As Arthur Conan Doyle famously said, “It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.”

Managing by statistics is the only way by which predictable expansion can occur. Statistics provide the facts a person needs to manage his or her activity.

Statistics record the number of products produced. They show at a glance the operating condition of the activity. They also, and most importantly, tell the manager of that activity what steps need to be taken to improve that condition.

A “condition” is an operating state. There are, as far as statistics are concerned, only six conditions with which a manager needs to be concerned.

Each condition has its own anatomy, and when a manager understands these he is armed with the information he requires to affect an improvement in the condition to the next higher condition.

It matters not what the statistic measures – whether services or products, messages delivered or mousetraps sold. What matters is the trend of the statistic. That tells the tale, and reveals the condition of productivity.

The lowest of these is referred to as “Non-Existence.” This is the condition one is in when he takes over a new job, or when he is on a job for a while but is producing no products.

There are four anatomical realities to this condition, and therefore four steps that must be taken to resolve this condition and bring it to the next higher one.

The statistic that indicates a non-existence condition is sharply plunging, or one in a very low and unviable range. A “Flatline,” if you will.

The person in charge of that job or area applies the four steps that resolve the non-existence condition and moves up to the next higher condition called “Danger.”

The statistic marking a Danger condition is sharply down-trending. It indicates a person who has lost control of the job or, coming up from non-existence, has not yet gotten the area under control and requires his senior to bypass him to get products out of the area.

There are 5 points of the anatomy for this condition, and the formula for Danger resolves these to bring about the next higher condition, Emergency.

Emergency is marked by a statistic that is flat or slightly down-trending. It is a fact that this universe does not recognize or allow a condition of no-change. A business, for example, is either expanding or contracting. It does not stay the same. Emergency, therefore, left unresolved, turns in to a Danger condition which then falls to Non-Existence. It is an Emergency condition because actions need to be taken to ensure expansion occurs.

There are four points of this anatomy, and when these are resolved the condition improves to a Normal operation.

A Normal statistic is slightly up-trending. By applying the formula of this condition the trend improves to the next higher condition. This is seen as a slightly uptrending statistic (Normal) turning upwards in a steep climb.

This is called Affluence. Ironically, this is the most tricky condition of all because if it not handled correctly or mis-named or the wrong formula is applied, a sharp down-trend (Danger) occurs.

The formula for Affluence, applied, will continue the Affluence to a point when it turns from a sharp climb to a gentle climb that continues. In other words, it is now in a “Normal” condition but in a very high range. This condition is called Power.

Power is a stable condition of operations that is a trend over time. It is not a one-week affair, but a Normal trend following a period of Affluence that occurs over many weeks. Applying the Power formula supports this Power and ensures its continuation.

There is a point here where the condition of “Power Change” is required. This is the formula that a person applies when he takes control of an area that is in a Power Condition. In other words, he is replacing the person who got the area in to a Power Condition.

Of course, the product of organization is FREEDOM. Once a person gets his or her area in to a condition of Power, he must be then FREE to expand to other areas. He must therefore turn over this Power area correctly to his replacement.

This is often violated in organizations. The “new broom sweeps clean” is more the operating basis, and has killed many Power Conditions by the incoming replacement changing those things that were working and which brought the Power about. The Power Change formula ensures that this does not occur.

Most companies “manage by statistics” by comparing productivity today against ”this time last year.” This causes a huge waste of resources. It has little value to manage statistics on a monthly or yearly basis when one is close to a production area. The smoke detected today will be a fire tomorrow, and by the end of the month the barn is gone.

It’s a simple fact that if a person on a job is operating with weekly statistics and managing with these formulas, he is in control of the activity. Production is something that is caused in Present Time.

The span of time one covers in his managing by statistics varies with his distance from the production area.

People on the production line manage by daily and weekly applications of the formulas. Their managers are further removed, and take longer trends in to account – weekly to several weeks. Senior management is interested in six-week trends and does not concern itself with daily and weekly trends. In multi-national companies the senior management is far from the production areas and concerns itself with longer trends- three to six months, for example.

The application of statistic formulas for a senior management strata are designed for programs of a greater magnitude than those we find in more local areas. Their programs, based on statistics of a three-month trend, are generally applied to the area of concern and are intended to make general adjustments in the operations under their control. They are not applying these formulas to affect changes on a daily or weekly basis, but for the term represented by their level of management.

For example, if a Senior manager notes that his general area is gradually up-trending over the span of a few months, he applies the Normal formula to his general operations. He does not concern himself with ups and downs of more local areas as he is looking at a bigger picture.

It is also a point of great relief that when these conditions and their formulas are known and applied at every echelon of the company from Senior Management to the people pushing brooms, it spreads the workload across the spectrum and allows people to focus on their own jobs.

Statistics are vital tools of management. They provide prediction and excellent control, but to work they must be applied correctly.

Many hands make for little work.