why won’t managers use my data? or: an invitation to become a decision engineer
DESCRIPTION
Dr. Lorien Pratt, Quantellia Chief Scientist, challenges you to advance your career by becoming a Decision Engineer. This emerging profession is a natural extension of business intelligence, and Dr. Pratt presents research to show that decision engineers are desperately needed. Learn how to design decisions, and some best practices as you help your organization and clients to gain that maximum value from data, "big data", databases, your expertise, and more.TRANSCRIPT
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#GMSQL
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Why Won’t Managers Use My Data?Or: An Invitation to Become a
Decision EngineerDr. Lorien Pratt, Chief Scientist, Quantellia
Mark Zangari, CEO, Quantellia
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About Me
• Based in Denver• Former college professor• Research focus: applied analytics/neural networks• Wrote Learning to Learn and a lot of articles• Ran market analyst team with Frost and Sullivan• Co-founded Quantellia in 2008• Chief Scientist
• US Government spending• Community Justice Advisors analysis / Liberia
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Agenda
1. Decision Engineering: Research showing the importance of this need
2. Research results for what’s needed to fill this need
3. How to do it: key steps
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Global research study:Q: What is the biggest
problem that technology should be solving, that it
is not?
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Global research study:Q: What is the biggest
problem that technology should be solving, that it
is not?A: Decision making
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Where all this great data could
be used
Where the data is actually
used
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Strong Demand for Better Use of Data
"We use predictive analytics in the following areas"
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
"Better use of our data and analytics could produce substantially more value (cost savings
and/or revenue growth) than it does today"
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Ineffective Navigation Structure the Norm
"We use predictive analytics in the following areas"
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
0% 5% 10% 15% 20% 25% 30% 35%
"We have an effective business navigation structure in place, where we make decisions,
monitor their outcomes, then adjust decisions as needed to achieve our business goals"
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Human Resources2%
Environment2%
Pharmaceuticals2%
Financial Services2%
Nonprofit3%
Manufacturing3%
Defense7%
Public Health7%
Media10%
Information Technology
11%
Telecom-munications
52%
Source: Quantellia (2008) Number of samples = 61
Market Research
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Decision Making
Source: Quantellia (2008). N = 28
Approximately 86% of organizations do not consistently follow a formal methodology for ensuring sound decisions.
We have a formal
methodology and we gener-
ally follow it14%
We have a formal
methodology but we do not adhere to it
very closely or consistently
29%
We follow an in-formal "rule of
thumb" methodology
32%
All decisions are made in an ad
hoc manner25%
How carefully do organizations make decisions today?
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So why don’t managers use my data?
Because their most essential needs aren’t
met
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Wanted: Decision Engineers
This can be you.
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What is Difficult in Your Organization About Making Decisions?
Source: Quantellia (2008) N= 61
Decision making problems involve many business factors: especially communication, collaboration, and visualization
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Mine Unstructured Data Sources
Include domain expertise
Common Methodology for Visualization
Sensitivity Analysis
KPI Identification / Dashboard
Integrate with Excel
Model Building Wizard
Handle uncertainty, e.g. by visualizing confidence levels
High powered quantitative engine
Multiple bottom lines / objective functions
User Friendly
Need for decision maker to tweak models themselves
Templates / pre-canned models and/or data
Social / Value Network Visibility
Iterative Methodology
Organize information / Help with overload
Need to represent intangibles
Qualitative plus quantitative data together
0% 2% 4% 6% 8% 10% 12% 14% 16%What features would be most valuable in software that supports decision making?
Source: Quantellia (2008) N = 61
Decision makers have many needs that are not met by current decision support systems
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Systematic Decision Making Problems• “We focus on only one measure, when there are really
multiple objectives.”• “We make decisions that assume a predictable
unchanging future.”• “Our focus is on short-term goals,
ignoring long-term ones.”• “We are unable to reason about long
cause-and-effect chains.”• “We ignore intangibles like morale, reputation, trust, and
brand.• “We plan for only a single future scenario when
radically different courses of action may be appropriate, depending on how the future unfolds.”
Revenue Communit
y Service
Cost
“Five years from now, the market for our product will have grown by 30%”
“I can barely plan for next quarter, how can I think about the future, too?”
Reduce Time We Spend on Customer Care Telephone Calls
Lower Customer Care Costs
Improved Contribution Margin
Unhappier Customers
Reduced Knowledge of our Customers
Greater Customer ChurnWorse Contribution Margin
Brand
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GAP
Decision Makers
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Decision Makers
What will be the impact of today’s
decision, tomorrow?
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“What price should I charge for this product?”
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“Is my money better spent on more servers or more iPads?”
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“Which buildings should I transform to cloud/VOIP first, to
maximize business benefit?
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How can I design a new democracy to meet the health and legal needs of rural
populations, given limited funds?
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What price should I charge for my new mobile service?
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Data
Data
What will be the impact of today’s
decision, tomorrow?
Decision Makers
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Q: So how can I get my data more widely used?
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Q: So how can I get my data more widely used?
A: Realize that a decision (like software) can be engineered, and apply
engineering principles to its creation and
management
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What have we done in the past when the complexity of a problem eventually exceeded our ability to manage it?
Analogies from History
• Small structures require little planning, commit few resources, and have relatively few consequences if they fail.
• As we try to build larger structures, we need more is needed.
• There is a ceiling beyond which the complexity becomes too great.
• An engineering discipline provides the organizational and communications tools that enable much larger structures to be reliably erected.
Example: Construction.
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Decision making has reached its own complexity ceiling…
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To overcome the complexity ceiling, we need to create a structured paradigm for decision making…
We need Decision Engineering.
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Previous times we’ve introduced visual engineering approaches
Manufacturing
Incr
easi
ng v
isu
aliz
ati
on /
inte
ract
ivit
y
over
tim
e
Software Decision Making
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“[It is essential] to visualize not just the data used to support decisions, but also the decisions themselves. [This is an] essential need in both the commercial and nonprofit worlds.”
-Lynn Langit, Developer Evangelist at Microsoft and author of the book Smart Business Intelligence Solutions with SQL Server 2008
Quantellia: Winner of the 2009 Microsoft Windows 7
Innovation Award
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"In an age of global complexity, the time for making decisions is ever-shrinking, and the cost of bad choices too great to tolerate. Quantellia created a tool for making the right decisions in this environment.”
-Guy Pfeffermann, former Chief Economist of the International Finance Corporation (World Bank); Founder and
CEO of the Global Business School Network (www.gbsnonline.org).
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“Telecommunications companies, along with other businesses challenged by the rapid pace of a global environment, recognize the competitive value of applying Business Intelligence and analytic tools to the vast stores of data they generate. Visual, actionable decision engineering solutions are the next evolutionary step in BI, to help get at what decision makers need and how they think, rather than on what data managers can provide.” - Susan McNeice, Vice President - Software
Research, Yankee Group (www.yankeegroup.com)).
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“Anyone facing complex decisions with many participants and stakeholders, mounds of data, and limited resources to address the decision-making process, should look closer at visualization tools … Visualized decision support—decision engineering—is fast becoming a key part of effective business management.”
-Karl Whitelock, Director Strategy – OSS/BSS, Stratecast, a Division of Frost and Sullivan (www.frost.com ).
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What does all this mean in practice? Some keys
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To make the best use of data, you have to start by setting all the
data aside.Really.
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Time for a blueprint for decisions
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Key Elements of a Decision ModelDecision Levers
Outcome #1
Outcome #2
Outcome #3
External Factors
Decision Levers
Decision levers: Factors over which we have control.Examples:• Price of a product• Features of a
product• Investment in sales• Investment in
marketing• Investment in OSS
External Factors: impact the outcome but over which we have no control Examples: • Competitor price• Market demand
Intermediate Values
Intermediate Values: Facts and values that are calculated along the way to determining outcomesExamples: sales volume, mean time to respond, sales expertise level, fallout rate
f
f
f
f
Outcomes: Measures of successExamples: Margin, Brand, Share Price
Dependencies: how one part of the model depends upon another, through cause-and-effect or other flows. Examples:How does MTTR respond to investment in CSR training?How does brand respond to sales staff expertise level?Note: these can be determined through traditional analytics, staff expertise, or industry benchmarks
Goals: targets against outcomes. Example: 5% margin growth in 2 years.
f
f
f
Data
Analytics
Analytics
Analytics
Predictive
analytics
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Understand time
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Understand how feedback loops end up dominating many
systems
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Proprietary and Confidential Not for Reproduction Without Permission of Quantellia Copyright © 2010, 2011 Quantellia Inc All rights reserved.
Demonstration #1: Carbon Tax
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Understand that Situational Data + Decisions + Time = Outcomes
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Use Human Intelligence (especially when data is
imperfect)
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Planning Phase
Implementation Phase
Objectives
Specification
Design
Qu
ality Assu
rance
Alignment
Execution & Monitoring
ChangeManagement
Secu
rity
Apply best practices of the engineering lifecycle
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Beware the Whack-a-Mole
“When I lower costs in one part of my business, it ends up creating bigger problems in another.”
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My decision is only as good as the data that
supports it
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My decision is only as good as the data that
supports it
Not
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How: Since only 10% of the data impacts 90% of
the decision, problems with the 90% matter much less. Know which is which
Use sampling / statistical to extract excellent analytics from messy data
Use human expertise when data is imperfect
Good Decisions from Imperfect Data
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Start with the decision maker, not the data
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Follow the decision value chain / connect the dots
Customer experience investment
Improvement to a KPI
Improvement to brand
Changes to demand
curve: sell same product
at a higher price
More revenue for the same
cost
Keep asking why
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Understand time
Demonstration #2: Blue Jeans
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Decision Engineering
• Like automobile design• Key competency: being
able to understand how the system will work
• Key competency: using judgment where data is missing
• Like monitoring a working vehicle
• Key competency: detecting problems accurately and quickly
• Key competency: diagnosis
Operational Monitoring
vs.
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Data Is a key element, because Situational Data + Decisions +
Time = Outcomes
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Decision Engineering is the Next Generation of Business Intelligence
Decision EngineeringPredictive
AnalyticsReporting/Business
Intelligence
Data Management
Wanted: Decision Engineers.
An invitation: change the world.
(or, just do the next cool thing)
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THANK [email protected]
303 589 7476@LorienPratt
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#GMSQL