6 and 8, The Dark Side of Estimates

Peter Drucker is famous for pointing out how much better managers could manage if they only used numbers. His message: “…if you can’t measure it, you can’t manage it.” 

Managing is the business of numbers…or is it? Certainly, Frederick Taylor, the inventor of Scientific Management felt that way. 

What neither of them told you is that just because you’re using a number, it doesn’t mean that you’re managing well. In fact, it may be quite the opposite.

A key behavior for managers is assessing the problems that surround moments like this episode’s stars, the numbers 6 and 8.  In this case, 6 was the number of hours that it was supposed to take to get something done, and 8 was the number that it actually took.  The simple solution employed by most managers and systems is to treat the 8 as the problem.

We’ll explore both the consequences of that behavior, and also dig deeply into what the 6 and 8 really tell us, touching briefly on concepts like anchoring bias, false precision and a key idea taken from Taiichi Ohno, the father of the Toyota Production System.

Questions that you’ll want to ponder after the episode:

1. Can you see the bias in estimates versus actuals and the way they are handled?
2. Can you see our sense of betrayal or disappointment, and how that can color your or other people’s responses? 
3. Can you see what happens when you introduce range-based estimates to a discussion?