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Management happens
insisted on seeing the numbers (OK, now I may be exaggerating)
and Intel would never have been the mega-success it is now (not
exaggerating).
So why do we insist on producing numbers if we’re talking
strategy? Genuine strategy, by denition, deals with long-term
issues, uncertainty, and ambiguity. Hence, numbers don’t work
very well; they are unreliable, potentially misleading, and
sometimes simply impossible to produce in such a situation.
And I guess that is exactly why we/companies are so eager to see
them. The long-term, uncertain aspects of strategic investment
decisions make us insecure about whether we are doing the
right thing; therefore, we really would like to see some numbers
to lull ourselves into the belief that we’ve been thorough and
have uncovered the facts and have a solid basis on which we’re
accepting or rejecting the proposed course of action. Of course
that’s just make-believe (you can make numbers say whatever
you want them to say) and may make you myopic, missing the
things that are difcult to quantify but just as important.
Am I proposing that we should get rid of numbers in strategy
altogether? Heck, no; forcing yourself to go through some sort
of quantifying exercise can sometimes make you uncover and
realize things that you hadn’t thought of before. But subse-
quently you should do what an (anonymous) CEO told me he
always does when they’ve made nancial calculations regarding
new proposals: “Once we’ve carefully and painstakingly produced
all the numbers, we toss them aside and sort of make a decision
based on our gut feel and experience.”
Numbers in strategy may form one (minor) input into your
decision-making, but don’t mistake them for the real thing:
make the calculations, but then toss them aside and use your
judgement and common sense.
Inebriated cyclists
Actually, business people’s insistence on seeing the numbers
always reminds me of the anecdote of the man looking for his
Business Exposed14
keys under a lamp-post. A guy leaves a bar in the middle of the
night. There, he sees a man on his hands and knees under a
lamp-post, clearly looking for something. He asks him, “What
are you looking for?” and the (slightly inebriated) man answers,
“The keys to my bicycle; I must have lost them.”
“I will help you look,” says the guy, and on his hands and knees
he starts to search too. After a good ten minutes have passed, still
not having found the keys, he turns to the inebriated cyclist and
says, “Are you sure you have lost them here? We’ve looked all
over and they’re nowhere to be found!”
“No,” says the man, pointing towards a dark spot to the side of
the road, “I lost them over there, but there it is so dark, I would
never be able to nd them.”
The moral of this story is that we often look for solutions where
there is light and we can see things, while the real cause of the
problem lies in an area which is much more difcult to fathom.
Managers are often inebriated cyclists. If a company or division
is in nancial trouble, it cuts costs, slashes headcount, disinvests,
sets stricter targets, and so on: the stuff that can be captured in
numbers (i.e., “where it is light”), while the real cause of the
problem will often be a lot more subtle, and lie in a tainted
reputation, low employee morale, or low service quality. And
looking hard where there’s light won’t make you discover the
key to solving your problems any quicker. On the other hand,
the hard stuff (which can be captured in numbers), such as
production capacity, headcount, etc., are exactly the things that
cannot give you much of a competitive advantage; they can
often be bought off the shelf, meaning that your competitor can
get it too. It’s usually the soft stuff, such as morale, reputation,
organizational culture, etc. (which we don’t spend much time
measuring, largely because these factors are difcult to observe
and capture in numbers) that can make all the difference, because
they can’t be bought, and take much time and effort to develop.
Hence, don’t be misled by the hard stuff, which you can measure;
of course you need it but it will seldom give you a competitive
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