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which numbers can you trust?

How much trust can you put into numbers? Statistics got bad press a couple of hundred years ago and I learned the power of presenting the right numbers in the right light very early in my management career, so how much reliance can we place on any number that we see?

I’ve talked about perception and reality here before, and that there is no relationship between them, because people will refuse to believe that two and two make four if they want to, and especially if they have ceased to trust the person showing them the calculation.

Numbers are always true, but there are times when that truth is not what people want to hear, and that is where trouble tends to creep in as the numbers that get presented are not necessarily what they seem. But if numbers are absolute in themselves, the way that we use them can be vague; what time is it? About quarter past, nearly 10 to etc. Or, how many of those have you had; about 5, how far have you come, about 30 miles. And then there is the tendency to round numbers to the nearest whole number, ten, hundred or more. We treat numbers as indicative rather than with precision because we rarely need the number concerned to be precise and we are happy to live our lives that way.

In a business sense you may argue that there are some numbers that we rely on more; the price for example, but even in a retail sense that is often only the price at that moment in time as anyone who regularly shops in a supermarket will tell you. Rates of pay between an employer and an individual will have some consistency, but much of the playing with numbers that we do in business is about the deal and we are searching for the number that we think will work well enough to get us the job and still allow us to make money on the deal.

When we do this we are again playing with variables because we have to predict the future and we play with models that will give us an idea of where things might go and test the sensitivity of our proposals, but sometimes the information that you have been given is so vague that you feel that you might as well just cast the runes and see what they come up with.

At the end of a project or at certain milestones into a project you ought to be conducting reviews to see how you did, or are doing. What you learn from these is often a great help in the next one you do, but I would say that of all the PIRs that I have done, whilst many have come out close to what was planned, the route that they took to get there was not the one envisaged. The reality has been that our business world changed between us making the predictions and the PIR, and not necessarily in the way that we thought that it would.

This is why experience, knowledge and information are valuable as it is the right outcome that you are seeking; to save money, grow market share, increase productivity or whatever, you need to get the right end result for the business. And so the numbers that we use will be estimates rather than absolutes and they will be presented in good faith as the best numbers that we could get to in those circumstances, but there is a word for using the wrong numbers on purpose: Fraud

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