Increasingly facts and numbers seem less relevant in decisions, analysis and forecasting. While politics may be the best example, bias, unwillingness to face challenges, uncertainty about what the facts are, tradition, and ritual can all encourage us to ignore reality.
One of the biggest barriers to facts is passion, innovation, pride, and intuition. As Steve Jobs said, “the people who are crazy enough to think they can change the world are the ones who do.” We all need confidence, belief, enthusiasm, energy, persistence, and support to succeed. Adding facts to those motivations can simply be a bummer.
In contrast excellence and success require knowledge and execution. When we understand reality, we understand the problems, limitations, and constraints associated with any undertaking. As Thomas Edison said, “A vision without execution is hallucination.”
Bias is a critical factor in ignoring facts and its impact is compounded by our tendency to ignore it. Almost no one objectively assesses sports teams, our kids are viewed as more accomplished than reality, and self-assessments are usually higher than actual. Much market research has an in-built positive bias that tries to support its position. If we are not careful, we can go in with a favored option and try to build a case for it. We may deny it, but we all do it, even if unconsciously.
More than facts many people are uncomfortable with numbers. In most cases entrepreneurs frequently develop endless variations of their product. However, it has been well proven that in most cases 20 % of customers and products represent 80 % of sales. One of the more difficult tasks in evaluating alternatives is that the sum of probabilities has to add to 100 and we sometimes have difficulty comparing items.
Wealth, poverty, and rural communities can be complex to understand. For example, many of us don’t understand how rich the rich really are how poor the poor really are. For example, do we really understand how the poor frequently have to ration scarce food and medical resources.
We frequently focus too much on success and avoid learning from failure. This is despite the fact that we acknowledge the need to search and test new ideas and challenges. One of the key recommendations of most great leaders is to recognize that you will make mistakes and focus on solving them rather than blaming someone.
A major aspect of facts and numbers is measurement and evaluating alternatives. The more objective the information to perform these functions the better the outcomes. Examining alternatives also allows for comparisons, developing criteria and including multiple goals and outcomes. For example, what is the relative importance of issues like long term versus short term, quantitative versus qualitative, risk, and objective versus subjective.
I apologize for introducing the academic term” cognitive dissonance” but it is an extremely valuable concept for developing new business strategies and taking into account the above elements. One obvious characteristic of communication is the perceptions of the presenter and the facts which presumably form the basis of the communication. We all know, but seldom acknowledge, that our perceptions of a presenter typically have a dramatic effect on our understanding and acceptance of the communication. The theory of “cognitive dissonance” articulates this concept and has been affirmed through years of research. For example, appearance, a pleasant environment and even things like snacks can be used to alter the interpretation of actual facts.
When I talk to people thinking about operating a business, my experience has led me to focus on two distinct concepts critical to success: Passion and Reality. Passion is the dream, idea and mission of your business. Reality understands the facts, numbers and basics of the business and the problems, limitations and constraints. While you need the passion and excitement to succeed, having wrong facts and numbers can significantly destroy success.
Related: Is the Glass Half Full or Half Empty