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Numbers & Business: Whose Reality Is Reliable?

Organizations mix “facts” into a tasty Kool-Aid that everyone drinks. How reliable is fact-based decision making? What is really real, and which reality should we believe?

Lately, when I ask my eight year old about her day, I get a long rambling synopsis of one of her TV shows. It makes me irritable. I want to snap that while I’m very interested in her, I don’t watch those shows for a reason. Then I remember that for her, those shows are as experiential for her as school and friends. They are not part of my reality, but very much part of hers.

I’ve seen similar patterns in almost organization I’ve worked with. Everyone drinks the same Kool-Aid and buys into a reality that is based on fiction.

Haven’t you ever responded to a request for an update on your business with tables of numbers? How real are those numbers? Are they the reality of the market, or simply part of a narrative that we’ve tacitly agreed to pretend is relevant?

Don’t get me wrong: I love numbers. They are powerful tools. Heck, I went to the ultimate quant business school, and built my early career on the reputation of being an analysis jock. But one of the lessons I took from all those stats classes is that there are no “facts” that cannot be questioned. There are always underlying assumptions, and the wise leader knows that facts are better thought of as hypotheses.

I’m trying to be provocative here because it matters. American business keeps making the same mistake of misusing data. Numbers are terrific as indicators and milestones, as measures of what happened in the past. But the future cannot be quantified. Multiple futures can be modeled, but there is nothing there yet to measure. Consider:

  • Detroit’s demise was foundationed on solid analysis of trends. There was good reason for GM and Ford not to develop pursue compacts in the 70′s or hybrids in the 00′s. Meanwhile, Japan kept making crazy bets that made no sense to our rational, scientific, numbers-based business leaders. We know who won.
  • The decision to launch New Coke was as fact-based as it gets, built on years of research. But the facts did not predict the future.
  • The architects of the our devastating Vietnam war were strong practitioners of scientific management. They had the facts. They were wrong.

Many entrepreneurs do better, following instincts to futures unimaginable to most of us. But with few exceptions, most of our corporations use the fiction of facts to blind them to disruptive possibilities.

I believe that what’s required is a nimble agility of mind, the ability to look at tables of numbers as nothing more than possibly-accurate signposts, and then to ask what if they’re wrong? The ability to consider what our market would look like if some Galileo were to prove our fundamental axioms wrong.

I’m talking to myself here. I’m the one who resists my child’s reality because it doesn’t jibe with mine. I can be as obstinate as any CMO when someone challenges my numbers-based conclusions.  That’s why I regularly remind myself that business “facts” are often wrong.

So how to function when we’re not sure what to trust or believe?

This new decade, I’ll be trying to dial up my mental agility. What if it turns out that lessons learned from Nickelodeon are more relevant preparation for the unimaginable workplace of 2025 than school or friendship? What if today’s numbers indicating high customer satisfaction with our products are based on a fundamental flaw that is currently camouflaged? What if everything we believe turns out to be fiction, and fiction proves to be a better predictor of the future?

Consider this: a few decades back, smart and capable business leaders could show you well constructed studies predicting a worldwide market for computers of a few hundred units, while wild-eyed hack science fiction writers portrayed a fully wired world. Whose reality was more real?

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