NABE Silicon Valley RoundTable

NABE Silicon Valley RoundTable

The Flaw of Averages or Why Everything is Behind Schedule, Beyond Budget, and Below Projection

Speaker(s):  Sam L. Savage, Consulting Professor of Management Science & Engineering, Stanford University

Meeting date:  October 9, 2007

The practice of forecasting uncertain future demands, prices and other parameters with single numbers is widespread in business. Unfortunately it leads to what our speaker calls the Flaw of Averages, a family of fallacies as fundamental as the belief that the earth is flat. Probability Management, a new approach to this problem is based on recently introduced software technologies, information systems and management protocols. Application to retirement planning and portfolios of oil exploration projects at Shell will be presented. No prior understating of statistics is assumed, but for those who have had a course in the subject, this talk will attempt to repair the damage. See www.ProbabilityManagement.org for more information on Probability Management.

Sam Savage is Consulting Professor in Management Science & Engineering at Stanford University, Senior Associate of the Judge Business School at Cambridge University (UK), and President of AnalyCorp Inc., a firm that develops executive education programs and software for business analysis. Sam holds a Ph.D. in computer science from Yale University, and has published a wide array of technical and non-technical articles with recent contributions to the Washington Post, Harvard Business Review and Journal of Portfolio Management. His book, Decision Making with Insight has been called "a Must Read" by Harry Markowitz, Nobel Laureate in Economics.

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