BI and Poor Decision making

Good Decision/Bad Decision

This has been something of a preoccupation for me of late. We spend much of our time debating the technologies. We invest valuable time in deciding if we should we go with mega-vendors (IBM, Oracle, SAP) or a challenger? We agonise over should it be cloud or on-premises, mart or warehouse, dimensional or relational? And it is all, frankly academic if the businesses is not making good decisions.

There is no shortage of material that try and make sense of why good people and great businesses make monumentally bad decisions. In the book ‘Thing Again:Why Good Leaders Make Bad Decisions’ by Sydney Finkelstein, Jo Whitehead and Andrew Cambell the focus is on the strategic decisions that have dramatic and highly visible consequences for the organisation.

Good People in Great Organisations Can Make Poor Decisions

An example is one of the UK’s premier retailers Boots which enjoys one of the largest footfalls in the UK. Established in the 19th century, it is now a subsidiary of £20billion Alliance Boots. In September 1998, the Chief Executive, Steve Russell excitedly announced a range of healthcare offerings including dentistry, chiropody and laser hair removal. Five years later, the initiative had lost in the region of £100m and Boots needed to break open the piggy bank and look down the back of the sofa for another £50m just to close down the operation and convert that premier retail space back to being … retail. It almost goes without saying that the changes were implemented by a new CEO, Richard Baker.

Apparently, one of the chief reasons for making the move into Healthcare services was  that a slowdown in the Beauty business ‘had been detected’. However a spokesman was later quoted in the Telegraph as saying that ‘they recognised that these areas are still growing strongly’.

Let’s stop there for a second. Spotting trends in sales and revenue by product category is probably marketing and business 101. And even the most rudimentary business intelligence solution should be trending sales over time. Yet the trend in sales in a key category for Boots was diagnosed as slowdown and only a few months later as growth. Of course, the slowdown may have been a short-term blip but the point of trending is to smooth these out for the purpose of longer-term planning. And, the error in trending might be more understandable had it not been for the fact that the later growth was characterised as ‘strong’.

Of course, I am not on the board of Boots and I have an advantage shared with all those analysts and commentator that put the boot (or should that be Boots) into Mr Russell … hindsight. Indeed, it’s a testimony to the strength of Boots as a high street giant that they can make major booboo’s and still go on to survive and thrive.

The Problem with Decisions …

And organisations are complex systems of individuals and interactions. Large organisations are very complex. This is why organisational decision making doesn’t always stand up to the scrutiny of us as individuals who retrospectively try and apply the logic of rational decision making to such mistakes.

There are a number of problems associated with individuals making decisions. Individuals have bias, self-interest, pre-conceptions. There are also a number of problems with organisational decisions. Groups have to manage conflict, disagreement and there are dynamics that can produce undesirable outcomes like Groupthink.

Today BI’s only Contribution is a Report, Chart or Dashboard

So if we accept that the purpose of Business Intelligence is to help organisations make better decisions (surely there is no debate here?) then Business Intelligence applications have to be more than reports, dashboards and charts.

They need to make decisions easier to collaborate around, they need to link decisions directly to the information that is required to make them. Furthermore decisions need to be open, transparent, accountable not just for the regulators but so that the whole organisation can buy into them.

 

Decision Making Black Holes

 

A Funny Thing Happens at the Forum

Meetings are one of the most common decision making ‘forums’ we are all regularly involved in. In fact one in five company meetings we take is to make a decision. As a way of making decisions though, they can be problematic. Once the meeting has concluded, the connection between information shared, decisions made and actions taken can be weak even lost. It’s as if the meeting itself were a decision making black hole.

Some Decisions are More Equal Than Others

Some decision making meetings are impromptu for making a timely, tactical decision quickly. Others are regular, formal and arranged around the ‘drum beat’ or ‘cadence’ of a business to make more strategic decisions. The more strategic the decisions and longer term the impact the less frequent the forum so a Senior or Executive Management Team may only meet quarterly for a business review (QBR)

How a QBR ‘Rolls’

A typical QBR will see Senior Managers sharing results in PowerPoint, possibly with financial results in spread-sheets which I would hope have at least been extracted from a Business Intelligence application.

If the SMT are reasonably well organised, they will summarise their conclusions and actions in meeting minutes. The meeting minutes will be typed up by an assistant in a word document and then distributed in email.

Throughout, they will all have been keeping individual notes so will walk out with these in their daybooks. The most senior manager in the room might not do this particularly if it’s their assistant who’s taking the minutes.

Later, actions from daybooks and minutes are likely transferred to individuals to-do lists and all follow-up will be conducted in email and phone calls.

An Implosion of Information, Conclusion and Decision

So let’s recap. Critical decisions about how resources are going to be allocated will be discussed in a ‘QBR’ and yet the artefacts of this critical decision making forum are scattered into Word documents, excel spread-sheets, emails and outlook tasks. Tiny fragments of the discussion, information, conclusion, decisions and activities implode around the organisation. To be frank, the team are now only going to make progress because the forum was recent and can be relatively easily recalled.

Of course, once time or people move on so does the corporate memory of the decision. Conversations begin with ‘what did we agree to do about that cost over-run?’ or ‘why did we say we were ok with the revenue performance in Q1?’

Executive Attention Deficit Syndrome

Many executives complain of a syndrome that feels like ADS. This is because the more senior the manager the more things they will probably have to deal with at an increasingly superficial level. A functional head will probably spend no more than 15 minutes on any one thing. To productively make decisions they will need to be able to have the background, status and related information to hand so that they can deal with it quickly and move on to the next thing. Decision making black holes contribute to this feeling of EADS.

CDM and Corporate Memory

Corporate Decision Making platforms will be successful when they connect;

• Decisions
• Information on which the decision was made
• Insight derived from the information
• Actions taken on the decision
• Results of the actions

This means total recall of corporate decisions good and bad so that, over time, decisions can be recalled, evaluated, re-used or improved. A far cry from current decision making forums which whilst functional are inherently flawed, fragmented and are not improving the timeliness and quality of decisions in our organisations.