In a data-led world, intuition still matters

A new book argues that the best decision-makers combine good data with sound judgment.

by Daniel Akst

November 17, 2022

 

Decisions Over Decimals: Striking the Balance between Intuition and Information

by Christopher Frank, Paul Magnone, and Oded Netzer (Wiley, 2022)

For as long as there have been decisions, people have used facts (lately known as data) to make them, along with reason and intuition. Nowadays, though, data often seems to be making decisions for us. Just as ‘analytics’ has changed the face of sports, business data prompts computers to order products, cut prices, or take other actions that once required human thought and intervention.

But data needs people just as much as people need data. Business leaders must decide whether to launch a new product line, expand into a new continent, buy or sell a business, or change a venerable logo. So how can managers use the torrent of data available to them to make the best decisions? That is the timely subject of Decisions Over Decimals, a concise guide to decision-making in the age of analytics written by Christopher Frank, Paul Magnone, and Oded Netzer, a trio of business veterans associated with Columbia University (as well as American Express, Google, and Amazon, respectively).

“The challenge in today’s world is not the lack of information but the judgment to use it,” they write. Data-based decision-making is unavoidable but comes with risks: “Data and numbers tend to provide the comfortable feeling of accuracy and certainty, but they rarely tell us the full story. Numbers alone can never provide a perfect solution or answer, and they will never immunize decision-makers from faltering.”

What business leaders need, the authors argue, are techniques for combining good data with sound judgment. Over the years, they’ve developed an approach called Quantitative Intuition (QI) to help executives make informed choices. And they are convinced that QI, oxymoronic as it may sound, can be learned. “Combining quantitative information with intuition—human judgment developed through experience and close observation—is indispensable.”

In its broadest outlines, QI doesn’t look different from what any sensible person would do to make a decision. But as the authors walk us through their process chapter by chapter, various valuable insights, large and small, emerge.

For example, they cite the late organizational theorist Russell Ackoff’s observation that “we fail more often because we solve the wrong problem than because we get the wrong solution to the right problem.” They point out that you don’t know what data you need until you properly frame what you’re trying to decide. The data can only take you so far on this essential question because you have a view of the broader business landscape, including, of course, the complexity of your own business. “Don’t expect the data to provide both the questions and the answers,” the authors warn. “It is your responsibility to home in on the essential question and then combine data with intuition to identify the answers.”

Because the authors consider clarifying the problem significantly, they believe it’s worth senior management investing time to do so upfront, saving time and error for everyone later. “Why?” questions, asked of subordinates in a near childlike fashion, can help in problem-defining. Why do you want to conduct such a study? Oh, to know customers better. Great, but why do we want to know them better just now? And so forth, leading eventually to the real issue at stake.

In a data-led world, intuition still matters

 

A Collaborative Business Culture Is a Must-Have for Transformational Change

By Myles Suer

October 26, 2022

CMSWire - The Leading Community of CX Professionals

 

Collaboration & Productivity

 

With a culture of collaboration, everything is easier. Can you use some of these collaboration strategies for your teams?

In my discussions with CIOs over the last several years, they have repeatedly stressed the importance of considering people and processes before technology. The transformational change CIOs are leading needs to fit with their organizations.

After reading "Smarter Collaboration" by Heidi Gardner and Ivan Matviak (the book reaches shelves on Nov. 1), I think collaborative business culture is a must-have for organizations needing transformation change. This culture should, as a goal, put IT into a team that is creating the corporate future. For this reason, I recommend "Smarter Collaboration" to business leaders and CIOs. With a culture of collaboration, everything is easier.

Why Collaborate?

Gardner and Matviak start their book by asserting that competition moves faster in the digital era. Speed can be a competitive edge or deterrent. The authors argue firms that succeed at transformation figure out how to collaborate across silos and build teams with complementary skills. And this is increasingly the essence of competitive advantage. While technology and the ability to “sense that the snow is melting at the edge” still matters — without collaboration, some organizations can have a "Kodak moment" where the middle of the organization rebels against corporate strategy.

For this reason, businesses today need contributors that can build networks across boundaries and then invoke those networks to deliver value to their companies. The author’s research shows collaboration accelerates innovation, increases customer satisfaction and enhances employee engagement. And these result in higher revenues and profits, greater market share, improved efficiency, accelerated growth and improved transparency and risk management. To prove this point, they provide case studies from multiple industries.

Importantly, smart collaboration also impacts employee engagement. Today, 30% of employees worldwide and 67% in the US say they are not engaged. Expectedly, working remotely tends to increase worker isolation. Given this, CIO David Seidl said in a recent #CIOChat that “today, we're focused on how we build connections and communities for new hires and maintain it for everyone.”

This matters, the authors say, because today’s business uncertainty and complexity are best tackled by a diverse team with complementary talents. The reference to complexity is similar to Professor Russell Ackoff, who suggested, “our environments have become larger, more complex, and less predictable — in short more turbulent.” (“Creating the Corporate Future,” Wiley Press, page 4).

A Collaborative Business Culture Is a Must-Have for Transformational Change

 

 

Susanne Kaiser on DDD, Wardley Mapping, & Team Topologies

"Wes Reisz: Great. There's so many things that are in software. What made you decide to bring these three things together to kind of a story?

Susanne Kaiser: Yes. So for me, the combination of Wardley Mapping, Domain-Driven Design and team topologies evolved naturally over time, but it was at its core driven by system thinking. So, Dr. Russell Ackoff, one of the pioneers of the system thinking movement, he stated that a system is more than the sum of its parts. It's a product of their interaction. So the way parts fit together, that determines the performance of system, not on how they perform taken separately. So, and when we are building systems in general, we are faced with the challenges of building the right thing and building the thing right. Right? And building the right thing addresses effectiveness, and addresses questions such as how aligned is our solution to the users and business needs. Are we creating value for our customers? Have we understood the problem and do we share a common understanding and building the thing right?

Focuses on efficiencies, for example, efficiency of engineering practices, and it's not only crucial to generate value, but also being able to deliver that value. How fast can we deliver changes, and how fast and easy can we make a change effective and adapt to new circumstances. So, the one doesn't go without the other, but as Dr. Russell Ackoff pointed out doing the wrong thing right is not nearly as good as doing the right thing wrong. So, by considering the whole, and having effectiveness and efficiency in mind to build the right thing right, that we need a kind of like holistic perspective to build adaptive systems. One approach out of many is combining these three perspectives of business strategy with Wardley Mapping, software architecture, and design was Domain-Driven Design, and team organization was team topologies. So, in order to build and design and evolve adaptive socio-technical systems that are optimized for fast flow of change."

Susanne Kaiser on DDD, Wardley Mapping, & Team Topologies

“Systems Thinking” announced as 2022-2023 Common Experience theme

The Common Experience at Texas State University has announced that the 2022-2023 theme will be "Systems Thinking." Texas State presents an engaging academic theme each year, providing numerous opportunities for everyone — students, faculty, staff, and community members. Systems Thinking was chosen as the Common Experience theme for 2022-2023 because students are made of, surrounded by, and embedded in systems from the moment they enter the world. When they choose to attend Texas State, they choose to insert themselves into one of the most impactful systems of their lives — one that will allow them to change the world.​ When one understands a system, one can better navigate it.​ When one can navigate a system, one can advocate for change.​ As part of the Common Experience, all incoming first-year students receive a critically acclaimed book related to the year’s theme. Students discuss the book in their University Seminar class and other courses. The 2022-2023 Common Reading book is Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy by Cathy O'Neil. First-year students will receive a free copy during Bobcat Welcome Week. The Common Experience team encourages and welcomes interdisciplinary collaboration. To discuss the theme, events, and activities planned for the 2022-2023 academic year, contact (512) 245-3579 or [email protected]. 

Julia Brodsky

Contributor

 

I inquire about the meaning of education in our fast-changing world.

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Nov 9, 2020,04:34pm EST

Primary school students enjoy discovering interdependencies in the world around them.

getty

We live in a world of complex, interconnected systems. They range from big corporations and the Earth’s biosphere to social networks and our own bodies. Complex systems have many components that interact with each other in dynamic patterns. They chug along quietly and uneventfully until, one day, they unexpectedly turn our world upside down. Hurricanes and pandemics, elections and market crashes - all inevitable products of complex systems - ceaselessly remind us of our limited understanding of the world. What’s missing is the ability to notice and comprehend the counterintuitive nature of complex systems. This ability, called “systems thinking,” is recognized by educators, scientists and entrepreneurs as one of the most valuable skills for the 21st century.

 

 

The concept of systems thinking was introduced several decades ago by the late Jay Forrester of the MIT Sloan School of Management, who founded the field of systems dynamics to describe economic behavior and advance management education. Forrester recognized that systems thinking could, and should, be taught to students starting at an early age. Dr. Tracy Benson, the President and CEO of the Waters Center for Systems Thinking and one of the international leaders in the field of systems thinking education, is helping to implement Forrester’s vision. The Waters Center provides training in habits, strategies, and tools of systems thinking to educators and entrepreneurs around the world. 

 

A recent longitudinal study conducted by the Waters Center explored the benefits of systems thinking in schools. The study found that systems thinking helped students connect their learning to real-world problems, improve their decision-making, and consider the unintended consequences of their choices. Likewise, a framework for K-12 Science Education developed by the National Academy of Sciences recommends the incorporation of concepts such as “stability and change” and “systems models” into the science syllabus. The framework, which informs state-level educational decisions, draws on the most recent scientific research on the best ways for students to learn science. However, systems thinking has yet to become a backbone for a modern school curriculum.

Why Students Should Be Taught Systems Thinking Starting In Kindergarten

Success is the result of creative thinking and intuition, not scientific systems.

By Ed Smith

 

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My experience of elite sports supports that argument: without insight, “process” and “methodology” don’t hold much value. Insight is the first domino. It is the quality that the greatest coaches and strategists possess above everything else. They originally see the game, allowing them to perceive how winning happens in ways that others cannot. They are like poets and scientists in this respect: they apprehend the game more clearly and form a superior understanding. Often their insights are bound up with making surprising connections or seeing analogies that others miss. “The creative mind,” in Jacob Bronowski’s phrase, “is a mind that looks for unexpected likenesses.”

Ironically, so much time is wasted studying the “motivational tactics” of great sports leaders (invariably personal and impossible to imitate), which entirely misses what’s actually inspiring and motivating about them: their gift of apprehension, the clarity of their insights, the freshness of their vision. A great coach might or might not be articulate, but they are certain to have a philosophical talent for seeing through to the essence of the game.

McGilchrist’s arguments have implications for how organizations that claim to pursue excellence –  whether businesses, schools, universities or hospitals – should perceive and arrange themselves. He argues in favor of wide-ranging thinkers who have the imagination to apprehend what’s needed, and then the perspective to know which levers and methods are best suited to bringing the project to fruition. Instead of trying to turn life into a machine, adapt your thinking and approach to life.

The primacy of insight and perspective also explains why organizational charts – designed so that accountants can apportion salaries and bureaucrats can file “appraisals” – are not only often fantastical but counterproductive. By encouraging a delusion of mechanistic order, they cut against creativity and genuine collaboration.

“The idea of a Gestalt is central to this book,” McGilchrist writes, “by it I mean the form of a whole that cannot be reduced to parts without the loss of something essential to its nature.” This idea is also highly relevant to team sports. A team must and can only be a collective and living whole. The whole is always different from the sum of its parts. That is true even in sports that (superficially) appear to be a series of independent events, such as cricket and baseball, as well as sports that have intrinsic flow, such as football and rugby. (It is a myth, as the cliché has it, that cricket is “a team game played by individuals”. It is, in fact, an individual game played by teams.)

McGilchrist attacks the notion that a collective endeavor can be chopped up, the elements polished separately, and then subsequently reassembled into a superior whole. He sees it as inappropriate in the human sphere. Indeed, it isn’t even true for machines. Russell Ackoff, the American systems thinker, asked his students to imagine a lecture hall filled with the best component parts drawn from every car manufacturer (the best brakes, the best suspension and so on). If all the best bits were then assembled, would it create the best single car? Of course not. The way a car fits together is, to a significant degree, the majority of what a car manufacturer does.

McGilchrist puts it like this: “I suggest that relationships are primary, more foundational than the things related: that the relationships don’t just ‘connect’ pre-existing things, but modify what we mean by the ‘things’.” In this context, I don’t think McGilchrist is using “relationships” to mean “how people get along with one another socially”. He means “how they relate to each other fundamentally in the creation of the whole”. This connects with the point made by Juanma Lillo – the mentor of Manchester City’s manager, Pep Guardiola, and who is now assistant manager at the football club – when he warned against criticising players without appreciating the context: “My mentality is interaction and relation. If you say, ‘Let’s evaluate the right-back,’ I say, ‘But who is alongside him? Who is in front of him? Nearest to him?’” (Lillo also said, “You can’t take an arm of Rafael Nadal and train it separately.”)

Of course, everyone wants to believe that success can be turned into a system – because a system can be copied and profitably “scaled up”. But there are no systems that can deliver success without intelligent steering by good thinkers. A good process can filter out errors (which is very useful), but it cannot yield insights.

Further, and this theme runs throughout the book, insight, and creativity can only be controlled and willed up to a certain point (even among people who have the talent). Believing there is a complete process for creativity is fundamentally anti-creative. “Brainstorming is practically the antithesis of creativity,” McGilchrist argues, reassuring if you feel looming despair every time someone picks up a marker pen in front of a whiteboard and says, “let’s brainstorm”.

Success is the result of creative thinking and intuition, not scientific systems.

Doing management the wrong way

In the UK, the supposed panacea of good management has proved to be a chimera. The country has been training managers in the discipline of managing for decades, but very little good has come of it.

If one looks at the public and private sector one sees more bureaucracy, greater intensification of work in which fewer people have to cope with downsized operations to deliver greater shareholder value, while the public sector is not improving in spite of huge cash injections and the UK falls behind Germany, the US and France in productivity.

According to the National Audit Office, the public sector in the UK spent £7 billion on consultancy in the past three years to little effect.

Management itself has become the problem. The reason for the failure is complex. In a nutshell, it is because the UK has been following the wrong way of doing things and constantly trying to get it right. But as the systems and management theorist Russell Ackoff said: "The righter we do the wrong thing, the wronger we become. When we make a mistake doing the wrong thing and correct it, we become wronger. When we make a mistake doing the right thing and correct it, we become righter. Therefore, it is better to do the right thing wrong than the wrong thing right."

The wrong thing managers have been doing is central planning, a command-and-control management model reminiscent of the Soviet Union. On top of this essential wrongness are a host of service companies and consultancies from IT to PR who reinforce the model with their own additions and refinements.

Doing management the wrong way

Russ Ackoff Systems Lecture

Russ Ackoff Systems Lecture
His lecture on systems thinking
1975
A must-see video!
A lecture was given by a young-ish Russ Ackoff. Covers many topics. It's copied from a VHS tape, so some areas have tracking issues. Keep watching, it will clear up.

 

 

Data’s New Paradigm

Jan 27, 2022

By Dan Graves, CTO, Delphix

It’s not an accident that data is the bedrock of the Data, Information, Knowledge, Wisdom (DIKW)  pyramid made famous by Russell Ackoff in 1989. That expresses the shared conviction that data are the basic foundation on which all knowledge is built. 

Except that’s not how data and knowledge work. It’s not even that there’s a more fundamental layer beneath data. Rather, the very shape of the pyramid reinforces a paradigm that has outlived its purpose. A pyramid is too stable, too linear, and way too one-way in its direction. It’s an Industrial Age model in which raw materials—data—are refined and transformed into a usable product.

In an age in which data is increasing exponentially, and our new technology, especially machine learning, can’t get enough of it, we need to flip the pyramid. Then we need to thoroughly rethink what data is, the context we want to use it in, and how to get the most value from it. 

In the old DIKW pyramid, the line between data and information is actually a warehouse—another remnant of the Industrial Age. Data warehouses have served businesses’ predictable needs since the 1950s when the modern idea of data became prevalent in business.

Under this old definition, data are atomic elements of knowledge, siloed according to the department and application that developed them and tagged with metadata that reflected how that data was anticipated to be useful. The value extracted from them after they were delivered was likely to be forever lost

Data’s New Paradigm