Use Data to Make Decisions

Make good decisions by relying primarily on facts and data, rather than solely on opinions or emotions. Be objective. Analyze the data and use this information to make better decisions.

The Mars climate orbiter was a NASA space probe launched in 1998 to study the Martian climate. The scientific community was eagerly awaiting the breakthrough data that the probe would eventually deliver. They needed to wait a year, however...the trip was a few hundred million miles in distance! Finally, though, in September 1999, the fateful day arrived. The probe entered the Mars atmosphere, and after its few hundred million mile trip, it wandered 40 miles too close to the surface of the planet and burned up. It was a $193MM failure.

How did this happen? Well, one set of engineers wrote the software using English units of measure, and another set of engineers accepted the input and gave commands based on metric units of measure. A grade school level mistake led to faulty data and a $193MM mistake that the world waited a year for.

So, when Fundamental #23 says "Use Data to Make Decisions", we must also remember to use GOOD data. Examples of bad data include costs that are allocated and not direct, costs that are based on "standard costs" and not actuals, and revenue that doesn't take material cost increases into account...among many, many others.

The other pitfall we must ensure we avoid is confirmation bias. This is the tendency to search only for data that confirms a position we believe to be true in advance. Warren Buffet once said,

"What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact."

So true! How painful is confirmation bias? In 2018, in the US, there were 151 exonerations representing innocent individuals who spent a collective 1,639 years in prison due almost exclusively to faulty eyewitness accounts that were a result of confirmation bias. The eyewitness expected them to be guilty, therefore they had to be guilty. They were not.

How does this happen in business? An example: a company president expects a certain type of product to be profitable. The company makes 25 of them during the year. Five of them show a profit, 20 of them do not. The president finds fault with the 20 loss-showing reports, lauds the five that show a profit. The product is thus profitable. Right?

So, yes, get the data. The data will set you free. Get the facts and let the facts tell you what to do. In God we trust, all others bring data. Just make sure you let the data tell you the unvarnished truth. Allow yourself to be wrong often...just not at the end.

Funny thing about that Mars Orbiter. While many people know about the unit conversion mistake, fewer know this: over the course of the year, engineers should have known SOMETHING was amiss. The trajectory of the course was off. There needed to be numerous course corrections. The force output was constantly incorrect. However, instead of saying "the data is telling us there is something wrong with the mission, let's find it", officials in charge instead said, "everything is a go unless someone can prove there is a fatal problem". Deciding it would be career-limiting to even SEARCH for that fatal problem, no one looked.

And after a year, $193MM, and a trip of several hundred million miles, everyone was forced to look when the orbiter flew its final forty miles too far.

Get the data. Get the right data. Listen to it. Good data will always tell you the right story...if you let it.