Peter Drucker

Psychology tells us that the one sure way to shut off all perception is to flood the senses with stimuli. That’s why the manager with reams of computer output on his desk is hopelessly uninformed. That’s why it’s so important to exploit the computer’s ability to give us only the information we want—nothing else. The question we must ask is not, “How many figures can … [ Read more ]

Peter Drucker

We cannot put on the computer what we cannot quantify. And we cannot quantify what we cannot define. Many of the important things, the subjective things, are in this category. To know something, to really understand something important, one must look at it from 16 different angles. People are perceptually slow, and there is no shortcut to understanding; it takes a great deal of time. … [ Read more ]

James Guszcza, Bryan Richardson

By now there are hundreds of examples … in which analytics involving the most traditional of data sources outperform traditional modes of decision-making. …

Each case … involves “sorting” or “prioritization” decisions that (a) are central to an organization’s operations; (b) are made repeatedly, typically by experts relying on professional judgment in varying degrees; and (c) incorporate quantifiable information that is readily available, yet commonly used … [ Read more ]

James Guszcza, Bryan Richardson, Daniel Kahneman

In Thinking, Fast and Slow, the Nobel Prize-winning founder of behavioral economics Daniel Kahneman … writes of two fictitious mental processes that he calls System 1 (“thinking fast”) and System 2 (“thinking slow”). System 1 mental operations are rapid and automatic; they are biased toward belief and confirmation rather than analysis and skepticism; they tend to jump to conclusions and infer causal relations based on … [ Read more ]

Peter Bell

Analytics is to management as a light bulb is to darkness: it is illuminating and helpful in revealing both future opportunities and pitfalls. Descriptive analytics seeks to understand past data and is widely used. Predictive analytics seeks to understand the future. This is a challenge for many firms, since it brings in risk (the future is uncertain) and the need to manage risk. Prescriptive … [ Read more ]

Freek Vermeulen

When something seems too good to be true, it usually is. And management techniques, practices, and strategies are no different. When you read a business book or attend a presentation on a particular management practice, it is a good habit to explicitly ask, “What might it not be good for?” When might it not work; what could be its drawbacks?

[…] There is a second … [ Read more ]

Michael E. Raynor

Explanatory power is a red herring when the objective is predictive accuracy.

Michael E. Raynor

[Steve] Jobs, for all his impact, was still only one person. In extracting general principles from his career as a whole, we have precisely one data point with which to work. And you can draw any line you want through a single data point.

Thomas C. Redman

Every manager must make the distinction between “correlation” and “cause and effect” regularly, as the topic comes up in many guises.

John Tukey

It is better to have an approximate answer to the right question than an exact answer to the wrong question.

Edward Tufte

Correlation isn’t causation, but it sure is a hint.

Peter Cappelli

What you are trying to develop in a manager is a kind of inductive skill in reading the terrain; of knowing intuitively when the paradigms are about to change or bust up—or endure.

Chip Heath, Saras Sarasvathy

Saras Sarasvathy, a professor at the Darden School, at the University of Virginia, has researched the differences between how entrepreneurs and very good senior managers at Fortune 500 firms think. She gives them a scenario about a new-product introduction. The typical Fortune 500 manager will run projections from the market data. But the entrepreneur says, “I don’t trust the data. I’d find a customer and … [ Read more ]

James Guszcza, John Lucker

Our intuitions can lead us badly astray in a way that is as surprising as it is straightforward. Kahneman identifies two types of mental processes. “Type 1” mental processes are fairly automatic, effortless and place a premium on “associative coherence.” In contrast, “Type 2” mental processes are controlled, effortful and place a premium on logical coherence. Although we fancy ourselves primarily Type 2 creatures, many … [ Read more ]

George Box

Remember that all models are wrong; the practical question is how wrong do they have to be to not be useful.

John Boudreau

Is it because people are not widgets, and out of respect for their free will and humanity it’s unfair or wrong to use the same logic for workforce decisions as we use for decisions about more inanimate objectives like inventories and machines? No. In fact, it’s arguably more unfair and disrespectful to employees and job applicants to make important decisions about where to invest in … [ Read more ]

Peter Drucker

The most dangerous thing is not having the wrong answer, it is asking the wrong question.

Otto Neugebauer

The common belief that we gain “historical perspective” with increasing distance seems to me to utterly misrepresent the actual situation. “What we gain is merely confidence in generalization that we would never dare to make if we had access to the real wealth of contemporary evidence.

Michael Porter

The highest compliment, I’ve come to understand, is, ‘Oh, that’s obvious.’ “I used to get really mad about that, but now I understand that’s the goal — to take a complex problem and make it seem really clear and obvious.

John Baldoni

One of the most powerful words in the English language is why. When asked as an interrogatory, why has the power to change assumptions, preconceptions and mindsets. It has the power to initiate change as well as the power to affirm the right course. It is a word that should be used frequently but with great care. When used the proper way, it can be … [ Read more ]