Make Better Decisions Thomas Davenport: Harvard Business Review Nov. 2009

1. Make Better DecisionsThomas Davenport: Harvard Business Review Nov. 2009 Sara Terwall 5/3/2011

2. Agenda • Background • Making Better Decisions • 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

3. Background • Consultant: • 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

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

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

6. 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

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

8. 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

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

10. 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

11. 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

12. 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?

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