Data obesity: when business leaders consume too much news, especially news that is not vital to their company. News headlines bombard us: factory activity, tariffs, car sales, oil prices and many, many other concepts. Those who bear great responsibility feel the need to know what is happening, but too much information can distract from important business issues, as well a distort executives’ views of their companies’ actual prospects. Many of us suffer from data obesity.
Penn Jillette recently commented (on the Joe Rogan podcast) that for most of history, all animals faced a shortage of calories. That was their primary challenge: get more calories. Now, in the last 100 years or so, in some countries, calories are abundant. We are not prepared for the challenge of too many calories, so our new problem is obesity. Jillette says that it’s the same with information. One issue of the New York Times has more news than a typical peasant got all of his life. We are data obese.
Not everything impacts any particular business, so company leaders need to filter their news inputs. International trade wars may make headlines, but the owners of my local coffee shop should avoid that news. They should, instead, pay attention to local employment and wage rates. Other companies, though, can ignore local employment but must focus on sales to overseas buyers. I have argued that every business needs an economic dashboard. Also, every leader must have an “un-dashboard:” the list of irrelevant economic statistics. These items must be avoided.
The interconnectedness of the economy leads to the idea that everything is important, but no one can run a business while digesting all economic statistics. Instead, the effective executive prioritizes incoming data based on how much they drive profits.
In addition to sheer information overload, headlines generate biased views of what is happening. Within news organizations, there’s a pronounced tendency to emphasize problems. In local television news, “if it bleeds, it leads.” Similarly in the business press, a collapse of negotiations gets more attention than productive talks. A bankruptcy is announced in bold headlines, but steady corporate growth may get a short back-page paragraph. The consumer of news sees a distorted picture of the world.
To continue the calorie analogy, our abundance of food may cause many of us to consumer the wrong kind of food—too many sweets, for example, and too few vegetables. Our information abundance allows us to read too many frightening headlines and too few healthy news items.
Inside the information consumer’s head, another bias appears. Humans tend to focus on news that reinforces prior beliefs, while discounting contrary evidence. For example, a person who expects a recession next year will seize upon every downward movement in jobs or sales or production as confirming evidence. When some of these measures go up, they are blips, statistical anomalies, or based on unreliable sources. So a casual scan of the news often “proves” that the reader was correct in the first place. The optimistsnotices all of the positive stories, while the pessimistic eye catches all bad news.
These biases can be overcome, mostly, through a structured dashboard, or at least a good list of what is relevant. Business leaders who select economic indicators that correlate with their key business drivers will see the statistics whether they are headline-grabbing or not, and whether they confirm prior beliefs or not. Ignoring economic statistics not on the list—those that don’t correlate with key business drivers—prevents cherry-picking headlines that confirm prior beliefs.
The most successful business leaders avoid distraction. They know what drives the business, and they focus on those factors. Everything else is ignored.
