amount of information, relevant and non-relevant, has led many to experience information overload. An Information Management Nightmare!

In this article I will attempt to add my voice to this paradoxical conversation around information management. If you have missed any of my previous articles in The European Financial Review or The European Business Review, let me introduce myself. My name is Sherilyn Casiano, and I am the CEO of S.I. Williams Wealth Management, LLC, a New York-based multi-family office whose clients are exclusively investment bankers and venture capitalists. Before starting my family office, I was a member of the personal wealth management group at the private equity firm, KKR. I also come from an entrepreneurial family in the US Virgin Islands, and am a single mother with 2 young boys. It is this unusual combination of training, experience and cultures that gives me a rather unique perspective on things, especially in the arena of the preservation and management of personal wealth. Hopefully my thoughts will trigger some new thinking and insights for you as well.

A Meeting of Extraordinary Minds

I recently attended the 2014 World Business Forum in New York City. This high-level event attracted some 4,000 movers and shakers from around the world to be inspired, educated and networked with each other. Over two days, 15 speakers, some of the brightest and most renowned experts on where we’ve been and where we’re going, did their best to capture our attention and share a wide range of ideas and viewpoints.

One of the themes that came through over and over again was the volume, speed, and accessibility of information – what is now often referred to as “Big Data”. What it means now, and for the future. And how we should grab hold for the ride.

But in all those presentations, whether informative or boring, educational or self-serving, there was, for me, a huge piece of the picture missing. It’s a piece that is so fundamental, so obvious, so essential, that I am continually amazed that it is ever overlooked in the conversation. It is the foundation of Information Management – the very bedrock that the information revolution is built on. It’s Big Data’s greatest promise and its greatest risk.

Not one out of the 13 presenters (I missed two of them) I listened to addressed the assessment of the QUALITY of information. You’d think at least one of those brilliant speakers would mention the vital importance of having a method and process to ensure that all the information of this revolution is accurate and relevant.

Information Management: What’s Been Left Out?

Why is this basic component so often left out of the conversation about Information Management, and its promise for the future? No one seems to talk about the “how to,” the step-by-step process to ensure that such data is accurate. That’s because – half the time – there is no process, or it’s an inefficient, poorly-designed, outdated, or broken process.

I think it’s for the same reason that the average person can’t tell you an exact figure for how much money they actually spend each week and what they spend it for. To have that figure takes real work. To have the true number and a breakdown of what the money was spent for, you must record every transaction and include a note on what was purchased. Add to that a dated receipt for each expenditure, and you can have certainty based on facts. This simple, basic, step-by-step approach is at the heart of all effective information management. Whether it be managing the production and sale of aeroplane parts, or the budgets of countries, it’s only a matter of scale. To be truly accurate, you must have all the pieces. But to be truly useful, in both a practical and strategic sense, you need more!

My point is this: to have reliably accurate information requires a method/system for ensuring such accuracy, plus rigorous consistency. This is the way to guarantee the quality of the information you get. That’s why it is so rarely mentioned.

To have certainty, one needs to look deeply into the source of the information and what process, if any, was used to vet that source, and what process, if any, was used to verify the information from that source. Trust and Hope cannot deliver certainty!

“To be truly accurate, you must have all the pieces. But to be truly useful, in both a practical and strategic sense, you need more!”

The real world consequences of not having done this are profound. How will you know how your investments have truly performed if you don’t have a way of getting accurate and relevant information? Ask your broker or adviser? How will you know that they are basing their work on valid information? Because they’re professionals with a prestigious firm? Suing stockbrokers is big business. Hundreds go to jail each year for fraud or incompetence. Didn’t all those advisers who invested in Madoff’s giant Ponzi scheme, either directly or through feeder funds, trust the information they were getting each month? And passed it right along to their clients, along with compliments to those clients on their shrewd choice of advisers? What was their method of judging the accuracy of those reports, which now, in hindsight, look so obviously fraudulent? Or the regulators who checked his books and gave him a clean bill of health. $60+ BILLION! Gone! Hundreds of reputations down the tubes. As long as it seemed like people were making money, no one cared or took a hard look. So who’s responsible, ultimately – the conman or the conned?

Life Seen Through a Different Lens

My training as a forensic accountant has helped shape the lens through which I see the world. There’s a saying “numbers don’t lie,” but you can lie with numbers. Therefore, the Number One Question for an auditor is “What is this number, is it accurate, and how do I know with certainty that it’s accurate?” The answer to that question determines what happens next. Does the item get checked off or does it go on the list for further investigation? The exquisite integrity of accounting lies in the reconciliation-authentication-verification process for transactions. It ensures that two sets of records are in agreement. If they are in agreement, then the transaction can be reliably reported with certainty. If they are not, further action, such as calling the vendor or another investigation step, is to be initiated. Every transaction should go through this process. That’s how you gain certainty regarding your financial condition!

Quality of Information versus High Quality Information

You may be asking yourself at this point “Why the accounting lesson? After all, The European Financial Review is a magazine for the financial community. This is such basic stuff!” You are right. It is precisely this basic, fundamental process of authenticating and verifying data, in this case financial transactions, that I see missing when it comes to information management as a whole.

For instance, in the corporate arena, there is an over-focus on the channels for transmitting/receiving information and the speed of doing so, instead of focusing on the quality of the information itself, or what the criteria should be for what makes some information high quality. For me, High Quality Information is information that not only is accurate and verified, but also has sufficient relevant detail, yet is simple enough to be easily understood and strategically useful. High quality information is the information needed to make evidence-based decisions, rather than conjecture-based decisions.

In companies I’ve looked at, there is a noticeable lack of any protocols or standards at any stage in the chain of transmission to check out or investigate whether the information is or is not high quality information. What impact does this have on the executive’s business decisions and understanding of what’s really going on? Could this possibly explain some of the colossal business reversals of the last decade? Nokia and Blackberry come immediately to mind. How could they have misread the change in their market?

Each person in the chain of transmission who transmits information becomes someone who does NOT vet the information rather than someone who either confirms its quality and/or confirms that the person they got it from did their due diligence to vet it. The ultimate recipient, e.g., the CEO, just assumes it’s high quality information!

Then there’s the fact that each transmitter has their own “filters/biases” leading to never-documented decisions, unconscious or conscious, about what to bother transmitting up the chain OR what information does or doesn’t need vetting before being sent upwards, across, or downwards, and who should get it. This leads to a chain of rushed, non-validated information, leading to zero guarantee that the information that the CEO, or anyone else in the company, gets to act on as the basis of crucial business decisions is high quality information.

What to Do?

I am on a mission to get people at all levels to address the quality of the information they receive – and the information that they send, as well! To be aware of it. To interrogate it. To not just assume that it’s accurate. To ask the questions and do the work. To not rely on shortcuts and skipped steps. Not for the important stuff. Not for the stuff that impacts our financial well-being, our freedoms, the actions our governments take on our behalf, and especially that impacts the health and well-being of our families now and for generations to come. To insist that the source and quality of information always be included in the conversation about and for Information Management.

So, if the question regarding the source and quality of information is missing from the conversation, how does one deal with that? My first recommendation is to begin to apply this forensic mindset to various areas of your life. Specifically, ask the question of both yourself and others before deciding on any course of action.

Ask:

For instance, in all your financial dealings, ask such questions as: Is there something unforeseen that could jeopardise my financial plan? Were the structure and provisions of that special trust properly executed? How do I know my broker actually made these trades, and got these results? Is that fund the best for my retirement goals, or is it the one with the highest commission?

Some questions for every CEO are: what are our real numbers and what accounts for them? How do we know that? Do we have a method and process in place to ensure and confirm accuracy; is it functioning as intended or are we relying solely on the competency, integrity, and diligence of the people involved? Equally important – what segment of our customers does the profit come from? Who is costing us money? Often the biggest customers have negotiated your margins to near zero in exchange for the volume. You won’t know if you don’t ask.

But That’s Just the First Part…

My second recommendation is to insist on getting what I referred to before as High Quality Information. Information that is not only accurate and verified, but also has sufficient relevant detail, yet is simple enough to be easily understood and strategically useful. Think how this would impact the kind of financial reports one receives, either in business or personally.

There are typically two kinds of reports – and, rarely, a third. You either get bare minimum totals, or page after page of minute detail. With the snapshot report, you know how you stand at that point in time. But how useful is that? You need to compare it to a previous period to know if there’s been any change. And you need to compare back many periods and years to identify trends. But none of that will give you any understanding of what accounts for that picture, or the changes over time.

To me they are insufficient because you have no solid basis on which to take action. If the picture is good, I want to know what’s working so I can do more of it. If it’s bad, how do I stop or fix what’s not working. To do that you need more relevant detail. Sadly, the trend in our fast-paced, sound-bite culture, and what most people think they want, is this snapshot style of information. The Info Graphic. The PowerPoint Summary. The Dashboard. The Tweet. I say people are fooling themselves.

On the other hand, with the minute detail reports, the information that could give the understanding and insight you need is in there, somewhere, but good luck finding it! This is the tactic used by Ponzi schemers and other fraudsters to fool the regulators, the investors, or the prospective buyers of a business. Smother them with details. Hide the truth in plain sight.

The third kind is a report based on and containing High Quality Information. This kind of report combines a comprehensive big picture with sufficient relevant detail to enable one to quickly understand what accounts for one’s current financial position and the change from one period to the next. And you have certainty regarding the accuracy, because the information has been through a reliable and systematic authentication-verification-reconciliation process. Informed by this kind of report, you can in fact make strategic, evidence-based, decisions in your business and in your personal life.

Conclusion: The Road Ahead

With more and more information, and the pressure to cut corners, it’s essential to routinely inquire into the source and quality of that information. Don’t just passively accept and assume someone will have taken care of it. The answers you get will often surprise you, other times anger you, and still other times validate your intuition. Ask questions proactively to empower yourself and others, not as a way to reinforce and justify a pessimistic, paranoid worldview.

“With more and more information, and the pressure to cut corners, it’s vital to routinely inquire into the source and quality of that information. Don’t just passively accept and assume someone will have taken care of it.”

As we move into the era of the internet of things, this is vital. I heard today that my phone will be able to talk to my refrigerator, stove and other appliances. How do I make sure it’s my phone they’re communicating with, and not some evil hacker or rogue thermostat? History has shown that it takes much trial and error to get things right, only to have the hard lessons learned forgotten by the next generation.