One of the running themes from the past six months that I’ve been working on is the role of data in decision making. Historically, I’ve been one of the biggest advocates that it is hard to have too much data. Get the data together, test different ways of looking at it, then pick the best to drive decision making.
In the last half year, I have come to the conclusion that even basic data may do more harm than good many times. But the world is moving to more and more data you may exclaim. The trouble is, most people don’t understand numbers.
If you want to test the theory that most people don’t understand numbers, run a simple scenario by someone:
- Can the price of a stock go down by more than 100%?
- Can the price of a stock go up by more than 100%?
If you are reading this blog, you probably immediately responded No to the first, and Yes to the second. Stocks can’t go below $0 which means that, on a percentage basis, they can’t drop more than 100%. But a stock can increase to any imaginable number theoretically which means it can go up by as many hundreds or thousands of a percent as you’d like.
My guess, is you are going to be surprised by the number of people who get one or both of these wrong. Or who struggle to answer it. Or who don’t understand what you are asking. Even really smart people miss this.
If people struggle with basic percentages, what hope is there that they will be able to understand the relationship between square feet per person and square fee per desk. These numbers are often more together but projects can make them move in opposite directions. I’ve seen actuaries stop to think about it. Why would we think the majority will grasp it without first really understanding real estate fundamentals completely.
Data in the wrong hands can be damaging. If the person using it thinks they understand it but they really don’t, they can easily draw the absolute wrong conclusion. If they partially understand it, they can misuse it for something it doesn’t even address. Worse, if they pull data themselves, they may miss nuances around how it should be put together and get the wrong number entirely.