Information Overload, Complexity, and the Finance Department

Did you see the recent Newsweek article entitled I Can’t Think! from science writer Sharon Begley? It’s about information overload and how our brains often struggle with too much information. It’s highly applicable to decision-makers in any organization and may help your Finance department get better at matching the right amount of information with the business decision at hand.

Step back for a moment and think about the last few informational documents you’ve received or churned out. Have you plowed through the 30 page monthly performance report yet? How far have you gotten on those weekly sales updates from the field? Were you able to stay focused for the 75 page binder used for the annual budget meeting…now that it’s over, are you ready to go to the CEO and explain what your EBITDA number is going to be next year and why?

If you’re struggling to assimilate this deluge of information and make decisions with it, you should know that you’re normal. Here’s what Begley says:

But as information finds more ways to reach us, more often, more insistently than ever before, another consequence is becoming alarmingly clear: trying to drink from a firehose of information has harmful cognitive effects. And nowhere are those effects clearer, and more worrying, than in our ability to make smart, creative, successful decisions.

Physically, our brains can’t handle it, according to a study by Angelika Dimoka, director of the Center for Neural Decision Making at Temple University. When your brain is bombarded with too much information, here’s what Ms. Dimoka found (quoted from the Newsweek article):

As the information load increased, she found, so did activity in the dorsolateral prefrontal cortex, a region behind the forehead that is responsible for decision making and control of emotions. But as the researchers gave the bidders more and more information, activity in the dorsolateral PFC suddenly fell off, as if a circuit breaker had popped. “The bidders reach cognitive and information overload,” says Dimoka. They start making stupid mistakes and bad choices because the brain region responsible for smart decision making has essentially left the premises.

So the question is, what can we, in the Finance department, do about this? In most organizations, Finance is the gatekeeper and monitor of the information used for business decisions, so Finance directly impacts information overload. I think information overload is also related to increasing complexity. Both of these items need to be addressed, we need to stem the rising tide of information and complexity so that we can become better decision makers. Is it too much of a burden on Finance to be the complexity police?

Let’s start sorting through some solutions. Here’s a worthwhile resource that targets complexity – take a look at the video/webinar associated with this article from the Harvard Business Review. It’s almost as if Ron Ashkenas is talking directly to CFO types and Controllers. If you want, skip to these points for a little more focused viewing:

The Book (14:45) – The “internal cottage industry” in big companies that churns out a binder full of data for the CEO every month is standard operating procedure for many Finance departments. Is it really worth it? Is all that data being used? Just ask the question. Be honest with your organizations, as Seth Godin suggests, and ask, “Are we measuring this because it’s important or does it just appear important because we are measuring it?”

The Budget (17:36) – Does your company’s budget process take six to nine months? Most of the “churn and decision spin” is internal and can be eliminated. Map out the process, make it a priority to reduce complexity, and monitor your progress.

Standard Definitions (26:40) – I really like this SAP implementation example and how to clean up some complexity brought about by the enterprise system.

The problem is that the very act of reducing complexity and information overload could actually add to them in the short run. For example, a meeting about complexity could be a complex meeting. Let’s face it, the last thing your already thin Finance department needs is another initiative. So let’s prioritize it in this order:

  1. Stuff under your control: Don’t contribute to information overload and more complexity yourself. Whatever you’re doing, think about how complex it is and choose the path of least complexity. Don’t ever stop at, “It’s a complicated issue so it’s a complicated analysis.” Press on and at least attempt to demystify.
  2. Stuff under your influence: When you’re on a project team and you’re sorting through options, make information overload/complexity an issue. Push back on people who want to add new spreadsheets. Question managers who need new reports. Reducing complexity and focusing on the right amount of information should be part of the criteria for anything your team undertakes, just like increasing accuracy, and improving timeliness.
  3. Long term/big picture: Start an initiative to reduce complexity and make things smaller (another great point by Seth Godin). Try these: Clean out and organize your shared network space, publish terminology documents, or rebuild analytical reports using nothing smaller than a 30 point font (suggested by Guy Kawasaki). These take time and focus. Make a list of complexity reduction priorities and start working on them as a team.

Good luck and happy complexity reduction to you and your crew. Soon, I’ll start a list of ways to reduce information overload and complexity. Stop back soon.