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NICE ROUND FIGURES

On one of my weekly lectures to Philips international executives we were developing a decision tree, inserting subjective probabilities, calculating pay-offs and outcomes and discussing the value of transferring the technique into real-life situations. The group appreciated that it was not an academic exercise but a procedure with practical value that could be applied to day-to-day operations; they became more wary of possibilities and a little more hesitant with their suggestions.

"What figure are we thinking of?" I asked, referring to the potential market for one of Philips' products, my pen poised ready to insert their response on the overhead transparency (OHT). But there was a deafening silence. After a pause, Stuart McNair, at the back of the group said, "Two hundred and fifty thousand, Len".

"OK," I said and inserted the figure 250,000 on the OHT. I continued and reached the point where we needed to agree on a particular percentage and insert it into the calculation. "What percentage, do you reckon?" I asked.

Again, a little longer silence. Nobody ventured until Stuart at the back said, "Len, I think five percent." I paused a fraction before inserting the figure, thought about it, agreed it was rea-sonable and said OK' and inserted it in the calculations on the OHT.

We then discussed the actions that would have to be taken, how many people would be in-volved and what supporting promotion would be needed. I walked from behind the overhead projector, round my table to the front, stopped and said, "Now we come to the crucial point - how many customers are we talking about?"

Rather too quickly I thought, Stuart McNair came up with the figure, "Two hundred and fifty, Len!"

I returned to the overhead projector to insert 250, but before doing so paused, looked up and asked, "Where are you getting all these figures from?"

"They're nice round figures!" he replied. The group broke out in laughter. What he had said was indisputable. They were acceptable figures that fitted in with what we had been discuss-ing. Nice round figures that everyone could agree with.

This got me thinking. Nice round figures (NRF) are in the areas we are expecting; they aren't odd amounts, over or understated but figures we can accept. Surely, this would be a general tendency and if one quoted figures that were somewhere in the right area, easy to understand, not awkward with several decimal places, people might readily accept them.

I put it to the test at a board meeting later

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