Excel’s place in business is so firmly cemented it gets the NPR treatment, but an economics expert says we should place even more trust in its capabilities.
Of all the possible subjects for the producers at National Public Radio to explore, you’d think that spreadsheets would not be very high on the list.
Two years ago, however, NPR’s ‘Planet Money: The Economy Explained’ devoted an entire episode to charting the history of programs like Excel and why they’ve remained such powerful tools for all kinds of business professionals. NPR recently decided to re-air the episode and has also made it available to stream or download on its website.
“On balance, spreadsheets are actually a good tool. They give us more information. They help people make better decisions. It’s a win. It’s a plus – net plus.”
Although the program is only about 20 minutes long and is well worth listening to in its entirety, the following exchange was particularly interesting. It’s one of the hosts of Planet Money, David Kestenbaum, who plays a clip of his interview about spreadsheets with Matt Levine, a writer at Bloomberg who used to work on Wall Street:
KESTENBAUM: This is the thing about spreadsheets. They look really good no matter what goes into them. Someone brings a spreadsheet into a meeting, it looks so precise. It’s got numbers and graphs and pretty fonts. It feels like it’s telling you exactly how the world is. It feels like truth. Though, of course, it’s just a model. It’s just a guess.
LEVINE: It’s particularly a problem with spreadsheets because they’re very easy to use. So it’s really easy for, like, a 22-year-old right out of college to use Excel and to build something that really looks like a cool model.
GOLDSTEIN: But Levine says, you know, most people are smart enough to understand the difference between the model and reality. He says most of the time, people get the math right. So on balance, spreadsheets, Levine says, actually a good tool. They give us more information. They help people make better decisions. It’s a win. It’s a plus – net plus.
Just remember that this NPR episode ran in 2015. Now think about how corporate performance management has evolved in that time period — to a point where Excel is quickly becoming the front end to the most important work finance and other departments in the enterprise do every day.
Beyond merely celebrating spreadsheets, we should also continue to think about how we can make better use of them. That’s why Bill Conerly recently published a blog post on Forbes to help students majoring in economics ensure they don’t make errors as in Excel. His advice included carefully documenting all data sources, saving your raw data and, as he put it, burying your calculator.
“All calculations should be made with Excel formulas. Maybe you need a percentage change or you need this divided by that. I don’t care how simple it is. Use an Excel formula,” he advised.
“At some point in the future, you’ll want to know how you got the number. Even worse, you may have changed the data used in the calculation, so that the number you are looking at does not match the updated data. I watched a high-paid consultant embarrass himself when testifying as an expert witness in a billion-dollar lawsuit. He had made this very mistake, and his credibility was greatly reduced.”
Spreadsheets can be harnessed in more innovative ways than ever before to help people make better decisions. The way you manage the data behind them, however, is still up to you.