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Posts Tagged ‘Levitt’

I thought this was so good, I wanted to reprint it here.  Greg (Man Saves Dog blogger)

By Steven Levitt, Award Winning Economist and author of Freakonomics

There are two kinds of problems in business. Messy ones and neat ones. Inventory forecasting is an example of a neat problem. You can go in and count the inventory in the morning, then count it again in the evening and calculate the depletion and replenishment needs – model it and become more efficient. It might not be easy to develop the tools for optimal control of inventory, but at least the problem is well defined and everything is easy to measure.

Then there are the kinds of problems I like. The messy ones. The ones where it is hard to even know what the right questions to ask are. And once you ask the right question, figuring out how to answer it isn’t easy either. These are the kinds of problems that people tend to fall back on conventional wisdom to answer, but these are also precisely the problems where conventional wisdom is most likely to be wrong. (more…)

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