Why good spreadsheets make bad strategies.

January 16, 2010 at 10:09 am Leave a comment

via Why Good Spreadsheets Make Bad Strategies – The Conversation – Harvard Business Review

We live in a world obsessed with science, preoccupied with predictability and control, and enraptured with quantitative analysis. Economic forecasters crank out precision predictions of economic growth with their massive econometric models. CEOs give to-the-penny guidance to capital markets on next quarter's predicted earnings.

We live by adages like: “Show me the numbers” and truisms such as “If you can't measure it, it doesn't count.”

What has this obsession gotten us? The economists have gotten it consistently wrong. As late as the first half of 2008, no prominent macroeconomist or important economic forecasting organization predicted that the economy would not grow in 2008 or 2009, let alone that it would crater as disastrously as it did.

But, undaunted, the same economists who totally missed the recession turned back to the same quantitative, scientific models to predict how the economy would recover, only to be mainly wrong again. CEOs keep on giving quarterly guidance based on their sophisticated financial planning systems and keep on being wrong — and then get slammed not for bad performance but for their failure to predict performance exactly as they promised mere months earlier.

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Entry filed under: key executive coach, strategic planning.

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