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A spreadsheet of knowledge



I learned too late that October 17 was the Rain Day, marking the 35th anniversary of VisiCalc, the Apple II program that started everything. This moved me to publish a long piece I wrote about the meaning 30 years ago, as well as the dangers of this progress. (This was so long ago that I had to define what a marker was!) The chip first appeared in Harpers November 1984.

When Dan Bricklin remembers it, came the idea first to Han in the spring of 1978 while sitting in a classroom at Harvard Business School. It was that kind of idea ̵

1; so obvious, so right – it immediately made him wonder why no one else had thought about it. And yet it was not accidental that this breakthrough should have been his.

Bricklin graduated from MIT, where – and this is crucial to the idea he wanted that afternoon in 1978 – he had worked intimately with computers. Before deciding to attend school, he had worked for two major computer companies – first for Wang, then for Digital Equipment Corporation, for whom he helped design a word processor. Like most Harvard MBA graduates, he wanted to be a businessman; But most often his thoughts were discontinued from the technological.

The question Bricklin considered that day in 1978, worried about how he could use what he knew about computers to help him in his economics course. This was the task: he and several other students were asked to project the complicated financial consequences – the shift in numbers and dollars, and the shifts resulting from these shifts – of a company's acquisition of another.

Bricklin and his classmates would need ledger sheets, often called spreadsheets. Only by gently filling the pale green nets on the spreadsheets will they get an accurate picture of the merger and its consequences. A row on the big book can be an expense of a category of revenue; A column can represent a specific time period – one day, one month, one year. Run your finger over, say a number of figures representing mortgage payments for a particular property, and the number in each "cell" in the horizontal row will be the number paid in the time period represented by the current vertical column. Somewhere on the sheet, the columns and rows will appear, and the information will be added to even larger sheets.

The problem with ledger sheets was that if a monthly expense went up or down, everything – everything – had to be converted. It was a tedious task and few people who got their MBA at Harvard expected to work with spreadsheets very much. Creating worksheets, but it was necessary, was a tedious task best for accountants, junior analysts or secretaries. In the case of sophisticated "modeling tasks", which, among other things, enable managers to project costs for their companies, these tasks can only be done on large mainframe computers by the computing professionals who worked for the companies Harvard MBAs managed. [19659003] Bricklin knew all this, but he also knew that spreadsheets were needed for the exercise; He wanted an easier way to do them. It happened to him: Why not make the spreadsheets on a microcomputer?

Why not design a program that would produce a green, luminous storks on a computer screen, so that the calculations, as well as the final tabulations, would be visible

Bricklin's teachers at Harvard thought he was playing his time: Why would one leader want to make a spreadsheet on one of the "toy" computers? What were the secretaries and accountants and the people down in the DP for? But Bricklin couldn't deprive himself. With a computer programmer friend from MIT called Bob Frankston, he set out to work on developing the first electronic spreadsheet program. It would be on a floppy disk and run on the brand new Apple PC. Bricklin and Frankson released VisiCalc (the name derives from Visible Calculation) late in 1979.

VisiCalc runs on Apple IIc, 1983.

Photo by Mark Mathosian.

Today, VisiCalc and its newer rivals – in particular, a more powerful spreadsheet program designed by Lotus Development Corporation called 1-2-3 – are making fundamental changes to the way US businesses work. For the first time, businessmen have fashionable and flexible methods for mapping all the variables – from interest to inventory – that make (and break) businesses. The largest companies, the most diversified companies, can just be translated into spreadsheets "models" – each box in the grid a window at once overlooked facts or relationships. These models can be used not only to keep track of transactions, but also to analyze the nature of a business itself. They allow businessmen to calculate the effects of sudden changes in the corporate environment (a reduction in prime rate) and to experiment with scenarios (ranging from the expansion of a product line to a merger) – all with a light challenge five years ago.

More than a million spreadsheet programs worth more than $ 250 million will be purchased in the United States this year. There are business executives, wholesalers, dealers, and small business owners talking about business life for two time periods: before and after the electronic spreadsheet. They mention poor gains in productivity. They talk about having a better handle on their businesses, knowing more and planning better, approaching their work more imaginatively.

A virtual cult of the spreadsheet is formed, complete with gurus and initiated, detailed lore, arcane rituals – and an unshakable belief that the way the world works is in rows and columns of numbers and formulas.

It is not far to imagine that the introduction of the electronic spreadsheet will have an effect as the result of the evolution during the renaissance of dual accounting. Like the new spreadsheet, the dual mailbox, with the separation of debit and credits, gave merchants a more accurate picture of their businesses and let them see – on the page – how to grow by cropping here and investing there. The electronic spreadsheet is to double the entry what an oil painting is on a sketch. And just like double entry, not only did some companies change, but also businesses, so have the electronic spreadsheet.

The worksheet has already redefined nature for some jobs. Being an accountant in the age of the spreadsheet program is – well, almost sexy. And the spreadsheet has begun to be a powerful decentralization agent, breaking down hierarchies into large corporations and reducing computing power.

There has been a lot of talk over the past few years about an "entrepreneurial renaissance" and a new risk phase taker who creates businesses where nobody previously existed. Entrepreneurs and their venture capitalist backers emerged as new cultural heroes, settlers of another US border. Less well known is that most of these new contractors rely on their financial spreadsheets as much as movie coupons depend on their horses.

Mitch Kapor, 34 years old, a former teacher in Transcendental Meditation, is chair of the board of Lotus Development Company. In 1983, less than a year after selling its first 1-2-3 package, Lotus was announced, a move that led Kapor's personal net worth to over $ 75 million. "Compare the expansion of business today to the conquest of the continent in the nineteenth century," Kapor told me recently as he pulled away from his IBM PC. We talked in his modest office in the old casting factory in Cambridge, Massachusetts, now the Lotus headquarters.

"The spreadsheet in this comparison is like the transcontinental railroad. It accelerated the movement, made it possible and changed the course of the nation."

Kapor's comparison is an appropriate one. The computer worksheet, like the transcontinental railroad, is more than a means to an end. The spreadsheet illuminates, embraces, the end, and serves to reinforce it. As Marshall McLuhan observed, "We shape our tools, and then design the tools." The spreadsheet is a tool, and there is also a worldview – the reality of the numbers. If the perception of those who play a major role in shaping our world is shaped by spreadsheets, it is important that we all understand what this tool can and cannot do.

However, a measure of the spreadsheet's impact is clear and it is a source of satisfaction to Dan Bricklin. Every student at Harvard Business School is now required to be competent in using electronic spreadsheets.

Ezra Gottheil, 34 is a senior product designer at Lotus. He shows himself to work in casual clothes, and his little office is messy with piles of manuals and software. When I visited Gottheil, he gave me a quick introduction to electronic speadsheeting. Computer programs are said to use different "metaphors" to organize their task; A program can use the metaphor of a Rolodex, or a file citation. When you "start" almost all spreadsheet programs in your personal computer, you see a little more than some letters that go over the top of the screen and some numbers that go down the page. This serves to indicate the grid of a ledger sheet, the metaphor used by Lotus, and other best-selling spreadsheets such as VisiCalc, Multiplan, and SuperCalc. The "cursor", a small block of light on the screen that acts as a kind of electronic pencil, can be moved (with a keystroke on the computer keyboard) to any cell on the spreadsheet to "enter" numbers or formulas. By placing in the cells either shapes of formulas that adjust shapes to different variables, it is possible to duplicate the relationship between different aspects of a business and create a "model." The basic model for a restaurant, such as the world includes expenses such as salaries, food and spirits, and mortgages or leases; Revenue can be broken down into "bar" and "food", perhaps even further by certain dishes. Every week, the numbers will be updated, the formulas revised if necessary (perhaps the price of the olive oil had risen) and the recalculated model provides an accurate snapshot of the business.

Gottheil turned to the IBM PC keyboard on a table next to his desk and started a spreadsheet. The screen lights up with the familiar grid, and Gottheil's hands curved over the keys as gracefully as the hands of a pianist. He pressed the keys making the flashing cursor hopscotch over the cells, and when he changed an element into a cell, there was a ripple movement in the other cells; the spreadsheet program was recalculated. His eyebrows rose when he saw the result. Then he entered another variable, and another ripple of characters washed over the screen. He offered the computer various hypothetical developments, and it fed back to him their likely consequences. "It's a good tool," says Gottheil. In these, the early days of electronic spreadsheet, it is most often seen as a tool to save time. Don Jackson is a certified public accountant in Cincinnati. He has between 40 and 50 customers, mostly small businesses. Before he bought an Apple three years ago, he carefully did his calculations on light green crosshatched archives. A client would come in to prepare a billing procedure, and after Jackson had put the appropriate numbers on a sheet – in light pencil, it could easily be done – various issues would come up. For example, if the billing procedure was based on a 15 percent interest rate, what would happen if the rate went up to 18 percent? To find out, the whole sheet had to be changed. Each figure must be entered into a hand calculator and then checked by one of Jackson's employees. "I wanted to work for twenty hours," Jackson said. "With a spreadsheet it takes me 15 minutes."

Jackson's story is a common one. In the first few days of electronic spreadsheets – that is, two or three years ago – those who used them did things so fast that, despite evidence of finished reports, bosses and colleagues often had trouble believing that the tasks was completed. Gottheil told me about an accountant who got "a rush task, sat down with his micro and the spreadsheet, finished it in an hour or two, and put it on the desk for two days. Then he Fed Ex-ed it to the client and got everyone kind of recognition for working overtime. "

But saving time is hardly the only benefit of spreadsheets. They encourage businesses to keep track of things that were previously unapproved or completely overlooked. Leaders no longer need to be happy with quarterly updates, because gathering monthly, weekly, and regular daily updates is now an easy matter. People use spreadsheets to make daily inventory checks, to find out who has paid their bills, to map the performance of truck drivers over a period of weeks or months. How Spreadsheet Handbooks often use as an example a merchant performance chart – the model breaks down how many items they sell each week, and instantly calculates commissions and even bonuses. If a word comes down as a track voltage is in order, a few keystrokes will create a sheet that clearly identifies the worst artists.

Bob Frankston (portrait) and Dan Bricklin, 1982.

Jim Raycroft

Bob Frankston, the programmer who designed VisiCalc with Dan Bricklin, noted that instant hard figures, recently a luxury, quickly become a necessity. The spreadsheet tool is shaping us. "There is a growing demand for quantitative rather than qualitative reasons for decisions," he said. "Earlier, before spreadsheets, people would have taken a guess. Now they feel obligated to run the numbers."

But what really has the spreadsheet users charmed is not the hard and fast numbers, but the "what if" factor : The ability to create scenarios, explore hypothetical developments, try different options. The spreadsheet, which a leader says, enables the user to create and experiment with "a phantom business within the computer."

"Before the spreadsheet, you barely had enough time to make the totals," said Archie Barrett, a Capitol Hill employee who uses an IBM PC-XT to create House Armed Services Committee worksheets. "Now put in a number and see if you are over or under total. You can play what-if games. What if we don't order so many thoughts? What if we order more?"

What-if factor has changed the way Allen Sneider, a partner in the Boston office Laventhol & Harwath, a national accounting firm, approaches his job. Sneider bought an Apple in 1978, but he could not make it useful in his business until he saw an early copy of VisiCalc and became one of the first professionals to use the program. He explained:

Before proposing a change to a client, have a staff member calculate it, send it to the typist, to the reviewer, and recalculate it to make sure there were no errors. Now you have a machine there with the client. Want to see what happens to another return on investment? Shelter? Interest rates change by half the percentage? It's done in a minute. Before you will be tempted to say, "Let's put it as it was." Whole mental attitudes to preparing for projections have changed.

What-if-factor has not only changed the nature of jobs as accounting, it has changed once rigid organizational structures. Junior analysts, without the benefit of secretaries or support from computing departments, can work up 50-page reports, complete with graphs and charts, and speak for a complex client action plan. And senior executives who take the time to learn how to use spreadsheets are no longer forced to rely on their subordinates for information.

Theodore Stein is assistant vice president of computing at the Connecticut Mutual Life Insurance Company in Hartford. Having seen what VisiCalc and the most powerful Lotus 1-2-3 could do, Stein became a passionate disciple of the spreadsheet. Until recently, Connecticut Mutual, like many large corporations, has centralized data services in a division – computing. People out in the field, or even at the corporate headquarters, were generally not satisfied with the information they received from DP, Stein said.

DP always has more requests than they can handle. There are two kinds of recall – the obvious, of what is required, and one hidden. People say, "I won't ask for the information because I won't get it anyway." When the two guys designed VisiCalc, they opened a whole new way. We realized that for three or four years you could also take a large mini computer out on a boat and leave an anchor out of it. With spreadsheets, a microcomputer gives you more power to one tenth of the cost. Now people can do the calculations themselves and they don't have to deal with the bureaucracy.

Since it was easy to learn to use spreadsheets – programming experience is not necessary. All it takes to enter the game is a $ 3,000 personal computer and a $ 500 copy of 1-2-3, or even a copy of VisiCalc or Micro-Soft Company's Multiplan, both of which cost less than $ 200. Stein learned early in Connecticut Mutual's spreadsheet days. The company's CFO wanted some information, and his top "experts" had trouble delivering it. He took an Apple calculation and a copy of VisiCalc's home with him. Monday morning he called his people in and showed them how he had received the information he had clung to. "With a swipe of the disk, he cut them on his knees." Stein said. He outperformed them. His experts! He wanted to cut the chain. The following week they all came down to learn VisiCalc – quickly. "

All these powerful scenario testing machines out there on the desktop, induce someone to experiment with elaborate models. They talk about" playing "with the numbers," massaging "the model. Computer" hackers "lose in intricacies of programming; spreadsheet hackers Losing in the world of what-if Someone, like Theodore Stein of Connecticut Mutual, admits that their habits go beyond the point of reducing returns: "I can't begin to tell you how many hours I spend on this," he said. "This is my pet, in a way. Scrape your ears and brush the code … it's almost an obsession. "

The experiments Stein and those he performs are elaborate attempts to formulate the ultimate model, the worksheet that behaves just like an actual business. Allerton J. Cushman of Morgan Stanley has been a hallmark of these models since discovered that the worksheets Cushman wrote a pamphlet about his projections titled "Confessions of a Apple Byter", which provided the observation that with VisiCalc it is easier to get the arms around the future. Cushman's office, high above Midtown Manhattan, is dominated by IBM Compatible computers and printers, and when I visited him there, he explained his fascination with modeling this way: "People like to build elegant models, either of balsa wood or numbers." [19659003] Spreadsheet models have become a form of expression, and The very act of creating them seems to give a joy that is not related to their ease of use. passed around; These templates are sometimes used by other models, and sometimes just admired for their elegance.

Sterin, Cushman and other so-called gurus lost in the more aesthetic possibilities of spreadsheeting. The perfect model is an end in itself. Power users learn from gurus, but have other ends in mind that they can use sophisticated models to gain significant professional benefits. When a guru is not available, there are courses to take, self-help books to study, and magazine articles to be examined, such as the July 1984 edition of Personal Computing entitled "Power Spreadsheeting", which warns about "arrested spreadsheet development" and encourages users to "think like a spreadsheet".

Championships are important, not for the sake of art, but to win. A brilliant model is not only beautiful, it gives insights impossible to achieve by any other method.

Dick York, a private real estate investor in Sausalito, changed his entire business to revolve around his Lotus 1-2-3. "I've used it to reduce everything in my operation to cash flow," he said. "The spreadsheets give me constant updates and I can identify features that don't take money – I dump those properties immediately. This is information I had always tried to get manually but couldn't." York told me about the time he negotiated a commercial lease that included both a monthly rental and a percentage of the profits of its business. In making the spreadsheet model, he discovered that there was a point on which to go along with a raise in his rent would actually reduce the amount he would pay the landlord. (The landlord did not have his own spreadsheet to divine this fact.)

Allen Sneider of Lowenthol & Horwath once worked for a spreadsheet masterpiece. A customer representing a finance company would know if it would be a good idea to pay $ 12 million to a factory that made artificial turf. Sneider and the client created a model that was sensitive to all kinds of variables. It will tell you the consequences of any changes you might want to make to your business. Add a new production line, reduce production, increase inventory, expand your security base, change your mortgage rates, increase your hourly wage … that's all there, calculated according to highly refined formulas. What happened? Sneider's client did not buy the factory (the factory employees bought it). Instead, he started his own business – buying and selling spreadsheets.

Because spreadsheets can do so many important things, those who use them tend to lose the decisive fact that the imaginary business they make on their computers is just that -imaginære. You can't really duplicate a business inside a computer, just aspects of a business. And since the numbers are the strength of the spreadsheets. The aspects that are emphasized are those that are easily embodied by numbers. Intangible factors are not so easily quantified. Jim McNitt, in TheArt of Computer Management tells the story of a restaurant owner named Maxwell, who tried to make a costly renovation. He ran fifteen different scenarios on his computer, including one in which he set aside the money set for renovation and invested it elsewhere. What Maxwell found was remarkable: Not only would the renovation be stupid, but "even the best case" showed that I would get almost as good a return on my investment in a money market fund as in the restaurant business. "Get out of the restaurant business! The spreadsheet said. What the spreadsheet ended, of course, was the undeniable emotional factor – Maxwell loved what he did. He kept the restaurant (though the renovation changed).

Maxwell was his own boss and could follow his instincts But a CEO who ignored such a clear bottom line conclusion could risk his professional life, he is more likely to follow the numbers highlighted by spreadsheets.

And then the spreadsheets contribute to the paper surplus drive and are an important one Takeover Architecture Tools A leader in a buying-hungry company can use their time-lashing to find a company mature for takeover – if the spreadsheet forecasts produce a likely candidate – if the numbers look good – he would, of course, recommend making takeover bids. takeover seems cut and dried, quite logically, in the world of spreadsheets. Anticipate a corporate culture or misery in shareholders, or whether headaches of a drawn takeover bid will ultimately damage the business environment of the companies involved.

The flexibility of spreadsheets can encourage other heartless moves from headquarters. There is no great drainage on a leader's time experimenting with all sorts of strange, even insidious. He may ask "What if we dropped the pension plan?" Then he can run his idea through a spreadsheet and find a big gain in capital – and that would be an unthinkable, hard figure.

Spreadsheets have no way of dealing with hunches, nor any formulas to tell their users when lightning is going to strike – when a product will not only be a product but a trend-setting blockbuster.

There were no formulas in Lotus' spreadsheet forecasts that did justice to the wonderful consumer acceptance of 1-2-3. "Our own projections were broken daily," Ezra Gottheil said. "It was beyond our wildest assumptions."

People tend to forget that even the most elegantly crafted spreadsheet is a short, ready to collapse at the first erroneous assumption. The spreadsheet looks good, but makes decision makers pay the price themselves. In August 1984, Wall Street Journal Wall Street Journal reported that a Texas-based oil and gas company had kicked several leaders after the company lost millions of dollars in an acquisition agreement due to "errors traced to incorrect financial analysis spread A model repetition of computers is "Garbage in, Garbage Out." Any computer program, no matter how costly, sophisticated or popular, will yield worthless results if the data being submitted is incorrect. With spreadsheets, the danger is not so much that the wrong characters can be fed into them as the "trash" can be embedded in the models themselves. The accuracy of a spreadsheet model depends on the accuracy of the formulas that govern the relationship between different shapes. These formulas are based on assumptions made by the model manufacturer. An assumption may be an educated guess about a complicated cause and effect relationship. It can also be a wild guess or a dishonestly optimistic view.

For example, a 5 percent increase in the cost of raw materials used to create widgets can lead to a 10 percent increase in the retail price according to a fixed price ratio. Anyone who projects a budget for a widget company can, of course, integrate this formula into the model. However, to determine the effect of a 10 percent price increase on the number of widgets actually sold, he had to take into account all kinds of market factors, as well as how people tend to behave in certain situations. Perhaps spreadsets have access to a study that definitely shows that a 5 percent increase in widget prices results in a 6 percent drop in sales. But perhaps no study exists. Or perhaps the spreadsheet knows that the widgets company is planning to use the projection to seek new funding and therefore will not disclose the company's vulnerability to commodity price fluctuations. So he can make the ridiculously optimistic assumption that a 5 percent price increase will result in only a 1 percent decline in sales.

A famous example of this type of fiddling occurred when David Stockman, director of the Office of Management and Budget, prepared the budget for Ronald Reagan's first presidential term. According to William Greider's book The Education of David Stockman and Other Americans a mainframe computer had been programmed with an elaborate model of the nation's economic behavior. When Stockman used the model to project the impact of Reagan's plan to reduce income tax and increase defense spending, the computer calculated that the plan would lead to unprecedented federal deficits. Did Stockman file his president for a dangerous course? No. He changed the financial conditions that were fed into the data model, writes Greider. "[He] assumed a rapid fall in prices and interest rates. … The new model was based on a dramatic increase in the nation's productivity." So Stockman was able to strengthen the administration with the numbers – generated by a computer – that showed that The deficit would not be a problem.

easy to distinguish. In 1981, electronic spreadsheets only came into their own, and the sophisticated modeling of Stockman was still produced mainly on mainframe computers. The output he worked with was not in the now known spreadsheet format; Instead, the formulas appeared in one place and the results in another. You could see what you got. It cannot be said about electronic spreadsheets, which do not show formulas that control their calculations.

As Mitch Kapor explained, with electronic spreadsheets, "You can just randomly make formulas, all of which depend on each other. And when you look at the final results, you have no way of knowing what the rules are, unless someone tells you you. "

Lotus 1-2-3 on the screen of the used Tandy 3000NL computer in 1988.

Rick Payette

Increasingly, businessmen say not, but let the worksheets do the talking. Because a spreadsheet looks so authoritative – and it was done by a computer, wasn't it? – The hypothetical models are accepted as gospel. The spreadsheet presentation becomes both more common and sophisticated: not just the numbers, but the sheets on the sheets themselves are designed to make eloquent points. This use of spreadsheets has less to do with productivity or insightful analysis than with the art of persuasion. "People who are negotiating now sit down with spreadsheets," said Bob Frankston. "When you're trying to sell a car, the standard technique is to ask for the other person's objections, and then argue them away. If two people are in front of a spreadsheet, and one says, 'Well, the numbers say this,' the other can't say, 'Yes, but something I can't quite point to.' ”

As spreadsheets are used more for persuasion and negotiation, people are becoming rather sly about their design. Lotus 1–2–3 can turn figures and formulas into graphs—graphs that spreadsheeters can use to skew and oversimplify reality. “With graphs, things take on greater weight,” Allen Sneider said. Sneider expects spreadsheets to become more persuasive – and the distortion of reality greater – when color printers become more common. “If I wanted to, I could skew the picture by choosing a particular color in a bar graph. Some people think red is very negative. They might think green indicates profitability.” All of this has made some people who work with spreadsheets regularly skeptical of what they see. “I know of one venture capital firm that assumes people manipulate spreadsheets,” Kapor said. “So they have this other model to put against the first one, to factor the stuff out.”

Obviously, not all the millions of people who use spreadsheets (VisiCalc alone has sold over 700,000 copies) are accountants, financial analysts, or middle managers. VisiCalc’s co-designer Bob Frankston attributes some of his program’s popularity to these other users: “It turns out there are a number of people who are running their own businesses or doing financial management. The ‘own business’ might be something like renting an apartment. If you’’ve got to project costs for a year, it makes sense to do it with a spreadsheet.” More than 10 million people filed Schedule C “self-employment” reports with the IRS last year: we are becoming a nation of businesspeople. Moreover, we are becoming a society of businesspeople. We speak in a jargon derived from the business world (“What’s the bottom line on this?”). We read columns on “personal money management” that urge us to speculate in markets once reserved for the very few. We have accepted the venture capitalist as a role model. The buzz word these days in computer software firms looking to expand their markets is “personal productivity,” as if the home itself — maybe life itself – were best viewed as a business.

Spreadsheets are at the heart of this movement. Using electronic spreadsheets, everyone can run his or her own business. Thousands of Americans are attending classes to learn about the spreadsheet way of knowledge.

Some will lose themselves in the rows of columns, the grids becoming their windows on the world. They will spend their evenings in front of their computers, the dark dimly lit by the glow of green phosphorescent numbers, fiddling with scenarios, trying to make the profit line perfect.

There is no doubt that the electronic spreadsheet saves time and provides insight; there is no doubt that even greater benefits will one day be derived from these grids. Yet all these benefits will be meaningless if the spreadsheet metaphor is taken too much to heart. After all, it is only a metaphor. Fortunately, few would argue that all relations between people can be quantified and manipulated by formulas. Of human behavior, no faultless assumptions – and so no perfect model — can be made.

Copyright © 1984 by Steven Levy, reprinted by permission.


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