Reading Doug Hubbard’s excellent How to Measure Anything I got thinking about the proposals I read and write, the problems they face, and how to fix them.
A typical proposal (I’m thinking mainly of internal projects) will make a claim like “This project will add 500,000 unique users in the first year” or “This will bring in £400,000 of new revenue by October” or “This will save £250,000 next financial year”. I know because I’ve written some of them. In choosing what number to use you don’t want to put in anything too low or the project won’t look worthwhile, so you tend to put in something that’s a little generous (but not implausibly so) and assume that all the contributing factors will work out for the best — the marketing, the timing, the user take-up, and so on. Depending on the audience you’re presenting it to you might even have some evidence for your projection.
The problem is, of course, that it won’t happen like that. Some things will work out well, some not so well. Everyone knows that, and if you’re facing a sceptical inquisitor then you’re just setting yourself up with less credibility before you start. Thinking back on the last such proposal I wrote I can imagine a conversation with a fantasy inquisitor that might have gone like this…
Fantasy inquisitor: You say this will bring in £400,000 before October.
Me: That’s right.
FI: Can you guarantee that? Can you guarantee £400,000 of new revenue?
Me: [fearing liability, and wondering which members of my family might get taken away if it doesn’t happen]: No, of course I can’t absolutely guarantee it.
FI: So what are you saying about the £400,000 if you can’t guarantee it?
What indeed? The truth is that will be the revenue if things generally go well. We might make even more. But realistically we might make less. Being honest with ourselves and our audience will help everyone. Let’s return to the scene…
FI: [repeating for the sake of the drama] So what are you saying about the £400,000 if you can’t guarantee it?
Me: I’m confident we’ll make that.
FI: How confident?
Me: Really quite confident.
FI: So you’re “really quite” confident it will make at least £400,000. And I suppose it could make us as much as… what? £800,000?
Me: Er, no I don’t think it will go that well. Maybe £500,000.
FI: So you’re confident it could make as much as £500,000. And you can be confident it won’t generate a penny less than £400,000, can you?
Me: Well, it certainly could make less, I suppose, if not everything went to plan.
FI: Would you be surprised if it didn’t make us anything at all?
Me: Yes, I would. Even being realistically pessimistic it really should make at least £150,000.
FI: Okay, so you’re very confident we’re looking at making £150,000 to £500,000 with this?
Me: Yes, I’m very confident of £150,000 to £500,000 of new revenue.
So our single (and therefore implausible-sounding) figure becomes much more realistic when we change it into a range, even if it goes down at one end. It also goes up at the other end.
I think this goes a long way in dealing with a sceptical audience becaues it is more realistic. For the same reason we should be more confident when we talk about it, too.
I’ll add two final notes. First, there’s an important question that needs to be asked, which I’ve omitted: What is your evidence for this? This may be calculations based on observations, historical data from similar projects in the past, market research, etc. Either way, it’s important to know that the figure(s) in question aren’t entirely random.
Second, the statisticians in the audience will point out that “very confident” is almost meaningless when we could say “90% confident” or attach some other actual number. I certainly appreciate that, and mostly concur. But for me a significant, easy, and meaningful step forward is to move from single figures to more realistic ranges. And this should promote more honest and confident dialogue.