Yes, they’re an excellent tool for analyzing data. Yes, they give individuals and companies the ability to store large amounts of information, perform calculations, and even spot trends. Yes, our employers probabaly wouldn’t be able to pay our paychecks without them. I am, of course, referring to spreadsheets.
No, spreadsheets don’t hurt people. People do. At some point, we went from using them as tools to inform decision making, to tools that actually make decisions. “I’ll spend the majority of my time with my top 20% of customers”, we might say. “We’ll fire the bottom 10% of the salesforce,” management might say. Like a sophisticated Magic 8 Ball toy, a formula plugged into a spreadsheet spits out a course of action for us and we dutily follow it.
Like all computer programs, spreadsheets cannot function without input. That’s where you and I come in. We take one of the outputs of our work, (ie. net sales, market share, etc.) and feed to the spreadsheet so it can work it’s magic. Unfortunately, magic has yet to be proven to be anything more than artistic, entertaining, trickery. Here are some problems with the way we use spreadsheets in sales. Feel free to add more in the comments section of this post.
Spreadsheets Can De-humanize Sales people and Customers
We humans want to be treated as individuals. Considering only a few data points takes away any unique or relevant details regarding the individual. Intellectually, we all know this but, in practice, we forget it very quickly. According to Cal Newport in his book “Deep Work”, it is scientifically impossible for the human brain to truly multitask. Instead, our focus switches quickly between two or more tasks giving us the illusion of doing more than one thing at once. Therefore, when analyzing a sales report, it is impossible to scrutinize the data and consider the person attached to it at the same time.
To this day, I have my personal breakthroughs quickly reduced to rubble at the hands of a spreadsheet. In response to a record week of sales, I am rewarded with a report sharing how many reps around the country had the same or more sales than I did. Customers don’t fare much better either. We don’t throw reports in their faces. Instead, we treat them only as well as their business potential dictiates. Why? That’s what a formula on our spreadsheet tell us to do.
Spreadsheets Facilitate False Assumptions
Where does data come from? The past. According to Nicholas Nassim Taleb in his book, “Fooled By Randomness”, one of the biggest mistakes humans make when looking at history is assuming everything is due to cause and effect and not randomness. He skillfully points out that even major historical events are the result of random factors. For example, what if Adolph Hitler was born a girl? Given the restrictions on women in Germany at the time, is there any way she could have risen to power, let alone attempted to take over the world? In a more practical sense, managers often assume reps are either unskilled or lazy when sales are low.
Don’t get me started on charts either! I like the visual representation they provide in describing the past. It’s what lies beyond the trend line the spreadsheet never tells you. As someone who has won and lost on the stock market, I can tell you that no trendline EVER guarantees what will happen in the future. When your personal sales trend line is pointing down, you are looking at a picture of the past. You and I only have influence on the future.
Spreadsheets Can Hide Information
Anyone who has used Excel can show you how easy it is to hide rows or columns of data. Once the information is out of sight, it’s much easier to ignore. Often its the data that’s NOT recorded in the first place that is relevant. Try developing a list of key customers without looking at geography and you may miss many smaller targets who have high potential because of some geographic factor.
I had a friend who was a judge tell me once that he did not like video-taped testimony. He felt something could be happening off camera that could be influencing the witness. Spreadsheets, have the same effect. They shout, “Hey look at this information here!” All the while, our focus is potentially taken away from something else that could be more relevant.
Spreadsheets Often Oversimplify the Real World
As sophisticated as we think we are when we use them, spreadsheets force us to limit the way we see the world. Why? Our brains are not wired to take in massive amounts of information at once. Therefore we use spreadsheets to help find that one crucial piece of data or trend. Again, it’s the ‘Hey, look over here’ effect. The dumbing down of our approach makes us susceptible to confirmation bias. This is when we only notice data that confirms what we already think. Daniel Kahneman explores this and many other cognitive biases in his book “Thinking Fast and Slow”.
One mostly uh-helpful excercise I’ve had to perform many times in my career is the “Hot, Warm, and Cold” list. “Hot” customers are those we think are close to buying. “Warm” need a little more work and “Cold” are not interested at all in my product. These designations fit nicely into a spreadsheet where they can be sorted. Other than for time management, this information provides little value in advancing sales cycles. Calling someone a “Hot” prospect does not tell me what I need to do next to insure the sale gets closed. Calling someone a “Cold” prospect doesn’t guarantee that I’m not losing business by ignoring them either.
Spreadsheets are no more to blame for these problems than a baby is for a dirty diaper. The real problem is the power we give them – the power to make decisions for us and make us less accountable. Stop confining yourself, your employees, and your customers to numbers in a cell and you just may see your world open up!
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Ps. I’d like to put a plug in for Seth Godin’s “Akimbo” podcast. I love his thoughtful and straightforward tone. His thoughts often inspire mine. To check it out on iTunes click here or search for “Akimbo” in your podcast player.
To check out Nassim Nicholas Taleb’s “Fooled By Randomness” on Amazon, click here.
To check out Cal Newport’s “Deep Work” on Amazon, click here.
To check out Daniel Kaheneman’s “Thinking Fast and Slow” on Amazon, click here.