I recently came across an interesting discussion on LinkedIn that highlighted the dangers of relying on spreadsheets.  The discussion made reference to an article on Fortune.com, which showed how a range of large and powerful organisations allegedly made significant analytical errors. These errors allegedly included the way they valued acquisitions and calculated risk, amongst other things.  One common cause that the article cites is simple: The organisations relied on spreadsheets for complex analytical calculations and data manipulation, and once errors had permeated into the spreadsheets, they went unnoticed until disaster struck.

The article reminded me of how many times I’ve seen and heard of spreadsheets being used in extremely important situations.  It never ceases to amaze me how many midsize and even multinational organisations use spreadsheets for very complex tasks, and I guess that everyone reading this will have seen at least one example where a spreadsheet is being used where a different tool would be better.  I remember once being told about a team relying on an extremely complex spreadsheet (with macros) that had been built by someone who had subsequently left, and nobody had any idea how the spreadsheet worked.  If the spreadsheet were ever to break, they would be in a very difficult situation indeed.

Of course, spreadsheets have their uses.  A spreadsheet’s beauty is in its flexibility, but there also lies a pitfall. It’s very easy to just start ‘building’.  If this pattern continues, then before long you are left with a plethora of separate spreadsheets maintained by disparate teams.  It can soon become someone’s full-time job to copy and paste data between the various sheets and interpret the results.  And with a veritable mixture of manual intervention and manipulation of data, there’s a real danger of errors creeping in, just as the case study above Illustrates.  These risks and these hidden costs can grow and can cause real organisational pain.  This growth in unofficial and unacknowledged spreadsheet-based applications often happens entirely under the radar, meaning that nobody really knows what it costs the organisation.

There has to be a better way

If I were to take a guess, I’d bet that we’ve all been in situations where we need to make an important decision quickly – where one of the possible options is presented in such a compelling way, it seems like a foregone conclusion.  Perhaps the option appears to have benefits that are so hugely significant, it is seen as a ‘no brainer’ – a decision that is so ‘obvious,’ there is little point in putting much thought or contemplation into the decision making process itself.  Perhaps it’s ‘obvious’ that we should launch into a new market, slash our prices, buy a new software package or restructure a particular department.

This desire to make decisions quickly is understandable and rational – after all, it’s important that we avoid ‘analysis paralysis’ – yet a real danger awaits the unprepared.  In many cases, ‘no brainer’ decisions have far wider consequences than the decision maker might initially appreciate.  In fact, further analysis of the data might show that you are being duped into making a bad decision with confidence.  Let me illustrate with a hypothetical example.

Imagine an online retailer sees a sudden sustained drop in its sales.  It knows that competition in the market is cut-throat, and it needs to retain its market share.  It could be seen as a ‘no brainer’ to temporarily cut prices or offer some other type of incentive to increase sales volumes.  In some cases, this might be an appropriate response – but in others, it might lead to a dangerous race to the bottom – with all firms lowering their prices until they can bear it no longer.

In the hypothetical situation mentioned above, it would be far better to look at the business situation holistically. It would be beneficial to carry out analysis and look at the business environment and establish what data and insight is available.  Maybe there are other reasons that sales have dropped overnight, or other factors that should be considered.  For example: was there a similar drop last year?  Is there a seasonal peak in sales?  Has the weather been unusually hot/cold (which might affect the pattern of people buying or ‘shopping around’)?  Are people buying a completely different substitute product altogether (think Netflix affecting DVD sales)?  There would, of course, be many other factors to consider too.

In situations like this, it is hugely beneficial for organisations to look at their data and analytics for insight.  Carrying out analysis in this way – before making so called ‘no brainer’ decisions – helps to avoid the ‘knee jerk’ reactions that can lead to unexpected and unfavourable outcomes.  Ensuring that businesses move from data collecting to curating actionable data and insight is key.

So – if you’re presented with a ‘no brainer’ decision, what should you do?  Here are five key questions that you might consider asking:

As any business analyst will tell you, having a decent set of business processes can really help an organisation to excel.  When organisations have efficient and effective business processes, supported by the right people, technology and organisational structure, there is the best possible chance of sustained success.  This applies to organisations of all sizes, from huge multinational to small or midsize enterprises.   Accordingly, many organisations spend time mapping out, analysing and measuring the efficiency of their processes.  By building in regular measurement and feedback, it’s possible to improve continuously.

Yet there is danger waiting for the unwary.  When thinking about processes, it is extremely easy for our business stakeholders to get blindsided by the “Fire and Forget” fallacy, and end up tweaking and changing processes in a way that might make them worse overall.  Let me explain…

Don’t “fire & forget” 

When mapping out, analysing or improving processes, often our end-users and stakeholders will immediately want to dive into the detail.  They’ll talk about the individual steps that they undertake for a particular task.  They might be brimming with ideas for improvement – but there is a danger that the improvements that they bring to us are extremely localised.   Each stakeholder might be telling us about only part of a wider, underlying end-to-end process.