What steps do you take when making a decision? How long do you take to evaluate every option to be able to make the best choice? Do you suffer from paralysis by analysis – where you over analyze to a point where you are unable to make a decision?
All professionals make decisions every day. Financial, accounting, marketing, sales and C-Suite management executives regularly make business decisions either with too little or too much information. In most cases, there is too much information. The challenge is to sift through the relevant and meaningful data related to a decision that affects a business unit or the overall company performance.
Making decisions on information with many parameters and options adds complexity and is difficult. One reason for the difficulty is that every decision requires analysis of ever increasing amounts of data with many parameters. The old saying of finding a needle in a haystack is a useful. In this case, the needle is select relevant data points, while the haystack is the massive amount of collected information.
According to Digital Intelligence today, based on 2013 figures:
- 90% of all the data in the world has been generated over the last two years.
- 28% of office workers time is spent dealing with emails
- “Between the dawn of civilization through 2003 about 5 exabytes of information was created. Now, that much information created every 2 days” (Eric Schmidt – former Google CEO)
- The typical Internet user is exposed to 1,707 banner ads per month
In his book The Paradox of Choice: Why More is Less, Barry Schwartz argues that more choice makes us unhappier. In a series of studies, Schwartz explains that as options increase, various factors lead to worse not better choices. We also find the process of choosing is less; not more enjoyable.
Schwartz says, “autonomy and freedom of choice are critical to our well-being, and choice is critical to freedom and autonomy. Nonetheless, though modern Americans have more choice than any group of people ever has before, and thus, presumably, more freedom and autonomy, we don’t seem to be benefiting from it psychologically.”
One solution to managing large amounts of information to drill down to effective decision-making is by leveraging smart applications and computing power, which has increased exponentially in the last few decades. Microsoft Excel is a powerful spreadsheet application used by millions of professionals. Most are unaware of its ability to analyze, process and interpret large amounts data for better decision-making. For Excel to be useful, organizations must view data as one of their most important assets.
Four tips for using Excel spreadsheets to make better decisions are as follows:
1. Identify what is actionable and meaningful data
For example, if an organization runs a call centre, data for the busiest hours or for the most productive agents is both meaningful and actionable. If you have an online store, some important figures may include peak sales periods, top selling items and items with the highest profit margins. Finding the most important measures for each business unit, department and the company as a whole is the goal for actionable and meaningful data.
2. Discover where data lives
One of the most popular feature requests from customers when purchasing custom or off the shelf software is whether information can be exported into Excel. The size and cost of exporting data are important questions to ask since company information tends to grow quickly. Before you can export data into Excel from another software application, it is important to understand what you want to measure and which systems the data is residing. For example, data may be exported from an accounting system. Other data will come from a CRM (Customer Relationship Management) system. Excel supports exporting, consolidating and analyzing from multiple sources and systems.
3. Learn power techniques in Excel
Websites like chandoo.org provide Excel users at any level of proficiency with tips and tricks that make it easier to produce meaningful data quickly and efficiently. Three techniques to get started in Excel are:
- Excel Data Tables – An Excel table consists of a series of rows and columns with related data that can be managed independently. Most work in Excel happens inside a table. A table allows users to easily create formulas to make calculations related to one or more rows and columns. Some examples of formulas include the sum of a column, an average, a maximum or a minimum value. For more on tables, visit this tutorial.
- Master the VLOOKUP – VLOOKUP is an Excel function that searches for values in a column of a spreadsheet list or table. The V in VLOOKUP stands for vertical (column). It allows you to pull data in from other places in your Excel sheet. A simple example is a spreadsheet containing thousands of part numbers, each with a description and a price. The VLOOKUP allows the user to enter a part number and immediately obtain the description and price. For more on VLOOKUP, visit this tutorial.
- Learn Pivot Tables – Excel Pivot tables are a useful and powerful feature of MS Excel. They are used to summarize, analyze, explore and present your data. For example, as illustrated in this tutorial website, it is common for a company to have lots of data about it’s sales force, sales regions, products and revenues as illustrated below on the left. A pivot table, as seen below on the right, can quickly create a custom sales report by region for each product.
4. Expert Level
Extending Excel’s reach to your company’s database will provide a fast and powerful way to create live dashboards and reports. The quality of the data and the speed to build meaningful business intelligence will be greatly enhanced, but will require a few more advanced skills.
Summary: Start small with small wins
The easiest way to get started with Microsoft Excel is to start small. Pick an important issue that would make an impact for your company. Discover all sources from where to get data. By starting small, you want early small wins. Focus on a problem that can be built in Excel in days not weeks or months. Your first attempt in forming the data to the way you want it may be clumsy at first.
The important point is to continually refine and improve a clear a concise way to present the data. Small wins with simple projects will justify the return on investment and result in fewer billable hours, faster receivables and higher profitability. As you learn more about Excel’s powerful features, you will become more confident in tackling more challenging and complex projects.