The Cost/Benefit Ratio and the Acquisition of Information

 

One of the most frequent and frustrating occurrences I see among corporate managers is the failure to understand the cost-benefit ratio of information.  This is the idea that it costs a certain amount to obtain each bit of information, and that cost rises as you approach 100% of the information you might need (or think you need) while the value of each bit of information falls.  To relate it to the Pareto principle, in almost any situation you can get 80% of the information for 20% of the cost, but the other 20% of the information will cost you four times as much.  This is perhaps a bit of an overstatement, but illustrates the concept. 

Maximizing the Effectiveness of Supplier Relationships

In every supplier relationship there are key pieces of information, besides the actual product or service provided, that have to be exchanged for business to be carried out successfully. All too often, requirements or deliverables are not clarified sufficiently, leaving one (usually both) parties short on something – information, money, or end products and services. So what considerations are involved, and how can a manager make sure both organizations get what they need, when they need it, in a way that provides maximum benefit to both?

Some Problems with “Command and Control” Management

What is “command and control” management? Many good articles have been written on this by smart folks like Joel Spolsky and Bruce Nussbaum. A good description is included in the Traditional Management Model page of www.1000ventures.com in the section (near the bottom of the page) labeled “25 Lessons from Jack Welch“. Much has been written decrying “command and control” management, but what makes it a bad thing?

Is a “People Whisperer” the Optimal Manager?

This morning NPR did a story on a woman writing a novel about a female horse trainer of the late 19th century, who used the “horse whispering” or “gentling” technique and was superior to the others in her profession.  The traditional method of breaking horses at the time (and still prevalent) was to have some big brute of a guy get on the horse and ride it, bucking and kicking, until it tired out and was “broken”.  Needless to say, horses trained in this way often developed personality disorders or other peculiarities that were occasional problems for the owner or rider.  I quickly began to see implications for the management of human organizations.