Curious Cat Management Improvement Blog: Deming, lean thinking, innovation, customer focus, continual improvement, six sigma.
Post related to psychology in management

Understanding psychology was one of the four areas of Dr. Deming's management system. Too often managers seem to forget the human aspects of the systems they manage. Recommended posts: Respect for People (Understanding Psychology) - Stop Demotivating Employees - The Psychology of Too Much Choice - Write it Down - The Illusion of Understanding - Managing Fear

October 7, 2008

Motivate or Eliminate De-Motivation

To Motivate or Not to Demotivate

The idea that you cannot motivate a person is wrong. I suspect that it has grown out of failed “motivational” initiatives like company slogans, posters, pep talks, performance reviews, and coffee cups with the text “teamwork” printed on it. I agree that those practices are probably not the best way to motivate most people. But there are bad ways and good ways to do things. And it’s the manager’s job to find out what the good ones are…

Note: Frederick Herzberg also tells us that motivation is an intrinsic thing, which means that you actually cannot directly motivate a person. You can only try to influence their motivation. That’s true. But it also applies to people’s demotivation. And therefore I only consider it just a semantical issue, that bears no relationship to the motivation-vs-demotivation issue.

I still think eliminating de-motivation is the better way to look at it.

I still see far to many managers thinking in a theory x way - 50 years after McGregor’s The Human Side of Enterprise. If there was not such a systemic failure to apply effective management practices and such a desire to substitute motivation for management I wouldn’t see this as a big deal. The issue is important to me because their is a huge amount of poor management based on how people view the need to fix how people are motivate instead of fixing what management really needs to fix (see all the links in the related section at the bottom of this post).

“eliminating demotivation” is a too simplistic view

When our management subsidizes a great party that is organized by our employees themselves, and the employees appreciate our company’s financial contribution, do you still talk of “elimination demotivation”? I think that would be just a silly way of turning the matter upside down. I simply call it motivating people.

I would say a party doesn’t really motivate people. But it can (taking psychology into account) gain advantages by helping bond people to each other, letting people feel good as they form social relationships, build trust with others… They can be good things that can build a stronger work environment. And by building social ties we can create an environment where people are more interested in working toward common goals.
(more…)

September 24, 2008

Dr. Deming’s 15th Point

Guest post from John McConnell, Wysowl Pty Ltd

Dr. Deming opened his first Australian seminar in 1986 with the question, “What are we here to do”? After some discussion he answered his own question with, “To learn”, and “To have a good time”.

He repeated this opening at subsequent seminars.

The Fifteenth Point
Mr. Murray Mansfield of Melbourne has what I believe to be the only completely up to date version of Dr. Deming’s famous Obligations for Top Management. After a long discussion with Murray during his last Australian seminar, Dr. Deming agreed that there ought to be a fifteenth point. He took Murray’s notes turned to the page containing the fourteen points and at the foot of the page wrote:

15.     Have a good time!

Related: I Don’t Know - Find Joy and Success in Business - posts on respect for people - Destroyed by Best Efforts - Lets Play Work - Seven (plus 2) Deadly Diseases of Western Management

August 7, 2008

Individual Bonuses Are Bad Management

Gojko Adzic provides a nice post on Mary Poppendieck’s presentation at Agile 2008 on bonus, compensation and motivation: Paying programmers: are bonuses bad and what to do about it?

In software development, it is very hard to establish the effects of individual contributions and good teamwork is key to the project. Most individual compensation schemes, according to the presentation, absorb vast amounts of management time and resources and leave nobody happy, but team compensation strategies are not easy to implement. Mary presented results from HP’s experiments during the beginning of the nineties, when HP allowed 13 local organisations to experiment with team-incentive plans. All programs were discontinued by the 4th year, due to constant changes to the plans which were needed to distribute available money among the teams and a wide dissatisfaction with the plans by employees.

Use profit sharing schemes instead of bonuses to tie people to the organisation goals.
keep in mind the norm of reciprocity — if people feel that they are being treated generously, they will reciprocate it with increased discretionary effort.

As usually Mary Poppendieck provides good advice: Mary Poppendieck webcast on Leadership in Software Development. The idea that bonuses are bad management is one of the more difficult management improvement ideas for people to accept. See related posts for much more on the problems with them and what to do instead.

Related: Interview with Mary Poppendieck - The Defect Black Market - Deming on the problems with targets or goals - Incentive Programs are Ineffective - Problems with Bonuses - Measuring and Managing Performance in Organizations

August 1, 2008

Multitasking Decreases Productivity

The problems with multitasking are becoming more and more well know, thankfully. Here is another article on the lower productivity multitasking produces - Multitasking Madness Decreases Productivity by Barbara Bartlein:

In a recent study by Eric Horvitz and the University of Illinois, a group of Microsoft workers took, on average, 15 minutes to return to serious mental tasks, like writing reports or computer code, after responding to incoming e-mail or instant messages. They often strayed off to reply to other messages or browse news, sports or entertainment web sites.

These findings are similar to those of David E. Meyer, a cognitive scientist and director of the Brain, Cognition and Action Laboratory at the University of Michigan. “Multitasking is going to slow you down, increasing the chances of mistakes,” said Meyer. “Disruptions and interruptions are a bad deal from the standpoint of our ability to process information.”

“Many people delusionally believe they’re good at this,” he says. “The problem is that we only have one brain and it doesn’t work that way. In reality, nobody can effectively do more than one remotely complicated thing at a time.”

Related: The Siren Song of Multitasking - Multi-Tasking: Why Projects Take so Long - Flow (the opposite of multitasking)

July 7, 2008

Better Meetings

Meetings are perennial problems. People sit through meetings and then complain about how big a waste of time it was. Here are a couple very simple tips to try and actually improve (instead of just agreeing that meetings are wasteful, but doing nothing to improve).

  • Have an agenda (with desired outcomes - decision on x, or whatever) and stick to it (I think you can successfully adapt as the meeting goes on, but be truthful, can you do so successfully - if so fine, if not stick to the agenda). If there are no desired outcomes, why are you meeting?
  • Most of the time you can improve just by having fewer meetings. So when you find there is no actually benefit to a meeting be happy - that is one more meeting that can be eliminated.
  • Document decisions on a flip chart that everyone can see in the meeting and then email everyone the decisions. This is a huge help in my experience. People often just want to get the meeting over with, so everyone just ignores that no decision has actually been made and just hopes the meeting ends. For those things you have decided it is worth meeting on, it is worth making sure everyone understands the decision the same way (how often do you waste time in between meetings and in future meetings as people present alternative versions of what was actually decided.
  • Talk to those involved in regular meetings and ask what can be improved. Improve your meeting process over time. If you don’t have an improvement process in place for meetings that is a bad sign.

I would strongly suggest if someone thinks they need to answer emails… instead of pay attention to the meeting they should not be in the meeting. Some people love to multi-task and act like they are too important to focus on something. I don’t find that true, instead they are just people that like to seem busy but not actually accomplish tasks. If your staff are doing this stop them. If you are subjected to working with such people, try to exclude them from the meeting and deal with people that actually care to focus and get things done.

Critical people on the other hand I find valuable (while others don’t want to deal with them). Encourage people to be open if meetings are not an effective use of their time. Talk to them about how to improve the meeting process. I take as true the idea that meetings are a problem and so those willing to state this and help make them better should be valued.

The Team Handbook also has good information on running effective meetings.

Related: Most Meetings are Muda - Programmers see meetings as wastes of time - Arbitrary Rules Don’t Work - Be Careful What You Measure

June 12, 2008

Respect for Employees at Southwest Airlines

“You have to treat your employees like customers”

“We’ve never had layoffs,” he told me the day before the annual meeting, sitting on the couch of the single messiest executive office I’ve ever seen. “We could have made more money if we furloughed people. But we don’t do that. And we honor them constantly. Our people know that if they are sick, we will take care of them. If there are occasions or grief or joy, we will be there with them. They know that we value them as people, not just cogs in a machine…”

“There isn’t any customer satisfaction without employee satisfaction,” said Gordon Bethune, the former chief executive of Continental Airlines, and an old friend of Mr. Kelleher’s. “He recognized that good employee relations would affect the bottom line. He knew that having employees who wanted to do a good job would drive revenue and lower costs.

Well said. Related: Focus on Customers and Employees - Airline Quality - Respect for People - Curious Cat Management Improvement Dictionary

June 9, 2008

Fairness Matters

Sense of Fairness Affects Outlook, Decisions

Burnout has been long associated with being overworked and underpaid, but psychologists Christina Maslach and Michael Leiter found that these were not the crucial factors. The single biggest difference between employees who suffered burnout and those who did not was the whether they thought that they were being treated unfairly or fairly.

Their research on fairness dovetails with work by other researchers showing that humans care a great deal about how they are being treated relative to others. In many ways, fairness seems to matter more than absolute measures of how well they are faring — people seem willing to endure tough times if they have the sense the burden is being shared equally, but they quickly become resentful if they feel they are being singled out for poor treatment.

If the sum is $100, for example, the first person might offer to give away $25 and keep $75 for himself. If the second person agrees, the money is divided accordingly. But if the second person rejects the deal, neither one gets anything.

If people cared only about absolute rewards, then Person B ought to accept whatever Person A offers, because getting even $1 is better than nothing. But experiments show that many people will reject the deal if they feel the first person is dividing the money unfairly.

Related: Obscene CEO Pay - Respect for People and Understanding Psychology - Why Pay Taxes or be Honest - The Illusion of Understanding - The Psychology of Too Much Choice

May 18, 2008

Well Managed Companies

If a company is dependent on one (or more) people to perform then it is in danger. Processes should be in place that don’t risk the success of the company on the performance of a specific person. If your organization is dependent on a person start taking actions to place the success of the company in reliable processes instead of individual stars.

In many instances the start is as simple as starting to document processes using flowcharts. Another benefit of doing this is that you can then make sensible improvements. It is hard to make reliable improvement hen processes are not documented and instead remain the mysterious realm of individuals within the organization.

Do your outstanding people think their importance is in getting through another day with through hard work and individual expertise. While those qualities are good most important to the success of the organization is improving the system not getting through one day. If those seen as the stars are not improving the system and processes then get them to work doing so. They might miss the feeling that the organization is dependent upon them. But it is more important that the organization not improve. And there contributions will still be worthwhile but the organization will be much stronger.

Performance dependent on specific individuals is not robust and not capable of continuous high quality performance.

Related: Bring Me Problems and Solutions if You Have Them - How to Improve - Management is Prediction

May 5, 2008

I Don’t Know

Guest post by David Kerridge (originally posted to the Deming Electronic Network):

This is part of a series in which I recall striking or thought-provoking things that W. Edwards Deming said, but did not put into his books.

I remember taking a manager to his first Deming 4-day seminar. Afterwards my friend said to me “I was very impressed with that man. He said ‘I don’t know.’”

Something in our culture makes us ashamed to admit ignorance. We expect quick, slick answers, whether from politicians, managers, or consultants.

Deming said “I don’t know” more often than anyone I have ever known. Sometimes you heard the answer about two years later, in his seminar.

I also remember him saying “I have learned more in the last six months than in the previous ten years.”

Maybe one quotation explains the other.

Related: Dr. Deming quotes - Instant Pudding - Deming on being Destroyed by Best Efforts - Where to Start Improvement

April 21, 2008

Find Joy and Success in Business

<div><a href='http://www.omnisio.com'>Share and annotate your videos</a> with Omnisio!</div> <p>

David Heinemeier Hansson Talk at Startup School 2008 (Paul Graham’s Y-combinator school). It is helpful to appreciate the importance of some simple ideas. Working on web focused businesses people often get carried away with the huge potential and sometimes lose touch with reality. While the ideas are more obvious when looking at web related business their is plenty here for many companies (the second half might be more helpful for many).

In this talk David does a great job of explaining how 37 signals has chosen to work. They are not concerned with becoming large. They focus on doing what they want to do - creating great software solutions (see: Systemic Workplace Experiments). And on making money to allow them to stay in business.

Some tidbits of advice: create great applications, charge people money, make a profit. Yes to those outside the web world this might seem obvious… He discusses a very similar idea to the idea of 1,000 true fans. He mentions to bring in a $1 million, all you need is 2,000 customers paying $40/month. 37 Signals has done well focusing on small business. Don’t be in such a hurry.

Related: Why is 37signals so arrogant? - Complicating Simplicity - Joy in Software Development - Great Marissa Mayer Webcast on Google Innovation

April 9, 2008

Packaging Improvement

McDonald’s Branding Makes Food Tastier for Tots

Researchers at Stanford University have found that children tend to rate food that is wrapped up in McDonald’s-branded paper as tasting better than the same food wrapped in plain paper — a finding that suggests that even the youngest consumers are heavily influenced by advertising. The new study was released Monday in the Archives of Pediatric and Adolescent Medicine.

The study had 63 children, aged 3 to 5 years old, tasting five pairs of identical foods and beverages — one in McDonald’s wrapping and the other in unbranded packaging. The researchers then asked them a simple question: “Which one tastes better?” An overwhelming number of the children said the food in the McDonald’s wrapping was tastier.

Oddly enough, this applied even to vegetables and milk. Sixty-one percent of the children in the study preferred the taste of carrots and 54 percent preferred the taste of milk if they were reminded by the packaging that it came from McDonald’s.

This is another reminder that tackling problems directly is not always the best strategy. The packaging doesn’t actually change the taste, but really it is not the taste that is likely a concern but rather the perception of taste. To me this is very similar to the studies on people preferring wine they are told costs more.

Ignore psychology at your peril: in marketing and in management. Deming’s management system include 4 interdependent areas: understanding variation, systems thinking, theory of knowledge and understanding psychology.

Effects of Fast Food Branding on Young Children’s Taste Preferences (I think this is the study referenced in the article though it was published in August 2007 - John).

Related: Indian researcher shows most people do judge a drink by its container - Marketing in a Lean Company - The Psychology of Too Much Choice - Be Careful What You Measure

March 24, 2008

Losses Covered Up to Protect Bonuses

Does it surprise you to learn traders would cover up losses to protect bonuses? It shouldn’t, it happens over and over. Would it surprise you that almost any bonus (or quota) scheme increases the odds that the data will be doctored to meet the goals? It shouldn’t. Intelligent measures to make such doctoring difficult can help reduce the practice. But it is a likely risk of any such goal. As we have quoted Brian Joiner as saying: there are: “3 ways to improve the figures: distort the data, distort the system and improve the system. Improving the system is the most difficult.” So it is no shock that distorting the data is often the tacit people use (especially when the rewards are great or the punishment for missing is severe).

Of course the people that take unethical or illegal action are responsible for their actions. But managers that set up poor systems and then get poor results should not be surprised. You mainly read about the exciting distortion of data - but there is much more such distortion that doesn’t seem interesting enough for the press.

Traders at top investment bank ‘covered up losses to protect their bonuses in £1.4 bn scam’

A top investment bank said yesterday that some of its traders had tried to protect their massive bonuses with a £1.4billion scam. Credit Suisse was forced to admit it will pay the price for the traders’ ruthless scheming by sinking into the red. All the traders involved - some of them based in London - have been fired or suspended.

Shares in the bank, which is based in Zurich, tumbled 7.5 per cent yesterday. Credit Suisse admitted it had discovered intentional “pricing errors” by a small number of traders involved in complex investments linked to the mortgage market.

Related: Problems with Bonuses - Be Careful What You Measure - Measuring and Managing Performance in Organizations - Another Quota Failure Example

March 10, 2008

Pleasing Customers

Why is 37signals so arrogant? by Don Norman

The Brash Boys at 37signals Will Tell You: Keep it Simple, Stupid. Brash is an understatement. I was quoted in the article because of my article arguing that simplicity is highly overrated: the tasks that we do require tools that match the requirements, and these add complexity.

Yes, they are arrogant — and proud of it: “Arrogant is usually something you hurl at somebody as an insult,” Hansson said. “But when I actually looked it up — having an aggravated sense of one’s own importance or abilities’ — I thought, sure.” Park concludes his article by saying “Call it arrogance or idealism, but they would rather fail than adapt. ‘I’m not designing software for other people, ‘Hansson says. ‘I’m designing it for me.’ ” “I’m not designing … for other people.” I think that simple phrase speaks volumes. Thank goodness most companies recognize that this attitude is deadly.

I don’t agree. Not compromising leads to solutions that are unlikely to be all things to all people. But with an intelligent and knowledgeable leader will lead to excellent solutions for those that share desires. Now I don’t think this is the best strategy, especially for growth. But it can be an excellent strategy for startup, innovators and those seeking 1,000 fans.
(more…)

March 6, 2008

Systemic Workplace Experiments

Workplace Experiments

At our company-wide get together last December we decided that 2008 was going to be a year of workplace experiments. Among other things, we discussed how we could make 37signals one of the best places in the world to work, learn, and generally be happy.

Last summer we experimented with 4-day work weeks. People should enjoy the weather in the summer. We found that just about the same amount of work gets done in four days vs. five days.

So recently we’ve instituted a four-day work week as standard. We take Fridays off. We’re around for emergencies, and we still do customer service/support on Fridays, and but other than that work is not required on Fridays.

We decided that 37signals would help people pay for their passions, interests, or other curiosities. We want our people to experience new things, discover new hobbies, and generally be interesting people. For example, Mark has recently taken up flight lessons. 37signals is helping him pay for those. If someone wants to take cooking lessons, we’ll help pay for those. If someone wants to take a woodworking class, we’ll help pay for that.

Part of the deal is that if 37signals helps you pay, you have to share what you’ve learned with everyone. Not just everyone at 37signals, but everyone who reads our blog. So expect to see some blog posts about these experiences.

We just ask people to be reasonable with their spending. If there’s a problem, we’ll let the person know. We’d rather trust people to make reasonable spending decisions than assume people will abuse the privilege by default.

Dr. Deming proposed supporting education of any type for employees (point 13 in the 14 points). That is not often done, but 37 signals is not alone in doing this. Great stuff. Create a great environment for people to work in and you can get great things done. Also good old PDSA at work - try things on a small scale and then institute those experiments that succeed on a wider scale.

Related: Google Experiments Quickly and Often - Vacation: Systems Thinking - Getting and Keeping Great Employees - Joy in Work - Complicating Simplicity - Workplace Management

February 28, 2008

Customers Get Dissed and Tell

There are those rare companies where interacting with them is not a dreaded experience: Trader Joe’s, Southwest Airlines, Ritz Carlton, Crutchfield, Cannon, Groovix. There are not many. And even just providing something that just works is seen as a treat. The all too common dis-service, combined with the internet, leads to Consumer Vigilantes:

a growing disconnect between the experience companies promise and customers’ perceptions of what they actually get.

A swell of corporate distrust - exacerbated by high executive pay, accounting lapses, and the offshoring of jobs - has people feeling more at odds with companies than ever before.

Years of dialing the call center for a technician yielded at least eight missed appointments by Comcast, he says, but a post on ComcastMustDie brought a phone call the next morning and, later, a lead technician who showed up on time. Now, Salup says: “Anytime I have a problem, I also post it on the blog.”

Pretty lousy systems thinking (or really failures to think systemically). Pay executives obscenely and cut service until customers literally can’t stand you so much they don’t just want to avoid you they want you out of business.

And then instead of fixing the system, just burn the toast (follow the link for an explanation). Then wait from those that get the burnt toast to tell everyone that you sold them burnt toast. Then, after they do that, go scrape it for them. This is not what Dr. Deming meant when he encouraged companies to eliminate the need to inspect for quality. Of course you know that (you are reading this blog after all). Maybe the business schools decided to cut down Deming’s ideas to just eliminating inspection and a couple other sound bites. And then tell the MBA’s not to bother reading all the rest of that… we have to get on to the cost reduction strategies that will make sure you move into the c-level and get the real money.

Most customers, of course, don’t have the time or energy to go that far in their service insurgencies. They want an apology, a human being who answers the phone, or simply some bottled water after a few hours sitting on the airport tarmac

But some companies just push people so far they have to let people know about how poorly they have been treated. Some past posts highlight the frustrating experiences bloggers, including me, share about how badly we have been treated: Ritz Carlton (good) and Home Depot (bad) - Incredibly Bad Customer Service from Discover Card - More Bad Customer Service Examples - Poor Service, an Industry Standard? (HP) - Comcast HD DVR Is Simply, Terribly Awful

Consumerist, is a great site, doing what it can to counter some of the horrible service.

February 24, 2008

Losing Consumers’ Trust

Last week their was a recall of 143 million pounds of beef in the USA. Lets take a short systemic view at what is going on. The public has an interest in a safe food supply which is difficult to enforce through caveat emptor (buyer beware). So this is a natural situation for government regulation (to protect the public interest) - plus it relates to public health which is another natural for government regulation.

The USDA regulates the industry and puts in place rules as new threats emerge. So a few years ago they instituted rules that if an animal can’t walk after the USDA pre-death inspection they be re-inspected “largely as a precaution against bovine spongiform encephalopathy, or mad cow disease .” It seems hard to argue with that plan. If the pressures to maximize profits (assuring every cow is processed) exceed the desire to take precautions to ensure the safety of customers the risk of losing the trust of consumers is great.

There have been several instances, that have been made public, which call into question how effective the system is at preventing self interest from endangering the food supply. That then calls into question the safety of all meat that is part of that system. Many in the industry seem not to realize that they will be judged by the failures of any in the industry. And in my view, it is in their interests to have strong protections industry-wide.

The export market for meat is large. For political reasons some countries aim to protect local farmers and ranchers (the USA is a huge subsidizer of farmers and ranchers - Sugar Industry Quotas). And when the system continually shows that bad practices are allowed to continue it makes it a very easy decision to not allow the import of meat. Why would a country want to import food from a system that fails to follow food safety standards (especially if politically that is what they want to do - this provides them a pretty darn good reason to do what they want).
(more…)

February 22, 2008

What Motivates Programmers?

A fun read on What motivates programmers?

I will start with a question, if you have a spare £400 in your development budget do you A) Reward your star programmer with a £400 bonus or B) Buy him a 24 Inch 1920×1200 LCD screen? If you answered ‘A’ then you need to read on.

Programmers see meetings as wastes of time. Most communication between programmers is done via email or by a quick wander to another desk to clarify something that is beyond the scope of an email. Therefore any time within a meeting room is ‘unhappy time’ and unhappiness increases exponentially with the length of the meeting. So at all costs if you do need to drag your development team into a meeting either include some form of Lego to play with (I am serious) or keep them very short.

The tips in the post are worth reading. Yes, real world situation are always more complex but there is a great deal of truth in the post. Also, I will repeat my statement for all managers for all employees: your job is to eliminate de-motivation not to motivate.

If you really want to manage programmers well, read these blogs and take action to prevent yourself from becoming a pointy haired boss: Signal vs. Noise - Joel on Software - Paul Graham - Coding Horror - Scripting News - xkcd

Related: Joy in Software Development - Hiring Silicon Valley Style - Most Meetings are Muda - Metrics and Software Development - Amazon Innovation - Two Screens Are Better Than One

February 11, 2008

Don’t Use Performance Appraisals

I like to continue to push for some things that might not seem achievable to many. It is too easy to accept that things have to stay the way they are. Several of Dr. Deming’s list of Seven Deadly Management Diseases are now accepted as serious problems by most. Performance appraisal is a strange disease: most people agree performance appraisals are not effective and indeed are harmful. Yet, most still don’t think anything can be done about it. But we can, and should, take steps to improve. Just don’t do it.

Managers are from Mars, Performance Appraisals from Venus discusses Mary Poppendieck’s recent presentation - Appraisals and Compensation: The Elephant in the Room

Mary says that there is no valid research showing benefits of performance appraisals. Simply said, “it doesn’t work”. Her biggest complain is that appraisals target individuals (sometimes teams) rather the system itself. She also condemns judgment rather than feedback (system dynamic).

Mary went over the false assumptions behind individual pay-for-performance (money, motivation, individual assessment), and the negative effects they have on the system.

She finished by a case study done by HP across 13 organizations over a year 4 year period where each division implemented a different type of incentive plan. The results are just mind boggling. They all failed and got canceled.

I strongly suggest chapter 9 (Performance Without Appraisal) of The Leader’s Handbook, by Peter Scholtes, for those thinking about this topic.

Related: Righter Performance Appraisal - Problems Caused by Performance Appraisal - Performance Without Appraisal - Find the Root Cause Instead of the Person to Blame

January 10, 2008

Prediction Markets with Google Employees

Another interesting experiment from Google: Using Prediction Markets to Track Information Flows: Evidence from Google

In Google’s terminology, a market asks a question (e.g., “how many users will Gmail have?”) that has 2‐5 possible mutually exclusive and completely exhaustive answers (e.g., “Fewer than X users”, “Between X and Y”, and “More than Y”). Each answer corresponds to a security that is worth a unit of currency (called a “Gooble”) if the answer turns out to be correct (and zero otherwise). Trade is conducted via a continuous double auction in each security.

Google’s prediction markets are reasonably efficient, but did exhibit four specific biases: an
overpricing of favorites, short aversion, optimism, and an underpricing of extreme outcomes.

Interesting paper. I would guess most readers of this blog won’t be able to apply prediction markets to there workplace in the short term but never-the-less I find the paper interesting.

Related: Management is Prediction - Google Experiments Quickly and Often - Secrets of the World’s Best Companies

December 24, 2007

Bigger Impact: 15 to 18 mpg or 50 to 100 mpg?

This is a pretty counter-intuitive statement, I believe:

You save more fuel switching from a 15 to 18 mpg car than switching from a 50 to 100 mpg car.

But some simple math shows it is true. If you drive 10,000 miles you would use: 667 gallons, 556 gallons, 200 gallons and 100 gallons. Amazing. I must admit, when I first read the quote I thought that it must be an wrong. But there is the math. You save 111 gallons improving from 15 mpg to 18 mpg and just 100 improving from 50 to 100 mpg. Other than those of you who automatically guess that whatever seems wrong must be the answer when you see a title like this I can’t believe anyone thinks 15 to 18 mpg is the change that has the bigger impact. It is great how a little understanding of math can help you see the errors in your initial beliefs. Via: 18 Is Enough.

It also illustrates that the way the data is presented makes a difference. You can also view 100 mpg as 1/100 gallon per mile, 2/100 gallons per mile, 5.6/100 gpm and 6.7 gpm. That way most everyone sees that the 6.7 to 5.6 gpm saves more fuel than 2 to 1 gpm does. Mathematics and scientific thinking are great - if you are willing to think you can learn to better understand the world we live in every day.

Related: Statistics Don’t Lie, But People Can be Fooled - Understanding Data - Seeing Patterns Where None Exists - Optical Illusions and Other Illusions - 1=2: A Proof

Curious Cat Management Improvement Blog curiouscat.com 2005-2007 powered by WordPress - lean manufacturing directory

Internal Links

Categories

Links

Popular Posts

Other


Search Blog

Web Search

Management Improvement web search


Author

John Hunter

Archives

October 2008
M T W T F S S
« Sep    
 12345
6789101112
13141516171819
20212223242526
2728293031  

Blogroll