Recent events have made everyone aware of WMDs. What you probably don't realize is that your business is overrun with them! That's right, your business is overrun with Weapons of Mass Delusion! What? . . .You thought WMD meant something else?
I'm talking about spreadsheet analysis. The spreadsheet has become the most ubiquitous analytic tool in the history of mankind. As a result it defacto sets the context and frames the thinking of nearly every company issue and decision ranging from the mundane to the strategic.
Unfortunately, the spreadsheet paradigm is a hopelessly limited and inadequate tool to describe and gain insight into the world that businesses and individuals exist. In other words the spreadsheet is a bomb. Nevertheless, because of their familiarity with spreadsheet software business managers and analysts nearly always couch their thinking and analysis in the "language" available through a spreadsheet. By limiting themselves to expressing what a spreadsheet can describe business people simply miss the rich opportunities for accomplishment that exist.
The modern spreadsheet descends from accounting and bookkeeping ledgers kept mostly by hand until the "PC Revolution". Essentially a spreadsheet is a way to perform arithmetic on a table of numbers. The paradigm is financial and arithmetic.
However, this paradigm does not support the central characteristic of the environment that business managers need to understand to be successful: How the future is going to emerge from the present. That is, how and why the things we're interested in will change over time. To do this we need a more powerful paradigm.
What is loosely called "Complexity Science" provides such a paradigm. The tools and know-how to apply them has matured and is successfully being used in businesses with excellent results. By "Complexity Sciences" I mean primarily System Dynamics and Agent Based Modeling approaches. These paradigms rest squarely on the twin pillars of the calculus, invented not-so-recently in the late 1600s, and modern computational capability.
"This is all well and good" you say, "but I have seen many a spreadsheet with time periods running off on the right hand columns so it seems like they can handle time. And, I really liked all of the details running down the rows. All of that detail is very reassuring! Seemed pretty compelling to me, and especially to my finance organization. What's delusional about that?"
My answer to the devil's advocate boils down to this: The complexity science paradigm works by mapping the network of cause and effect relationships between the factors (or variables) that drive the results we're interested in. A truly cool aspect of this is that a factor can "cause" its own behavior. Although this "feedback" relationship sometimes seems deeply confusing it has been well understood in the sciences for hundreds of years. Feedback structures (along with its' cousins time delay and non-linearity) are intertwined with most, if not all, interesting real world problems.
In contrast, the spreadsheet paradigm cannot represent feedback relationships and most spreadsheet modelers do not attempt to map cause and effect structure. To the extent that cause and effect structures are included any feedbacks must be "broken" by external assumptions rendering the results inconsistent. As a result, most spreadsheet analysis is structured around the application of a set of financial ratios or is a simple presentation of a table of numerical assumptions.
And so this is how the spreadsheet paradigm spreads delusion. A delusion is a "fixed false or fanciful belief". The spreadsheet paradigm cannot present a coherent view of the world based on an observed network of cause and effect. And so rigourous cause and effect thinking is replaced by a set of unexamined and difficult to identify assumptions that avoid meaty issues but follow fixed tradition and beliefs that are very often "false and fanciful".
