In the new book "The Master Algorithm" by Pedro Domingos, the author makes the casual but very telling observation: "all information is statistical". This observation is based on Frank Knight's seminal views on risk and uncertainty. With so much understanding of the relationship between information and statistics, it is surprising there is not more business literature on the role of assumptions in business planning and modeling. A few good articles on the subject that I will use in my graduate engineering class on entrepreneurship are below.
- Want A Better Valuation? Decrease Your Assumptions.
- You Tube Assumptions—Sequoia
- Discovery Driven Planning--McGrath
- Managing Project Uncertainty: From Variation to Chaos (MIT)
- The Hierarchy of Engagement
- Theory of the Business--Drucker
Reasonably confident that Knight influenced Drucker and Drucker influenced McGrath, but I cannot find any documentation. The Hierarchy of Engagement is an article by Greylock Ventures and very practical. The Sequoia article shows the assumptions they made in their You Tube investment.
The Master Algorithm should be required reading for everybody. If you want to understand AI, this might be the only book you need to read. No math in the book.