Drawing on a lesson learned back at university, Peter Cochrane explains how the theories of physics can help run a more efficient business.

A breakthrough I had while studying physics at university has much to my amazement proved applicable many years later to the field of corporate management.

While at university I struggled greatly with many of the concepts of mathematics and physics. This was especially true of quantum mechanics and more specifically in areas concerned with semiconductor devices and the finite detail of electronic mechanisms.

On one occasion I was reflecting on the principal of the ‘quantum well’. Here was something tantamount to an electronic cliff face, where carriers at the top would fall down a chasm but not in relation to any applied voltage. In my mind I had mistakenly equated the attractiveness of the charge to the voltage applied.

The lecturer taking the class immediately spotted my difficulty and suggested an analogy that brought immediate understanding and has served me well for the rest of my life.

“Mr Cochrane,” he said. “Imagine a busload of drunken men at the top of a cliff. Open the doors and let them wander around at random. The chance of one of them stepping over the cliff and falling to their death has absolutely nothing to do with the height of the cliff – it could be 5m or 500m; it has nothing to do with the height.”

At that moment a light bulb came on in my brain and I understood immediately the way in which to look at this class of problem. I found myself able to understand and compute the right answers.

Years later I have found much of my work in mathematics, probability, physics, electronics and communications relevant to management and so coined a few terms and came up with images to illustrate to the difficulty of making decisions when confronted by ‘problem wells’.

For the purpose of visualisation, think of a large sheet of rubber onto which has been placed several rather large ball bearings to create dispersed and disparate depressions (or wells) in the surface. If you are blindfolded and wander around this surface, sooner or later you are going to slide down a hole. Your problem is now how to climb out. And for sure you will need more energy to get out than you needed to fall in.

This is a good analogy to the kind of management problems you find in government, companies and other sorts of organisations. There is seldom a single problem to solve, there always tends to be many. And you almost always have limited resources (such as your budget) and a limited degree of freedom in which to act. So what should you do?

All too often people adopt the most ineffective strategy – management by equal pain. When faced by a dozen problems they divide their budget into 12 portions to be applied to the entire set. The difficulty then arises when insufficient energy (or resources) in the form of money, people and technology is available to solve the problems.

The better strategy is to pick the biggest problem, or subset of problems, you are sure you can solve and put on hold any issues where there is doubt about the solution. Addressing problems in this way secures the greatest benefit to the bottom line in terms of increased productivity and profitability in the shortest amount of time. This in turn generates more resources that can then be applied to the remaining problems.

Of course in real life our sheet of rubber and ball bearings tends not to be static and problem wells come and go in various forms. Blindly making decisions on any basis is extremely dangerous and becoming increasingly so with our speed of communication and rate of economic development. Simple strategies tend to work well and provide solutions for a limited time but sooner or later a wrong decision will be made and catastrophe will follow. It is essential to invest in modelling the most critical situations to make sure the best decisions are made in a given circumstance.

What doesn’t work is the ‘equal pain’ solution so often demonstrated by government. Here every department is given a proportion of a budget and then left to their own devices to try and solve problems with often insufficient resources. In this 21st century we really do have to become a little more sophisticated.

Interestingly all of this is directly related to the black holes of astrophysics and the strange attractors of chaos theory – only the precise situations and subtlety of the mathematics differs.

Dictated during a manic day of travel in and around London from trains, cabs and coffee shops. Typed by my PA overnight and rewritten on the train back to Ipswich. Despatched to silicon.com via Wi-Fi the next day from my garden over a much needed coffee.