Editor's Window31 Jan, 2005 By: Sara Ferris
Numbers Game: Don't cut corners when building support for your proposals.
We all play the numbers game, whether it's called ROI calculation or projecting quarterly expenses or tracking time spent on various projects or whatever else your boss wants you to calculate this week. It's a basic business tenet: quantify, then evaluate. Base your decisions on the data.
This month Robert Green in CAD Manager takes an instructive look at ROI calculations that reminds us that figuring the numbers is merely the starting point. You also have to place the numbers in context, and that context may not be something so easily quantified. Or certain factors may have greater or lesser importance than others. Even though part of the equation looks great, it may be offset by an unacceptable figure in a part that carries more weight with decision makers.
It's good to get in the habit of looking at numbers with a skeptical eye. That goes for numbers you determine yourself as well as those that are presented to you. As that sage Homer Simpson once noted, "People can come up with statistics to prove anything. . .14% of people know that."
So when analyzing a problem, ask where the figures came from, why they were selected as relevant, how they were calculated, which merit more weight. Make sure you're getting the best and most complete information possible. And remember that some things don't lend themselves to easy measurement.
These days there seems to be a bit of a backlash against the compulsion to quantify everything. Malcolm Gladwell, who brought us the "tipping point," has turned his attention to snap decisions in his latest book, Blink. The idea is that our subconscious minds are constantly processing all sorts of information and drawing on our past experience, so that in many cases snap decisions turn out to be correct ones. Thin-slicing is what he calls this ability of our unconscious to find patterns in situations based on narrow slices of experience. So students, for example, who watch five-minutes of an instructor give the class the same average rating as students who take a class from the instructor for the entire term.
True, if you've been in your field for a considerable length of time, you should have a solid core of experience that gives you good intuition about what numbers you're going find or what your research will turn up. The danger here is that you'll form the conclusion, then backtrack to find the numbers to support it. Or worse, dispense with data-gathering altogether. Leaning too much on past experience can sometimes blind us to what's actually happening now, especially in a world of rapidly changing technology and economic factors.
Resist the temptation to cut corners. Coming up with an idea or proposal is the easy part. Collecting, evaluating and interpreting data may end up consuming more of your valuable time than you like. But in the end, what sells your proposals is a thorough, clear and compelling argument based on your best estimate of the real benefits (and risks).