Every week we collect articles from around the web related to probability and estimating in a business context.
Happy Friday of a holiday week (in the US at least)! Here's what has been happening in the world of business probabilities -
If You Say Something Is “Likely,” How Likely Do People Think It Is? (A. Mauboussin and M. Mauboussin, Harvard Business Review) Language is imprecise and the language around probabilities is especially difficult. Their first takeaway, "Lesson 1: Use probabilities instead of words to avoid misinterpretation.", is exactly why DartCannon exists. We'll return to this topic in more depth in later posts.
None of Us Understand Probability (RCM Alternatives) Looking at the world cup, hits on 2 big points: First, that just because a simulation gives a particular number (e.g. 56%) doesn't mean much without interpretation, an idea we fully embrace at DartCannon with our simulations. Second, that even when presented with percents rather than imprecise phrases (see the HBR article), perception often is quite different -
Welcome to the Highly Probably World of Improbability (F. Salmon, WIRED) Just because something is improbable doesn't mean impossible. Understanding those possibilities and either accepting the risk or making plans is important, as is making appropriate recalibrations when rare events do occur.
An end-of-week quote:
It is very difficult to make a vigorous, plausible, and job-risking defense of an estimate that is derived by no quantitative method, supported by little data, and certified chiefly by the hunches of the managers. — Fred Brooks, “The Mythical Man-month”
Hope everyone has a great weekend!