We have spreadsheets and reports for everything these days. We capture data, analyse it and use it to predict the future. And, like the fortune-tellers of old, we get it wrong as often as we get it right.
Companies predict their future income and expenditure as budgets and targets, economist use sophisticated models to predict human behaviour. We focus on measurement, believing that, if you can’t measure it, you can’t manage it.
Although this last adage has an element of truth, I believe it results in a focus on the numbers, the easily quantifiable. We tend to break everything down to targets and percentages.
We now even have measures for culture and values and it is easy to use the results of these surveys in the same way as we use a balance sheet. We naturally try to make sense of complexity in our world by reducing it to facts and figures we are able to work with.
Yet, all the sophisticated models and scientific tools failed to predict the recession. Few economists warned of the impending implosion despite a wealth of data and experience.
The real problem is that people don’t always act as predicted or even logically. So many factors play a role in decision-making that Asimov’s[i] mathematical formula that can predict every nuance and every decision we make and determine which path for the future is most likely, will remain fiction for many years to come.
The truth is, we need to look at qualitative as well as quantitative data. The numbers and percentages give you a starting point for discussion. Critical conversations, intense debates and innovative thinking are required to turn the data collected into something meaningful. We cannot expect data and information to make our decisions for us or expect more data and more probing to reveal answers that are simply not there.
Just as managers ultimately need to make decisions by combining their experience and knowledge with the facts; prediction and strategic thinking require a similar mix of the quantitative and qualitative.
I experienced a senior management team, deadlocked over an important decision, requesting more and more investigation and data on the problem in order to help them reach a conclusion. Both options were virtually identical in terms of costs, client data showed no real preference and no matter what angle they looked at, the data could simply not give them the answer. The reality was, the decision needed to be made but that the impact could not be predicted from looking at the data. The result was many unhappy clients as the delay in making the decision resulted in the change happening too quickly and customers were the last to know.
The reality is that intuition plays a bigger role than we like to realise. We look at all the data and make a decision from the gut. Often, when buying, we choose the product that “feels right” without being able to really define why. You may try to articulate it but ultimately, there is probably no logical reason to choose one brand over another much of the time. In the same way, when making business decisions, we justify through the facts and figures why we decide on one course of action over another. We try to downplay intuition and “gut feel” but often this is the only way to go.
[i]Isaac Asimov’s Foundation Series Novels
