What’s more valuable: Listening to your Spidey Senses or your Statistics?

I had a business school professor that said you had to be careful with statistics because it was like driving using the rearview mirror. I’m reminded of that because one of the major things I’ve spent the last couple weeks working on is some financial projections and trying to build out a business case. This work has primarily been centered on school safety. So we’ve looked at things like what is the overall size of people involved? Well it turns out there’s:

• 77 million Americans that are involved in education in some way
• There are about 100,000 K-12 public schools
• There are roughly 6,000 colleges and universities
• Finally there are around 35,000 private schools

Along with those statistics there are obviously demographic build outs and parent teacher association involvement. Turns out that’s one of the areas where there’s still a strong showing. 85% of the people surveyed said that they had attended or participated in a PTA meeting in the last year. This means that either that’s an area where we’re very strong as a country or people feel bad saying that they didn’t go so they over reported saying they did go.

There’s also a lot of statistics around crime. For example, 27% of teachers in the District of Columbia in 2010 reported they had been threated or physically attacked at school. Also a student is more likely to be victimized in school than out of school. Now on some level that makes since given the amount of time that a student spends in school vs. outside of school and what types of settings those are but it’s also a little bit scary. It’s one of the things that we’ve been focused on trying to develop technology solutions for, going on the better part of two years now. So it’s interesting as you look at all that and you try to draw meaning from it. You think about how you might work to change some of those statistics especially around the prevalence of crime and safety issues in schools. You think about what are the contributing factors and how can private industry engage to support better education environments.

Now as you try to build out a financial model that allows you to stay in business while also providing this socially redeeming service and encourage people to invest in the model based on financial projections; it makes me think of other times where I’ve been at something like this. Times where we’ve done a business case for a technology investment or for even looking at a large IT portfolio for a private sector or public sector organization. You’re trying to build out a business case again based on different statistics and your understanding of the organizations ability to handle change. You’re looking at what types of numbers are out there for people who have tried to do similar things and all of it amounts to essentially a lot of guesswork, educated guesswork, but still guesswork. The actual implementation and reality are almost always starkly different from what you originally thought. So I don’t say all that to discount doing the activity because I believe to this day that it’s one of the most valuable things that you can do as you look to build out even a small project. I believe it is vital to try to build out financial models, business cases, and return on investment because it forces you to think about things that you would otherwise take on gut feel.

So whether or not things go according to your projection down the road, I think you’re much more prepared to handle the twists and turns that are to come by virtue of having really thought through the data that is available. You learn a lot by forcing yourself to wade through things where other people have gone out and attempted similar things and succeeded or failed. You have the chance to think about what are the lessons learned from those previous success and failures. I think that for most organizations, and even in entrepreneurial pursuits, there’s huge value in doing a business case. Also when talking about the case that I’m working on right now there’s huge value to be found in working the financial forecast for a new venture because it forces you to step through that project piece by piece.

So I’m curious what other people think. Do you run through those types of processes around the projects that your organization is attempting to do and how often do people go to the numbers to back an argument vs. just using gut feeling? Now I don’t say that with a strong feeling one way or the other because I believe that the best way to approach it is to have the numbers but not to discount gut feel. Particularly if you’ve been at it a long time, there’s almost a spider sense that develops about certain projects that gives you a hint to where things might be going that maybe the numbers don’t tell you. At the same time I’m also a big believer in having those numbers available because they can provide great cues to action that otherwise you may ignore. They also may point out areas where you need to stay focused on as you progress through a project to make sure that you don’t fall into a trap that could have easily been avoided had you taken the time to take a look at the data that is out there. So again I’m very curious to know what other people’s experiences have been and how they balance gut feel vs. projections and spreadsheets and what they believe is valuable in terms of business case.