If the decisions are poor then BI is for nothing

 

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.

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.

Garbage Can Theory

However, what my own experience tells me is that information is all too often disconnected from the decision.

There is a theory of organisational decision making referred to as the 'garbage can model' ('rubbish bin model' to me) It points out that organisations comprise problems, people that can solve the problems and people that make the decisions. The model asserts that these three things are typically disconnected so that the successful application of all three things appears to be random. I would add one more to James G March and Johan Olsen's model ... information from which an informed decision can be made. Of course another variable makes successful decision making even more random.

 

The availability and application of the factors behind a well informed decision go some way in helping us understand why leaders with great track records in premier businesses make awful decisions. As practitioners in information solutions I would assert that it is time that we stop building islands of business intelligence and build systems that connect more closely with the people that make the decisions. I also need to find another high street chain that can help me with laser hair removal.