What Happens When We Can Quantify Some Aspects of a Decision But Not Others?

Do we make biased decisions because we are obsessed with quantifying our decision analysis? Linda Chang, Erika Kirgios, Sendil Mullainathan, and Katherine Milkman have published an interesting new study titled, "Does counting change what counts? Quantification fixation biases decision-making."  They asked the question: "Do people decide differently when some dimensions of a choice are quantified and others are not?"

The scholars conducted a series of experiments.  Each decision that the research subjects encountered involved some tradeoffs.  Some dimensions of the tradeoffs were described quantitatively and others qualitatively.  The results of the experiments demonstrated that people tended to prefer the alternatives about which numerical data was offered, rather than qualitative information.  Thea authors explain that, "This 'quantification fixation' is driven by the perception that numbers are easier to use for comparative decision-making."  

The scholars argue that we face many decisions in business and in life in which some dimensions of the tradeoffs can be quantified, but others simply cannot.  The qualitative information may be rich and useful though.  The numbers may tell only a portion of the story.  Think about a manager facing a decision about a brand extension.  Numbers may be readily available demonstrating the potential for sales growth, market share increases, and profitability enhancement.  On the other hand, the risks around brand dilution may be more readily described in qualitative fashion.  Do managers pay less attention those very real brand dilution risks simply because they can't easily produce numbers about how dilution may arise and impact the business?

The scholars conclude, "Those who structure decision contexts ignore quantification fixation at their peril. As quantification becomes increasingly prevalent, people may be pulled away from valuable qualitative information toward potentially less diagnostic numeric information."

How Good is the Second Act for a Leader?

Last week, I examined Mike Vrabel's path to the Super Bowl as a head coach in the National Football League.  I noted that 33% of Super Bowl winning head coaches had achieved their championship after failing to win a title with their first team.  The data suggest that a coach's second act can be more successful than the first, perhaps because leadership is a learned capability.   All-time great coaches such as Andy Reid, Bill Belichick, Mike Shanahan, and Don Shula all seemed to have learned from their successes and failures during their first tenure as a head coach.  

Today, I decided to examine whether this phenomenon was unique to the NFL.  Does the same pattern apply in the other major sports in the United States?   The table below shows the data for the past 50 years in each of the four major sports leagues.  As it turns out, the NFL is not unique.  In fact, the other sports show an even more dramatic positive effect for coaches in their second (or later) act!  In Major League  Baseball and the National Hockey League, more than 60% of championship coaches in the past 50 years did not win during their first tenure as a head coach.  All-time great hockey coaches and baseball managers in this group include Scotty Bowman, Al Arbour, Joe Torre, Dusty Baker, Terry Francona, and Tony LaRussa.   

By the way, during my original analysis of the NFL, I also noted that the sport's championship coaches demonstrated that the curse of expertise is very real.  The curse of expertise means that people with specialized knowledge who have achieved remarkable success often struggle to teach others, because they cannot easily put themselves into the shoes of someone for whom results do not come as easily.  In the NFL, only one Super Bowl winning head coach earned entry into the Hall of Fame as a player.  Is the curse of expertise also evident in the other sports?  Indeed!  Few Hall of Famers won championships in the last 50 years as a head coach: NFL (1), MLB (1), NHL (2), and NBA (4).  

Interestingly, second act success stories seem quite rare in business.  Most CEOs seem to achieve their most prominent success during their first tenure as a leader.  A few people stand out as having more successful second acts.  These include Reed Hastings, Eric Schmidt, and Stewart Butterfield.  The question that I'm not sure I can answer is:  Why are there more highly successful second acts in sports than in business?  Perhaps companies simply don't give many people that opportunity for a second chance if they have struggled during their first tenure as a chief executive.  Others would argue that talent matters more than coaching in sports, and that coaches win championships when they find the right fit between awesome talent and their good leadership skills.  Perhaps we simply attribute too much of a company's success or failure to the CEO, and therefore, we do not see through the struggles of a firm to identify the strong leadership capabilities of its top executive.