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“Not everything that counts can be counted, and not everything that can be counted counts.” The quote is often attributed to Albert Einstein and, whether or not he actually said those exact words, the principle is a powerful one.
There’s an old story about a man searching for his lost keys beneath a streetlight. When someone asks if that’s where he dropped them, he replies, “No, but the light is much better here.”
That simple story gave rise to what’s known as ‘the Streetlight Effect’ – our tendency to look for answers where it’s easiest to look, rather than where we’re most likely to find them.
It’s a surprisingly common way of thinking, and it doesn’t just apply to psychology. It influences the way many of us make decisions every day, including the decisions we make in business.
Looking Where the Light Is
Running a business has never been easier from a data perspective. Sales figures, turnover, bank balances, enquiries, customer reviews, social media engagement and dashboards are available at the touch of a button. The problem isn’t that we don’t have enough information; the problem is that we naturally give more attention to the information that’s easiest to see.
It’s easy to be reassured by:
- a healthy bank balance
- a busy diary
- rising turnover
- an increase in enquiries
- growing social media engagement.
All of those measures have value, but none of them tells the whole story on its own.
The Information That Hides in the Shadows
The Streetlight Effect reminds us that the most valuable answers are often found beyond the obvious.
While we’re celebrating increased turnover:
- are profit margins quietly reducing?
- are customers taking longer to pay?
- has growth created pressure on cash flow?
- are costs rising faster than revenue?
- is the business becoming more profitable, or simply becoming busier?
These aren’t the figures that immediately grab our attention, but they’re often the ones that shape the future of the business. The challenge isn’t that business owners ignore them; it’s that they don’t shout as loudly as the headline numbers.
Better Questions Create Better Decisions
Perhaps that’s why experienced business owners spend less time asking, “How are we doing?” and more time asking, “What’s really driving these results?”
Questions such as these often lead to far better conversations:
- Are we becoming more profitable, or simply busier?
- Is this growth sustainable?
- What trends are emerging that we haven’t noticed yet?
- Which parts of the business are performing best?
- What decisions should we make now to strengthen the business six months from today?
Those questions don’t remove uncertainty, but they do replace assumption with understanding. Rather than reacting to today’s figures, they encourage business owners to think about tomorrow’s decisions.
Looking Beyond the Streetlight
The easiest information to find isn’t always the information that matters most. That’s true in psychology, in science and it’s equally true in business. The temptation is to keep looking where the light is brightest because the answers are quicker and more reassuring. Yet the decisions that shape the future of a business often come from exploring the questions that aren’t quite so obvious.
Sometimes the greatest opportunity isn’t finding more information. It’s learning to look in a different place.
How James Todd & Co Can Help
At James Todd & Co, we believe our role is to help clients look beyond the obvious. While turnover, profit and a healthy bank balance all matter, they only become truly valuable when they’re viewed in context.
By combining management accounts, cash flow forecasting and strategic business advice, we help business owners understand not only what their numbers are saying today, but what they’re likely to mean tomorrow. The result is better-informed decisions, fewer surprises and greater confidence in the direction of the business.