The Most Underrated Bias: Quantification!

Mainstream management makes many mistakes - quantification bias is just one among them (well, this is chapter 10 of the series). Don’t get me wrong - metrics and quantification are needed to manage a business. Quantification by itself can’t be asserted as inherently harmful.

Having said that, our bias to focus on things that are easily quantifiable has been pointed out by many multidisciplinary thinkers over time. Here is the late Charlie Munger on this topic:

But, the mainstream management mantra in Silicon Valley has always been and still is:

I’ve always wondered about this conflict… What nuanced message are the multidisciplinary thinkers trying to convey? Today’s post will explore this topic.

Table of Contents

• The Human Element

• Slow Elevators vs Boredom

• Fast Trains vs Uncertainty

• Fast Taxis vs Uncertainty

• Inside - Focus on Your People

• Outside: Focus on your Customers

• Wrapping up

The Human Element

I’ve worked with several business, software development and cybersecurity executives - both as a consultant and as full-time employee. I have studied this phenomenon curiously as to how executives usually miss the human elements - both inside the corporation (their employees) and outside the corporation (their customers).

• Inside: They only look at a dashboard to make decisions and formulate their “strategy” - they miss reading the room, ignore the psychological disposition of their people, not factor in their aspirations and motivations (& incentives) and the conflicts that could arise from them. They don’t get that the outcomes that they seek are very much socio-technical and not just technical.

• Outside: They don’t understand what they are measuring, what it is a proxy for, and why they should optimize it and the second-order effects of such optimization. The number and the dashboard themselves become the focus of every meeting, all the teams rally behind it, but the business/customer implications are completely ignored. Here is Jeff Bezos cautioning leaders to be always on guard when it comes to ”metrics-driven” management 👇🏾

Let’s now look a couple of examples where the focus on the “not-so-easy-to-quantify” aspects led to creative solutions… As it turns out, the fundamental ideas about this stuff is well-known and used by marketing folks that understand behavioral science. I’ll set the context with a pertinent quote that is often attributed to the legendary advertising tycoon, David Ogilvy, the 'Father of Advertising':