Evidence-based decision making is best when data are properly used, when good judgment hasn’t been trumped by bad numbers, or good numbers twisted to support an inappropriate conclusion. Just collecting data, tying it to outcomes and using it to make comparisons isn’t enough. Numbers must be accurate and they need context. Data are essential to great leaders, but numbers don’t tell the whole story.
Let’s say I wanted to invest in a technology company. Being a devoted iPhone user, I am predisposed to liking Apple products. With a few clicks of my mouse I find Apple has earnings per share (EPS) of $13.87. Is this good? I quickly search for Google and learn its EPS is at $8.75. Should I be convinced that Apple’s numbers make it a better investment?
As a good consumer I should ask: Are the metrics accurate? EPS is a well-known measure of corporate profitability and my source was reputable. Are the metrics comparable? In this case, yes, but only after I checked that the EPS numbers covered the same time period. What do the metrics tell me? They give me insight into Apple’s and Google’s profitability. Read more »