In the “Mad Men” days, decisions were normally made by instinct, experience, and gut feel. Company leaders would debate opinions because good data took too long to develop and distribute. The technology boom has provided us with incredible amounts of data and information for our decisions. Don’t misunderstand me. Information is a great thing for making decisions. When we have reliable information, we can base our decisions on facts instead of opinion. The dark side of our technology boom is that we have reduced our decision making to looking at computer-generated models without questioning whether the models reflect reality.
When making decisions, don't rely solely on the numbers. You may swim upstream for no reason!
In his Planning, Startups, and Stories blog, business planning expert Tim Berry warns us about relying solely on the numbers. Quoting Seth Godin, Berry warns us about how numbers are often confused with truth. Numbers are simply an abstraction of reality. Great business leaders use the numbers as one part of a decision, but the numbers do not drive the entire decision. Great leaders and owners look at trends and events that numbers cannot explain. You must also place the numbers in the appropriate context. The great saying, “There are lies, (blasted) lies, and statistics”, can remind us how nearly anyone can manipulate numbers for a predetermined purpose.
My background is in finance and accounting, and I know the need for accurate and relevant financial information. I could not run a business or make decisions without good numbers, but I also cannot run a business in a numerical vacuum. Make sure your decision making process includes plenty of information besides your financial statements.
