|A Deductive Technique|
West Churchman used the I Ching as an example of management information in a quantitative methods textbook. Finding this material written by a philosopher who advocated rational techniques gave me comfort presenting the material to students. At least another business scholar had accorded the Chinese classic recognition. Added emphasis appears in red, and my reactions are enclosed in a box: (Note 160)
A Historical Example
Quantitative methods are not a new discovery that emerged with the advent of the computer. They may not be as old as all the hills, but certainly as old as some of them. It will be helpful to recount one quantitative method of using management information that dates back at least to 2000 B.C. in China because the reasoning and experience that were combined in this technique are very similar to that which we still apply today. The origins of the I Ching, The Book of Changes, probably go back to prehistoric times, and the book was certainly in use during the second millennium B.C. Its purpose was to provide decision makers with advice about their situation, and especially advice about how things will change. . . .
The method employed the technique of "throwing" stalks made from a yarrow plant. By a fairly elaborate counting procedure, the final results of the throws end in one of four possibilities: an old or new "yang" or an old or new "yin." Whichever occurs, the result is written on a piece of paper. A yang is represented by an unbroken line, a yin by a broken line. "Old" is represented by a circle around the yang or yin line. This process of throwing and counting is repeated five more times, and each time the resulting line is placed above the one that came before it. . . .
The six resulting lines are called a "hexagram," meaning a six place figure. In the I Ching you look up the hexagram you obtained; the appropriate passage associated with your hexagram essentially describes the situation you are in, and gives some advice and commentary about what it is wise to do. . . . Change is indicated by old lines; new lines indicate no change in the present situation. The book is not a fortune telling gimmick, since it is never specific, but rather is analogous to an expert who comments on the general situation - without telling you which choice to make. . . .
Besides being a book of great wisdom, the I Ching provides us with a very important lesson about the use of quantitative methods and management information. The management information consists of the book, which interprets each of the 64 hexagrams. But why should throwing yarrow sticks and counting lead us to the right hexagram, when "clearly" the whole operation is random? We'll see throughout this text that the meaning of random events is very important in decision making and that this meaning depends on what assumptions you are willing to make about how so called random events take place in the whole world.
For example, you might want to say that when you throw a coin the chances are exactly equal that the coin will come up heads or tails. But why? What do you assume about the world that justifies this belief? The Chinese sages would disagree with you. They believed that the whole world consists of two worlds, one of ideas, one of our everyday affairs. The events of the world of ideas "precede" the everyday events and influence their occurrence. Someone practiced in wisdom can succeed in getting the world of ideas to influence the yarrow sticks or coins so that they portray what is imminent in our everyday lives.
To the Chinese sages "random" means a kind of mystical influence that occurs in the "real" world of ideas. None of this appears to be very scientific to our Western minds, which do not particularly appreciate such hidden explanations. But we'll see later, when we discuss the use of randomness for decision making purposes, that even modern experts have to make strong assumptions about what is hidden in the natural world. So this need to make strong assumptions in using quantitative methods in preparing for decisions is the important lesson to be drawn from the ancient I Ching.
Reasoning as Deduction
We said that the method of the I Ching uses reason and experience; reason was used to develop and explain the theory of ideas which precede physical events, and to develop and explain the theory which ascribes a description of a situation for each hexagram. Experience was used to match the throws of the yarrow sticks with the appropriate description of the state you are in. Hence the methodology of the I Ching is an example of how reasoning and experience are combined to serve a decision maker. All quantitative methods are some combination of these two elements, reasoning and experience.
Sometimes reasoning is the dominant element, sometimes experience, sometimes the two are intricately combined. When reasoning predominates, we call the quantitative methods used deductive: the information is primarily in the form of assumptions, and the quantitative method used essentially involves deducing results from these assumptions. If experience predominates, the quantitative method is called inductive: the quantitative technique tries to generalize from the data that experience provides, and the information is primarily empirical data. There is an intricate and richer combination of reasoning and experience called the systems approach.