ManagementSpeak: Help me to understand.

Translation: I don’t know what you’re talking about, and I don’t think you do either.

Thanks to reader Brian Jaffe.

### Month: October 1996

## A letter to Dad about math (first appeared in InfoWorld)

Dear Dad,

Thanks for the e-mail. I enjoyed the joke, although I don’t really get the part about the nun and the rabbi. What you described them doing seemed out of character somehow.

Glad to hear your European trip was such a success. A German version of our new book, *Selling on the ‘Net* would be great, but since neither of us speaks German I’m not sure how we’d collect and analyze a bunch of German Web pages. Any ideas?

Speaking of the book, I know I promised to shamelessly promote it in my column. It just seems so crass, weaving in the title and publisher and pretending my readers really need to know it’s called *Selling on the ‘Net* by Herschell Gordon Lewis and Robert D. Lewis, published by National Textbook Company, for $39.95.

It would be one thing if there was any possibility of subtlety. Anyway, I’ll try.

You asked about my description of information theory a few weeks ago. I know it was a long shot. To answer your question, though … I may be, but since that’s hereditary you may not want to push the subject too far.

And besides, if it hadn’t been for the typesetting problem it would have been far clearer. Information entropy really is a great measure of complexity. Let me show you how you’d use it. You use four programs for most of your work: WordPerfect, AOL, the American Heritage Dictionary, and that CD-ROM with the world’s famous literature. WordPerfect is critical – give it a 5. AOL is important, so it gets a 3. You use the other two, but you could easily do without them, so they get 1 each. Add ’em together and you get a total of 10 points.

The formula should have been printed as:

-SUM[p(i)log(p(i))]

(You need the base 2 logarithm, so divide the regular, base 10 log by log(2) to convert it. Last time I used algebraic notation, but typesetters have a hard time with that.)

To get p(WordPerfect), divide WordPerfect’s score of 5 by the score total of 10 to get .5. Plugging all of your scores in:

-[.5*log(.5)+.3*log(.3)+.1*log(.1)+.1*log(.1)]/log(2)

which comes out to around 1.7. That’s a pretty low score – a pretty reasonable work situation. When it gets much over 2 things are getting complicated.

I know most business people avoid any statistic more complicated than a percentage, Dad, but that doesn’t have to be an absolute rule. If the best measure takes a bit more algebra, that shouldn’t be a hard barrier, should it?

Look at the formula for Return On Investment (ROI). That’s a polynomial series. A lot of people don’t understand why you put all of your costs into an artificial “Year 0” (you pretend all of your costs happen up front before you start figuring annual cash flows) but if you don’t, the polynomial could have more than one right answer. That gets hard to explain (“Well, boss, the return on investment is either 15.3% or -5.8% and we have no way to choose which one is more valid.”)

Or compound interest. You take the interest rate (plus 1) and raise it to an exponent equal to the number of years you’re compounding. People who don’t understand compound interest don’t even know if they’re losing ground to inflation, so it’s pretty important.

I know Americans take pride in being mathematically challenged, Dad. That doesn’t mean I should encourage the “Gumping of America” (GoA, to use the technical term) in my column. Ignorance may make good box office in Hollywood, but it’s a bad way to manage a business.

Okay, I’ll stop. Talk to you soon.

Love, Bob

P.S. I promise, I’ll find some way to flog *Selling on the ‘Net* in my column. Sigh.