Everything is Obvious (Once You Know the Answer)

I’m going to start with a confession: I stole the title of this blog from the book by Duncan J. Watts of the same title. Watts argues that common sense, while great for navigating daily life, is actually a poor tool for understanding complex social systems. We only think it works because of hindsight bias: once we know an outcome, we retroactively construct a story that makes it seem obvious, even though it was never actually predictable. His central thesis is that rather than trusting intuition or expert judgment to predict outcomes, we should measure, test, and iterate, treating social and organizational questions as empirical problems rather than ones commonsense can easily predict.

When I think about how this applies to our research in Small Firm Diaries USA, I think about the many times I’ve been to a conference or convening and, while listening to the speaker present their new findings or insights, seen a room full of people vigorously nodding their heads and saying some version of “Of course, I knew that!” When you hear something that inherently makes sense like “Small business owners are struggling to access low-cost, flexible credit options” or “Business owners cut workers’ hours when they’re running low on cash,” our inner wisdom (or common sense as Watts would put it) tells you that this is not new information. It’s so obvious that you must have already known it. But is that really the case? If we already know all of the answers, is there any point in doing any kind of research, ever again?

The question may be dramatic, but the underlying premise is worth thinking about. Research, especially high volume research like the Small Firm Diaries, is very costly and labor intensive. It takes lots of planning, pivoting, and resources to follow firms for a year gathering hundreds of survey responses and collecting months and months of bookkeeping data. So, if we already have all of the answers, why do we do it?

In short: we don’t know everything. Practitioners across the country, whether it’s lenders, technical assistance providers, funders, or others, have built deep knowledge across years of working directly with small business owners. But that knowledge is built from the specific firms each one happens to serve. While some overlap in experiences may exist, there is no “one-size-fits-all” understanding that can be generalized to small firms across the country.

To better understand how our emerging insights differ from the experiences of local organizations on the ground, and where our research fills knowledge gaps, we administered a brief survey to a small group of organizations that represent a cross-section of the ultimate end-users of our research (referred to below as "ecosystem partners"). The survey first asked them to guess the answer to a question taken directly from our surveys based on their experience working with small businesses. The answer from our survey data was then revealed. A selection of the results are presented below and spoiler alert: the divergence is high!

Responses from the ecosystem partners are represented in the graphs and the answer is presented below the graph.

ANSWER: increasing their sales and marketing efforts.

Almost half of the ecosystem partners selected the incorrect answer. 

ANSWER: personal or business savings. 

More than half of the ecosystem partners selected the incorrect answer.  

ANSWER: half of the firms.

Less than half of the ecosystem partners selected the right answer to this question.

ANSWER: Less than half.

Only one of the ecosystem partners selected the right answer to this question.

ANSWER: their existing relationship with the lender.

Only two of the nine ecosystem partners answering this survey selected the right answer.

This exercise isn't about catching anyone out. Our sample may simply look different from the firms these organizations typically serve — in size, sector, geography, age, or other factors — and that alone could explain some of the divergence above. Demonstrating how understanding and experiences can differ is important to illustrate the value and necessity of research like Small Firm Diaries.

An important takeaway emerges: no two firms are the same and to best serve them, we continuously need new data, obviously.