Business Decision Making, Second Edition, 2nd Edition

CHAPTER 11

Believe in Numbers—But Not Too Much

(What You Can Measure, You Might Manage)

Vignette: The Columbia Disaster

Numbers are not everything.

The following is a famous example in which the quantitative approach to decision making led to a faulty decision.

When the Physics Nobel laureate Richard Feynman was investigating the shuttle’s reliability following the Columbia disaster in 1986, he noticed that the probability of a failure was estimated to be 1 in 100,000 by management, but only 1 in 100 by the engineers.²⁹ Instead of accepting the discrepancy of those estimates as a sign of weakness, the management preferred to rely on numbers, numbers that, in hindsight, made no sense. The management’s evaluation was wrong. It gave a false sense ...