At the end of the day, the data and assumptions that we use in Product Cost Management, specifically in cost models, is as (or more) important than the equations and the approach to modeling itself. The classic example in cost modeling is raw material rates ($/kg for steel, plastic, etc.). A close second and third in importance are the labor rate ($/man-hour) for work in a given manufacturing activity and direct overhead rates ($/machine-hour).
Good, trustable data can be very hard to find in a company, even when everyone in the company wants to help the cost modeling effort. However, a bigger problem is not the unavailability of data, but the unwillingness of people to share the needed data with you. If you have ever been involved in a Product Cost Management (PCM) effort, especially one involving cost modeling or implementing a PCM tool, you have certainly encountered this problem. Certain people and whole organizations will be unwilling to share data with other organizations and/or with you personally as the PCM professional who is trying to help the firm.
So, what do you do when you run into this data stonewall? Today, I would like to share a very powerful but simple technique that I discovered years ago. Some may call this technique by another name, but I call it “Habeas Corpus Data.”
Why People Withhold Data
As a young researcher at University of Illinois, I was flabbergasted the first time that I was on an internship and someone became squirrely or delaying regarding data. At a university, of course, the goal is to freely share and promote good data to advance the common good of learning and research. However, in organizations this is not the case. Over the next few years, I realized that withholding data was the norm, not the exception in many organizations. The natural question one asks when told “no” is “why?” I have been given a lot of excuses, ranging from the presumably plausible to the outright ludicrous. However, they mostly break down into the six categories shown in the pie chart below. Furthermore, in my experience they break down in the proportions shown.As you can see, the first three categories, are legitimate concerns that need to be addressed. However, you will also note that this is a minor part of the pie. The lion’s share of the reasons given are simply excuses that should not be tolerated. The most frustrating thing is that no matter how illegitimate the real reason for withholding data is, the withholder will tell you a covering lie.
So, what do you do when you find the data door locked? Easy! You use Habeas Corpus Data to storm the castle.
Habeas Corpus Data
Many of the readers may remember Habeas Corpus from junior high civics class as the Latin phase meaning “you must present the person in court.” This legal idea originated in 12th century England and means that you cannot hold someone in detention without first showing sufficient cause. Or, as William Blackstone explained in 1305 “The King is at all times entitled to have an account, why the liberty of any of his subjects is restrained, wherever that restraint may be inflicted.” [Maybe that means you are the King and the data are your subjects?… oh, if only Product Cost Management were so glorious!]
Just as the court demands a reason for imprisonment of a citizen, so too you demand a real reason why the data is being held hostage. But, how do you expose the data despot for the unlawful detainment? Here’s the key to the prison cell:
Make and assumption and present the results from your work.
For example, if purchasing will not cough up a supplier’s labor and overhead rates for the cost model on which you are working, you assume a labor and overhead rate based on your past experience and expertise in PCM. It does not even matter if your assumption is close to the real numbers. When you present your results for the costs of the product or part, the warden of the data prison will very likely be present. You should make sure of it, which will be easy, because he is likely be a key stakeholder in the product cost project. As this point, you are effectively calling his hand, and he will have to lay down his cards and show the true reason why he is withholding data.
Why does Habeas Corpus Data have this effect on the warden of the data? First, he will be shocked you were able to proceed with your work without his data. More importantly, he will get very worried how your results (which are based on your assumptions, not his) will affect his job. The exact effect that Habeas Corpus Data will have depends on which of the six reasons for withholding data is the real underlying reason the person should have admitted in the first place.
Stay tuned next week, and I will will let you know the specific effect Habeas Corpus Data has based on the true each reason for data withholding.