One of the great things about running any online business is the amount of data that it throws off.  In fact, this is now true for pretty much any business, as processes such as supply chain, CRM, etc are all running through systems that collect tons of data.  But I am also finding that it is far too easy to get lost in the data:

• It is easy for discussions to get stuck in the data weeds, for instance, obsessing why a certain conversion rate went up or down relative to the previous month.

• With enough data, it is also easy to always find some positive indicators, even if they are different ones from month-to-month.  This compounds the apparently innate human tendency to pay more attention to confirming evidence than to contradictory evidence.

• A company is a kind of embedded system that lives inside of a larger system.  Most of the available data, however, is from within the embedded system and that makes it easy to ignore external threats that are much bigger than anything going on inside.

Putting this all together, I am pretty sure that folks inside some of the big banks were having heated debates around minor items, pointing to how some statistics were encouraging, while the whole enterprise was driving off a cliff.

All of this puts a premium on the ability to see the big picture and that should really be a critical role of the board.  That is as true for startups as it should have been for the big banks.  But with sometimes tons of data available to the board, I know how easy it is to get lost.  When I feel that is happening, I try to come up – by reduction – with what I believe is the one truly critical hypothesis and a single clear alternative.  For instance, should we be offering product X at all (yes/no)?  Doesn’t always work but when it does, I find the data suddenly tells a much clearer story.

One of the great things about running any online business is the amount of data that it throws off.  In fact, this is now true for pretty much any business, as processes such as supply chain, CRM, etc are all running through systems that collect tons of data.  But I am also finding that it is far too easy to get lost in the data:

• It is easy for discussions to get stuck in the data weeds, for instance, obsessing why a certain conversion rate went up or down relative to the previous month.

• With enough data, it is also easy to always find some positive indicators, even if they are different ones from month-to-month.  This compounds the apparently innate human tendency to pay more attention to confirming evidence than to contradictory evidence.

• A company is a kind of embedded system that lives inside of a larger system.  Most of the available data, however, is from within the embedded system and that makes it easy to ignore external threats that are much bigger than anything going on inside.

Putting this all together, I am pretty sure that folks inside some of the big banks were having heated debates around minor items, pointing to how some statistics were encouraging, while the whole enterprise was driving off a cliff.

All of this puts a premium on the ability to see the big picture and that should really be a critical role of the board.  That is as true for startups as it should have been for the big banks.  But with sometimes tons of data available to the board, I know how easy it is to get lost.  When I feel that is happening, I try to come up – by reduction – with what I believe is the one truly critical hypothesis and a single clear alternative.  For instance, should we be offering product X at all (yes/no)?  Doesn’t always work but when it does, I find the data suddenly tells a much clearer story.