Business Decision-Making

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 by management to be 1 in 100,000 but 1 in 100 by the engineers.²⁹ Instead of accepting the discrepancy of those estimates as a sign of weakness, management preferred to rely on numbers; numbers that, in hindsight, made no sense. The management’s evaluation was wrong. It gave a false sense of security, and ...