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Oct23
100 Calculations - How Much Data Is Too Much?

I got an email from Rich McIver, at the Bootstrapper blog, letting me know that they had just put up a post "Calculate This! 100 Financial Calculators Every Entrepreneur Needs". It is a collection of links to online "calculators" of various financial models, trends, or data. Some are fun, some are insightful, and most are very important. I suggest bookmarking it and spending a little time finding those that you are not familiar with and using them.

As a scientist, I learned to love collecting data. The trouble is that sometimes you can have too much. You can spend a great deal of time, thinking that you are working, collecting more and more data points. While this may smooth out a curve it does not always yeild a better result. I suppose this is why a class or two in statistics is a good idea. Once you know how to extrapolate data you begin to see how a small sample can be sufficient.

In business, the trouble is often the opposite. Not enough data is gathered and insufficient information is used to make decisions. Consider Greg Ryan, the former coach of the US Women's Soccer Team. Against Brazil earlier this year he chose to use a backup goalkeeper because he felt in his gut it was the better choice. It is at these times  that we celebrate those who were right, or lucky, and castigate those who were wrong, or unlucky.

I have seen many many businesses that were led by people who thought they knew enough not to need data. I would also suggest a read of "Blink" by Malcolm Gladwell to get a second opinion on the value of data when experience is insufficient. You may also wish to attend The Conference on Marketing that he, and Seth Godin, will be speaking at in Florida in March of next year.



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