Location: Macatawa, Michigan

Charles L. Bradford is a pioneer in strategic management for small to mid-sized companies. He is the Chairman of the Center for Simplified Strategic Planning, Inc., a nationwide strategy firm with eight consultants which he founded in 1981.

Saturday, December 23, 2006

Good Input – the Foundation of Good Strategy (part 4) How faulty data arises

The four basic causes of faulty information are:
inadequate consideration
inappropriate presumption

Misperception - Misperception is a cause of faulty information wherein we see what the situation really is, but we don’t recognize it for what it is. As an example, in watching football on TV you occasionally are sure you see something happen and then find out you are wrong when you watch the replay - misperception.

Deception - Another cause of faulty information is deception. Competitors often try to deceive one another in an attempt to mislead. Customers are sometimes deceptive in an attempt to negotiate a better deal. Suppliers are sometimes deceptive in an attempt to a) make themselves look better, b) make the competition look worse, c) get the order or d) negotiate a better deal. Many politicians are professional deceivers and congenital liars and have the worst public credibility of any group of people in this country. Colleagues, subordinates superiors and advisors may be deceptive in an attempt to a) make themselves look better, b) cover up a mistake, c) gain some particular advantage, or d) sabotage the company. Finally, we may even deceive ourselves in an attempt to avoid facing unpleasant facts. This falls under the category of “wishful thinking”. (We are usually unaware of our self-deceptions.)

Inadequate consideration - Another problem lies in the area of assumptions. When we are dealing with the future, there is very little that we can “know”. Even when it comes to death and taxes there are areas of uncertainty. Any prediction, estimate or hypothesis about what is going to happen is an “assumption”, and it should be obvious that it is uncertain. Good assumptions are grounded upon a clear understanding of the current situation and sound reasoning when considering possible alternative future outcomes. They require thoughtful consideration. Poor assumptions are usually “pulled out of thin air”.

Inappropriate presumption - To “presume”, on the other hand, is to accept something as factual without checking it out. Presumption is inherently risky. On occasion it is acceptable to presume, as when checking it out would be impossible or inordinately expensive and all reasonable evidence leads strongly to a certain conclusion. Presumption does not always lead to faulty information. However, most faulty information is the result of inappropriate presumption.

In summary, the four causes of faulty information are misperception, deception, inadequate consideration and inappropriate presumption. These may be first hand - as when you misperceive, self-deceive, inadequately consider or inappropriately presume. Or it may be second hand - as when someone else gives you faulty information either intentionally or inadvertently (e.g. he believes the information to be correct but it is faulty due to misperception, deception, inadequate consideration or presumption).
(part 5 – How Can You Assure Good Data will appear next week.)


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