Tom AustinI am here at the New York Sheraton Towers Hotel, this morning and was just passed by someone in a formal waistcoat and other formal regalia – a veritable Rich Uncle Pennybags without tophat. I’ve been here many times before in my life, from its early days as the Hotel Americana, famous in business school lore because (per the case studies that were published), its builders (and investors) showed the acumen to ignore by-the-book investment analysis and bet big on a vision for what could happen if their instincts paid off more handsomely than the IRR models their analysts were using.
I’ve seen software vendors, consulting firms and others cite statistics showing that business managers feel they lack the data to make the important decisions they face. And, opine the sellers, that proves people should spend more money hiring more business intelligence specialists, more financial analysts, more analytical tools and platforms, better data warehouses and all of the other modern accoutrements that surround (at least part of) the art of making business decisions.
Speaking solely for myself, of course, I ponder the logic and reach a very interesting prediction:
- Whether firms invest enormously in the recommended ways or not, 10 years from now, the vast majority of business managers will still continue to feel they lack the data to make the important decisions they face!
The problem statement – executives lack the data they need – is a canard, a clever ruse, an attempt to delude through allusions to a state that is not to be achieved.
Does that mean that it doesn’t benefit firms to devote more resources to analytics, business intelligence, data warehousing, performance monitoring, management and alerting mechanisms and that they shouldn’t hire more consultants, read more case studies and repeatedly question their decision making processes to ensure they have the best possible data available? Of course not! All of this can be of assistance to the business.
But the data business managers really need does not exist! Because the easy decisions are conclusions drawn from historical data (and existing strategies). The hard decisions are the ones that require creating assumptions, scenarios and perhaps even visions of the future based on fragmentary, early indicators, weak signals, instinct, expertise-based early pattern recognition and “gut feel”. These are decisions about the future!
So while I wander by a huge convention-event here at this hotel, in search of breakfast, and gawk a bit at the outlandish clothes some of the speakers at a conference on investing in private real estate investment pools (or whatever it is they’re selling), I realize these outsized characters have something no BI tool, no enterprise information architecture, no performance monitoring model provides. They have a sense of the intangible variables that influence billions upon billions of dollars of investments. They are students not just of statistics and markets but also of human nature.
So if you really want to help senior business executives make better decisions, figure out what it is they need before investing in a new, better rear view mirror … or data warehouse.
We are big (with very good reason) on helping enterprises establish “one version of the truth” – but we aren’t very good yet at helping enterprises establish “one vision of the future”, particularly when that vision is at odds with the current zeitgeist.
What would Rich Uncle Pennybags do?
How do you think we can help enterprises tune their early detection systems? And their early decision systems?
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2 responses so far ↓
1 Nick Jones June 11, 2009 at 12:22 pm
Tom, there are many ways of thinking about the issue you raise. One is that business bets that rely on a single specific future vision are dangerous. Any vision of the future can be derailed by unforeseen events. The future is defined by the fact it’s unknown and largely unknowable.
So one strategy is to bet on capabilities not products. This is, I suspect, what the folks at Google do, more or less consciously. Some days someone at Google wakes up and thinks: wouldn’t it be cool if….. and something like Wave, Maps or Earth is born. When they start investing in it, they don’t know exactly how it will work or even what features it will have. But they tend to create extensible and flexible capabilities that can be used in lots of different ways, and then let the community of developers find out what they’re for. So in many ways Google doesn’t care which future emerges, their technology will still be relevant.
A classic product development process based on detailed market forecasts and intelligence can pay off big time if you’re right, but tends to be fragile if the future doesn’t turn out the way you expect. Although it’s heresy to say so, as a Gartner analyst I am often worried when people ask me for detailed market forecasts, because it can sometimes indicate someone with too narrow a view of the future.
Nick
2 Betsy Burton June 11, 2009 at 5:38 pm
Tom -
Your posting reminds me of a “behind the scenes” tour of a major gambling casino that I had the pleasure of taking (…don’t ask why…that is a whole different posting). The executive giving the tour explained that at one time they considered automating the job of the pit bosses by creating an RFID-based system that tracked all the card, dice, chip and even drink movements on the gambling table. By the way..I learned that the pit bosses are the ones walking around the casino tracking and managing the floor. The casino did a pilot program and tried the computerized system out. In the end, they found that it couldn’t compare to the accuracy and speed of the pit bosses.
Why not??? Thinking like a geek…I was pondering the details. Was it a problem with the RFID chips, maybe the data transfer…maybe the issue was with the analytics tools? I must have had a pretty quizzical look on my face, because my guide said… “Let me show you.”
We walked over to one of the pit bosses. He was a 50+ year old man in a dark suit leaning against a podium, tapping his pen and generally looking bored off to space. My guide said, “Hi Fred, can you tell us what’s going on?” The pit boss proceeded to instantly rattle off how long each person had been sitting in his area, how much they had bet, how much they lost and won and what they were drinking. Based on his immediate and on-going tracking of the floor he and the management could make immediate decisions about deploying resources, serving more drinks, calling security or upgrading a high value gambler.
Every once and a while the pit boss would write down a few pieces of data that that were then later input into a data repository for trend analysis etc.
I give this organization a lot of credit because they realized that in fact there was a trade-off benefit of not automating and mechanizing everything. They realized that there was a whole generation (in fact multiple generations) of people, who had honed the internal gut skills to rapidly analyze incoming data, processes it and do something with it. AND also provide a level of customer service that was unmatched.
Finding that balance is essential. Just automating, warehousing, consolidating, outsourcing, clouding…or pick another buzz word……without an understand of why and understanding the cost and benefit, is just missing the point. There maybe a wealth of opportunity in the experience, the gut and the skills of people within your business that you might be unwittingly missing.