Make Better Decisions Thomas Davenport: Harvard Business Review Nov Sara Terwall 5/3/2011

Agenda Background Making Better Decisions Competing on Analytics Framework for Improving Decisions Do’s and Don’ts Competing on Analytics Key Attributes of Analytics Competitors Sources of Strength Moving from an Analytics User to and Analytics Competitor Discussion Questions

Background Consultant: Author: Professor: Named one of the Top 25 Consultants in the world by Consulting magazine in 2003. Named one of the 100 most influential people in the IT industry by Ziff-Davis magazines in 2007 and 2008. Directed research centers at Ernst & Young, McKinsey & Company, CSC Index, and Accenture. Author: Thirteen books, including the first books on analytical competition, business process reengineering, knowledge management, and the business use of enterprise systems. Hundreds of articles and columns for such publications as Harvard Business Review, Sloan Management Review, California Management Review, Financial Times, Information Week, CIO Professor: Babson College, Andersen Consulting Institute for Strategic Change, Boston University School of Management, The University of Texas

“In God we trust. All others bring data.” - W. Edwards Deming Making Better Decisions

Framework for Improving Decisions Four Steps Identification Inventory Intervention Institutionalization Industry Examples Educational Testing Service Stanley Works

Do’s & Don’ts Don’t build a model you don’t understand Make assumptions clear Practice “model management” Cultivate human backups Don’t use a decision approach if it doesn’t apply

“Do we think this is true? Or do we know?” - Gary Loveman Competing on Analytics

Key Attributes of Analytics Competitors Widespread use of modeling and optimization Capital One Progressive An enterprise approach UPS Proctor & Gamble Senior executive advocates Sara Lee Moneyball by Michael Lewis

Sources of Strength The right focus The right culture The right people The right technology Data Strategy Business Intelligence Software Computing Hardware

Moving from User to Competitor Apply systems/analysis to a range of functions Top-down support of analytics from senior management Make fact-based decision making not only best practice, but part of the culture Don’t just hire people with analytical skills, but the very best skills Manage analytics at an enterprise level

User to Competitor Cont. Invent proprietary metrics Use your data, but also share with customers/suppliers Create a “test & learn” culture Commit to building your capabilities for several years Emphasize importance of analytics internally and externally

Discussion Questions Of the 10 keys to becoming a competitor, which do you think is most important and why? Aside from those previously mentioned, what are some companies you think use analytics to their advantage? What companies do you think could benefit from increased focus on analytics?

Quiz Which of the following is NOT one of Davenport’s four steps of decision making? Identification Inventory Inspection Institutionalization