Management by the Really Big Numbers

26 March 2007 at 11:58 am Peter G. Klein Leave a comment

| Peter Klein |

Management by the numbers may work after all. But what about management by the really big numbers?

Paul Slovic, writing in Foreign Policy about genocide, says we are “numbed by numbers” — really big numbers, that is.

Why do good people ignore mass murder and genocide?

The answer may lie in human psychology. Specifically, it is our inability to comprehend numbers and relate them to mass human tragedy that stifles our ability to act. It’s not that we are insensitive to the suffering of our fellow human beings. In fact, the opposite is true. . . .

The psychological mechanism that may play a role in many, if not all, episodes in which mass murder is neglected involves what’s known as the “dance of affect and reason” in decision-making. Affect is our ability to sense immediately whether something is good or bad. But the problem of numbing arises when these positive and negative feelings combine with reasoned analysis to guide our judgments, decisions, and actions. Psychologists have found that the statistics of mass murder or genocide — no matter how large the numbers — do not convey the true meaning of such atrocities. The numbers fail to trigger the affective emotion or feeling required to motivate action. In other words, we know that genocide in Darfur is real, but we do not “feel” that reality. In fact, not only do we fail to grasp the gravity of the statistics, but the numbers themselves may actually hinder the psychological processes required to prompt action.

Here is a longer version of Slovic’s piece, with references.

Are managers, likewise, unable to extract meaningful information from really big numbers? Is this a cost of centralized decision-making, or a limit to firm size or scope for a given degree of centralization? What would Harold say?