How Are YOU Crunching the Numbers?

In a perfect world, we would get perfect answers.  In a perfect world, probability would reign supreme.  We don’t live in a perfect world, though (relatively speaking), so why do you plan like we do?  Entrepreneurs can make huge mistakes by making dumb assumptions.  Let’s say you set a release date for some software you are making – you set the official shipping date t0 January 5, 2008… but you still have some developing to do.  Well according to your plans, you should be done with a week to spare!  Uh oh – you forgot one major, missed assumption.  You’re dealing with people.  People are not machines, nor will they produce like them.  Companies like Electronic Arts have gotten in trouble for over-stressing their employees.

For those of you just joining us on Earth: humans get fatigued!

Fatigue affects efficiency, accuracy, motivation, and pretty much everything else; but… but we’re off schedule!  You should have seen something like this coming.

The bottom line is this – 99% of your forecasts will be totally wrong.  I left that 1% for meeting deadlines – and high five to those who do!  Unless you are some mystic who can magically calculate the fate of Earth through some gigantic conjuration of intelligence, you know as much about what will happen 2 seconds later as you will 1.9999999998999~ seconds later.  The idea is to reduce noise factors in your result.

Hey Jim, what’s a noise factor? You ask…

Well, a noise factor is something that distorts your signal.

Hey Jim, what’s signal?

The signal is your result.

Hey Jim, where do babies come from?

As I was saying about signal and noise… A noise factor would be something like the questions that I have been conveniently asking myself.  That really gets in the way of me trying to make a point.  See?  It distorts the results, thus causing the whole learning thing to be less efficient!  There can be many different types of noise factors, which is why you need to find a way to compensate for these inaccuracies.  I would give you some ideas, but there are just so many different situations – one wouldn’t cover a quarter of a percentage of the possible noise factors.

Either way, figure out what these noise factors are, estimate how it will affect your business, and come up with a forecast.  Don’t be afraid to be wrong, because no matter how you do it you will never be right!