Some theoretical thinking

Deming was fond of saying, management is prediction and, in this, I think he was exactly right. Management never takes action or makes decision to affect what happened yesterday, but rather to bring about what is hoped to be a desirable outcome tomorrow. Even when a manager is reacting to yesterday’s crisis, the action taken will bear fruit (or not) in the future. The instances where one is interested in a problem only in the here and now are extremely rare in management. This may be one of the principle ways that the business world is different from the academic world. Most businessmen do not find issues intrinsically interesting.

That being the case, the question then becomes one of how best to make predictions. What is the nature of the phenomenon being predicted, what is the basis for the prediction and how assured does one feel that the predicted outcome will occur are, it seems to me the relevant questions.

With regard to the nature of that which is being predicted, operational definitions are crucial. This term, first coined by Nobel Prize winning physicist Percy Bridgman is not well understood in the business world, yet is critical to success. What does it mean, for example, to say that a product is safe? A careful thinker will realize soon that the word has no categorizable meaning. It is ephemeral; like reliable, cold, dry, really dry, etc.

What does it mean to tell a hotel worker to vacuum a rug until it is clean? It means nothing until management says what it means. Likewise instructions such as fill the tank, dry the part, glue the two parts together, etc., leave it to each operator to decide what is meant. The worker doesn’t know what the job is. He or she is forced to guess. This causes anxiety, particularly when the penalty for incorrect guessing is censure or worse.

Again, there is an economic point at which further instruction or more detail is irrelevant, but most managers haven’t given this any thought at all, much less given any thought to the economic choice offered by more training or more detail.

In the world of prediction we can only talk about degree of belief and not probability of occurrence. I often hear businessmen say, I’m 95% confident, as though that number had any basis in theory at all. Typically these numbers are plucked from the air and used in a witless attempt to sound impressive or knowledgeable. It’s sad really to hear such blather. There is no substitute for knowledge.

What forms the basis for a manager’s degree of belief? Usually, experience. Another myth to fall by the wayside will be that of the objective reality. There is no such thing, just as there is no true value of anything measured or observed.

Consider attempts to measure the homeless population or report on crime statistics. There is no true value for the number of homeless people in New York City or the number of murders in Detroit. There is a definition of homelessness or murder that is used together with a method of measurement. They yield a number. A different definition or measurement method yields a different number.

Likewise, beware the hazards of copying, Ex Post Facto analysis and the fallacy of misplaced precision. What assumptions are built into their use?

All of these topics and more make up the area of what I am calling, theoretical thinking. One might call it epistemology, logic, and philosophy of science combined. What the area of thinking is called is not important. That managers learn to think this way comprises a competitive advantage that will be virtually unmatched in the business world of the United States.