Numbers Lie! Uncover the real story
Numbers can lie! If numbers are important in your business, ask yourself the following question:
What salary would you rather have:
- a 2% increase in your salary when inflation is at 4%
- a 2% cut in your salary when inflation is at 0%
Most people chose the 2% increase. But, in fact, the two options are exactly the same.
People tend to look only at the absolute value of numbers and forget the rest. The famous economists Irving Fisher and John Maynard Keynes called this the “Money Illusion”.
It’s not just individuals who get caught in the Money Illusion, companies get caught too.
Your sales may growth by 2% and you feel like your company is doing well. But, if your industry is growing at 4%, you’re actually losing market share. And vice versa. Your sales may drop by 2% and you may think that's bad. But if your competitors' sales dropped by more, your conclusion would be wrong.
This is when your numbers lie.
To get the true picture, companies need to look at their financial performance relative to the market. That’s why you should look into indexing your numbers.
Better now - before your numbers lie again.