Friday, March 6, 2015

History of Spreadsheets

I came across a fantastic article today - detailing the backstory and history of the spreadsheet.

It's an article from an 1984 issue of Harper's and was reprinted on Medium - and it's ridiculously interesting on a couple different levels.

1 - It's completely insane to imagine a world without spreadsheets. From my first internship (which I got because I told my future boss that I knew all about VLOOKUPs, although I'd never heard of them), to the slightly more complex models I built as a consultant - the spreadsheet is literally the most significant file format from my entire career (some consultants might argue for PowerPoint - but let's be honest, all the real work gets done in spreadsheets).

It's hard to imagine doing any of my jobs without spreadsheets, and even when my Dad would tell me about the days before the spreadsheet program, I couldn't believe him. He told me they did all these sheets BY HAND!!! And other much more experienced consultants used to tell me about the days of model building sessions that would take place on enormous sheets of paper.

The concept is so alien to me that even now it's hard to process. But the article really gives a great sense for not only what that was like but also how mind-blowing it was for the people actually impacted by the new tools (VisiCale, Lotus - which itself is amazing, this is all PRE-Excel).

"In the first days of electronic spreadsheets — that is, two or three years ago — those who used them got things done so quickly that, despite the evidence of finished reports, bosses and co-workers often had trouble believing the tasks had been completed. Gottheil told me of an accountant who got “a rush task, sat down with his micro and his spreadsheet, finished it in an hour or two, and left it on his desk for two days. Then he Fed Ex-ed it to the client and got all sorts of accolades for working overtime.”

What a complete mindblowing experience this must have been. And one that, were you in management, you'd have been completely unprepared for. I'm trying to think of a reasonable comparison in today's world that would be such an impact to my professional life and I can't really think of one (maybe if google's search engine could somehow become self-aware and anticipate what I would search for...shortly before it destroys all humans).

2 - What wasn't completely insane at all, what made a lot of sense actually, was the talk of people who become attached to their models. The real spreadsheet geeks.

Spreadsheet models have become a form of expression, and the very act of creating them seem to yield a pleasure unrelated to their utility. Unusual models are duplicated and passed around; these templates are sometimes used by other modelers and sometimes only admired for their elegance.


3 - The last element I thought was very interesting was how the author noted that spreadsheets allow you to model all kinds of permutations - but that they can also disconnect you from the real tangible business you're evaluating or working with. It seems a bit quaint to think of people feeling that way in the 1980's - because it's become increasingly turbo-charged.

And so it is that spreadsheets help in the drive for paper profits, and are a prime tool of takeover architects. An executive in a acquisition-hungry company might spend his time spreadsheeting in order to find a company ripe for takeover. If his spreadsheet projections were to produce a likely candidate- if the numbers looked good- he would naturally recommend making a takeover bid. Even a hostile takeover seems cut and dried, perfectly logical, in the world of spreadsheets.

Compare that to a hedge fund using derivatives or algorithmic trading - it's detachment on steroids relative to just some spreadsheets. It's particularly interesting to think about in the context of an offhand thought from the author:

The flexibility of spreadsheets can encourage other heartless moves from headquarters. It is no great drain on an executive’s time to experiment with all sorts of odd, even insidious. He might ask “What if we dropped our pension plan?” Then he might run his idea through a spreadsheet and find a huge gain in capital- and there would be an unthinkable, in hard figures.

You think any corporation views that as unthinkable in this day and age? What's telling about our business environment is that what the author refers to as 'unthinkable', now seems almost automatic.

No comments: