The Importance of Analyzing Metrics: Insights for Accurate Dynamic Evaluation…

—— WORK IN PROGRESS —— for your comments -—

When faced with a weird challenge, of decision making in non perfect knowledge, with substantial entropy remaining in the system - just like any CxO running a business - the situation sometimes seems analogous to crossing the street blindfolded, thus we understand the need for caution.?

Without visual information, we must rely on other cues to navigate safely. Imagine being shown a series of pictures just before the blindfold is placed on our eyes…

With each picture, we gain an incremental glimpse of our surroundings. With one picture, we know our initial position. With two pictures, we can estimate our speed.?Because of the incremental change. And with additional pictures, we can deduce acceleration and even identify points of sudden change. This concept of needing multiple pieces of information to derive accurate insights applies beyond the realm of crossing streets—it also resonates in the world of business analysis.

In business, better understanding of actual performance is crucial.?

Key Performance Indicators (KPIs) are essential metrics that help evaluate how well a business is performing.?

These KPIs often take the form of ratios, representing one value divided by another. Whether it's stock rotation, financing duration, KPIs serve as benchmarks for measuring business performance.?

However, it's not enough to focus solely on the KPIs we control. It's equally important to examine fluctuations in other metrics, including those outside our immediate control.?

These metrics are often referred to as parameters of the analysis, given values, context values, or reference values.?

If these metrics move outside the range of comfort, our analysis may no longer be valid due to discontinuities in the functions that govern them.?

Comprehending the interplay of various metrics is crucial for accurate evaluation, particularly in ensuring that we stay within valid ranges.

Let's consider a simple example of Q to the power of N, a fundamental function in mathematics. In business, Q often represents 1 plus i, the compound interest rate added to the initial capital at a given point. Elevating Q to the power of N allows us to compute the value of an annuity over N periods. While the formula itself may seem complex, analyzing the shape of its curve provides valuable insights into safe ranges and aids decision-making.?

Graphing the individual capitalization for each period helps us visualize the total area (defined integral between t=0 and t=n) as the value of the entire annuity. Analyzing the resulting curve allows us to recognize the behavior of these formulas, just as economists recognize the shapes of supply and demand curves. By understanding - or estimating - the shapes of the formulas underlying our KPIs, we can make informed decisions and infer their behavior beyond simple extrapolation, and in particular look for linear and higher order cause-effect relations beyond simple correlations.?

In the world of data analysis, visualization plays a crucial role. The human mind has a natural inclination to process and understand visual representations, such as graphs and charts, more effectively than raw numbers. ?

Our brain reacts to visual stimuli. Sees a cat, laugh; sees lion, run! Because their final velocity can become your final moment. Instinct. Darwinian.?

Graphs provide a tangible way to explore and grasp the patterns and relationships within data. They offer insights into the behavior and trends of various variables, enabling us to make more informed decisions.?

Analysing surfaces and curves is often more intuitive and manageable than deciphering complex numerical data. This holds true even in the realm of artificial intelligence, where complex models with trillions of parameters are distilled into graphical representations for better understanding.?

Just as Apple's visionary technologies allow us to visualize and interact with three-dimensional objects, we should leverage the power of visualization to enhance our analysis and decision-making processes.

It's essential to recognize that analyzing KPIs and metrics goes beyond simple linear extrapolation or static assumptions.?

We need to actively manage the changes in acceleration—how these metrics evolve over time.?

Just as a slower car like a Panda has a smaller acceleration capacity compared to a Ferrari, understanding the acceleration and changes in metrics allows us to navigate business dynamics effectively.?

In the realm of electric vehicles, even a Tesla, known for its high acceleration capabilities, surpasses traditional combustion engine cars like the Ferrari.?Electrical motors in cars, making possible new accelerations, is something many in Detroit have not yet recognised or have recognised too late as a huge jolt in the industry. Jerks! (Another term for jolt!)

This reality may provoke contrasting reactions, but it highlights the importance of actively managing the acceleration of change in our metrics.

In microeconomics, we recognize the shape of supply and demand curves, understanding how elasticity impacts market dynamics. Similarly, in financial mathematics, comprehending the shape and behavior of the compound interest formula, represented by Q to the power of N, provides valuable insights into safe ranges and aids decision making. While we may not have a formula for every KPI or metric over time, we can form hypotheses about their behavior based on different values and ratios.?

By actively managing the changes in acceleration, we can go beyond simple linear extrapolation and make informed decisions that drive success.

In conclusion, the analysis of metrics and KPIs requires a comprehensive understanding of their interplay, both within our control and those influenced by external factors.?

Just as crossing the street blindfolded necessitates multiple pictures to calculate position, speed, acceleration, and jolt, analyzing business metrics demands a holistic approach.?

We must consider not only the metrics we control but also the ones outside our immediate influence.?

By graphing and visualizing these metrics, recognizing their shapes and patterns, and actively managing their acceleration, we can derive valuable insights and make informed decisions that propel our businesses forward.

It's worth noting that the ability to comprehend and analyze these metrics is not limited to the human mind alone. Artificial intelligence systems, with their vast number of dimensions and parameters, can process and analyze data at incredible speeds. For example, the matrix used by AI systems to recognize handwritten numbers contains 13,008 dimensions. The processing power and speed of these systems enable them to handle complex calculations and derive insights that would be unimaginable for the human mind alone.

In recent times, technological advancements have further enhanced our ability to visualize and interact with data.?

Innovations such as Apple's Vision technology allow us to visualize and manipulate three-dimensional objects with our own hands.?

This opens up new possibilities for analyzing and understanding complex data sets in a more intuitive and interactive manner.?

Imagine being able to touch and manipulate a 3D representation of a sensitivity graph, exploring areas of comfort and risk in real-time.?

Such advancements in visualization technology enable us to grasp the intricacies of our metrics and make more informed decisions.

In summary, the analysis of business metrics and KPIs goes beyond simple numerical calculations.?

Understanding the shapes, patterns, and interplay of these metrics is crucial for accurate evaluation and decision making.?

By actively managing the acceleration of change in our metrics, we can adapt to evolving circumstances and seize opportunities.?

Embracing advanced visualization tools and technologies allows us to gain deeper insights and bridge the gap between complex data and meaningful understanding.

TLDR version 1:

The Importance of Analyzing Metrics: Insights for Accurate Dynamic Evaluation…?

When faced with a weird challenge, of decision making in non perfect knowledge, with substantial entropy remaining in the system - just like any CxO running a business - the situation sometimes seems analogous to crossing the street blindfolded, thus we understand the need for caution.?

Without visual information, we must rely on other cues to navigate safely. Imagine being shown a series of pictures just before the blindfold is placed on our eyes…

With each picture, we gain an incremental glimpse of our surroundings. With one picture, we know our initial position. With two pictures, we can estimate our speed.?Because of the incremental change. And with additional pictures, we can deduce acceleration and even identify points of sudden change. This concept of needing multiple pieces of information to derive accurate insights applies beyond the realm of crossing streets—it also resonates in the world of business analysis.

In business, better understanding of actual performance is crucial.?

Key Performance Indicators (KPIs) are essential metrics that help evaluate how well a business is performing.?

These KPIs often take the form of ratios, representing one value divided by another. Whether it's stock rotation, financing duration, KPIs serve as benchmarks for measuring business performance.?

However, it's not enough to focus solely on the KPIs we control. It's equally important to examine fluctuations in other metrics, including those outside our immediate control.?

These metrics are often referred to as parameters of the analysis, given values, context values, or reference values.?

If these metrics move outside the range of comfort, our analysis may no longer be valid due to discontinuities in the functions that govern them.?

Comprehending the interplay of various metrics is crucial for accurate evaluation, particularly in ensuring that we stay within valid ranges.

Let's consider a simple example of Q to the power of N, a fundamental function in mathematics. In business, Q often represents 1 plus i, the compound interest rate added to the initial capital at a given point. Elevating Q to the power of N allows us to compute the value of an annuity over N periods. While the formula itself may seem complex, analyzing the shape of its curve provides valuable insights into safe ranges and aids decision-making.?

Graphing the individual capitalization for each period helps us visualize the total area (defined integral between t=0 and t=n) as the value of the entire annuity. Analyzing the resulting curve allows us to recognize the behavior of these formulas, just as economists recognize the shapes of supply and demand curves. By understanding - or estimating - the shapes of the formulas underlying our KPIs, we can make informed decisions and infer their behavior beyond simple extrapolation, and in particular look for linear and higher order cause-effect relations beyond simple correlations.?

In the world of data analysis, visualization plays a crucial role. The human mind has a natural inclination to process and understand visual representations, such as graphs and charts, more effectively than raw numbers. ?

Our brain reacts to visual stimuli. Sees a cat, laugh; sees lion, run! Because their final velocity can become your final moment. Instinct. Darwinian.?

Graphs provide a tangible way to explore and grasp the patterns and relationships within data. They offer insights into the behavior and trends of various variables, enabling us to make more informed decisions.?

Analysing surfaces and curves is often more intuitive and manageable than deciphering complex numerical data. This holds true even in the realm of artificial intelligence, where complex models with trillions of parameters are distilled into graphical representations for better understanding.?

Just as Apple's visionary technologies allow us to visualize and interact with three-dimensional objects, we should leverage the power of visualization to enhance our analysis and decision-making processes.

It's essential to recognize that analyzing KPIs and metrics goes beyond simple linear extrapolation or static assumptions.?

We need to actively manage the changes in acceleration—how these metrics evolve over time.?

Just as a slower car like a Panda has a smaller acceleration capacity compared to a Ferrari, understanding the acceleration and changes in metrics allows us to navigate business dynamics effectively.?

In the realm of electric vehicles, even a Tesla, known for its high acceleration capabilities, surpasses traditional combustion engine cars like the Ferrari.?Electrical motors in cars, making possible new accelerations, is something many in Detroit have not yet recognised or have recognised too late as a huge jolt in the industry. Jerks! (Another term for jolt!)

This reality may provoke contrasting reactions, but it highlights the importance of actively managing the acceleration of change in our metrics.

In microeconomics, we recognize the shape of supply and demand curves, understanding how elasticity impacts market dynamics. Similarly, in financial mathematics, comprehending the shape and behavior of the compound interest formula, represented by Q to the power of N, provides valuable insights into safe ranges and aids decision making. While we may not have a formula for every KPI or metric over time, we can form hypotheses about their behavior based on different values and ratios.?

By actively managing the changes in acceleration, we can go beyond simple linear extrapolation and make informed decisions that drive success.

In conclusion, the analysis of metrics and KPIs requires a comprehensive understanding of their interplay, both within our control and those influenced by external factors.?

Just as crossing the street blindfolded necessitates multiple pictures to calculate position, speed, acceleration, and jolt, analyzing business metrics demands a holistic approach.?

We must consider not only the metrics we control but also the ones outside our immediate influence.?

By graphing and visualizing these metrics, recognizing their shapes and patterns, and actively managing their acceleration, we can derive valuable insights and make informed decisions that propel our businesses forward.

It's worth noting that the ability to comprehend and analyze these metrics is not limited to the human mind alone. Artificial intelligence systems, with their vast number of dimensions and parameters, can process and analyze data at incredible speeds. For example, the matrix used by AI systems to recognize handwritten numbers contains 13,008 dimensions. The processing power and speed of these systems enable them to handle complex calculations and derive insights that would be unimaginable for the human mind alone.

In recent times, technological advancements have further enhanced our ability to visualize and interact with data.?

Innovations such as Apple's Vision technology allow us to visualize and manipulate three-dimensional objects with our own hands.?

This opens up new possibilities for analyzing and understanding complex data sets in a more intuitive and interactive manner.?

Imagine being able to touch and manipulate a 3D representation of a sensitivity graph, exploring areas of comfort and risk in real-time.?

Such advancements in visualization technology enable us to grasp the intricacies of our metrics and make more informed decisions.

In summary, the analysis of business metrics and KPIs goes beyond simple numerical calculations.?

Understanding the shapes, patterns, and interplay of these metrics is crucial for accurate evaluation and decision making.?

By actively managing the acceleration of change in our metrics, we can adapt to evolving circumstances and seize opportunities.?

Embracing advanced visualization tools and technologies allows us to gain deeper insights and bridge the gap between complex data and meaningful understanding.

Disclaimer: some AI used for editing, not for generation of ideas in this draft mini paper.? // Credits: inspired in a past conversation between George Chiesa and the author of the book "The JERK": Chris Surdak