It’s really easy to hide in a spreadsheet and manipulate factors and assumptions until you get the results just right.
The danger is that you’ll waste a lot of time, you’ll feel really good about the model, but you won’t have spent a single second doing anything to effect the top line goal.
I’ve been guilty of loving the perfect spreadsheet model, more than once. It doesn’t directly contribute to failure, but I can confirm that each of my biggest business started with a perfect spreadsheet model.
A comment from Warren Buffett at this weekend’s Berkshire Hathaway annual meeting really struck me. During a discussion on Berkshire’s approach to deal making he touched on the use of “formulas” and spreadsheet models to make decisions.
In this discussion, he basically said we don’t have formulas and spreadsheets with specific hurdle rates and such. He went on to explain, that when you get too focused on managing business in this way you will always “get the numbers you want to hear.”
You get numbers you want to hear. This is the pearl.
Tinkering with formulas in spreadsheets can be dangerously alluring and comforting. The fact of the matter is that nothing in that spreadsheet is real until you get out into the real world and take action.
Set the goal, determine the next action, and go. Stop working the spreadsheet