By Stephen DeAngelis
I have often quoted Bain analysts, Michael C. Mankins and Lori Sherer, who stated, “The best way to understand any company’s operations is to view them as a series of decisions.”[1] They added, “We know from extensive research that decisions matter — a lot. Companies that make better decisions, make them faster and execute them more effectively than rivals nearly always turn in better financial performance. Not surprisingly, companies that employ advanced analytics to improve decision making and execution have the results to show for it.” Although I agree with their observations, they beg the question: Where should decisions be made? There are experts who insist that decisions are best concentrated in Decision Centers or War Rooms and there are experts who insist that decisions are best made throughout an organization (i.e., decision democratization). I suspect most businesses would benefit using a hybrid system that leverages both a decision center and democratized decision-making.
The Case for a Decision Center
Nearly two decades ago, Ronald G. Ross, cofounder and Principal at Business Rule Solutions, and an expert in enterprise decision management (EDM), introduced the idea of the Decision Center.[2] Like Mankins and Sherer, Ross knows that business decisions matter a lot. He wrote, “Operational decisions provide the actual value-add for the business — not the rules used to make those decisions per se. In other words, rules are simply the means to some important business end, some operational decision(s) to be made. So if you want to make the business and its processes smarter (and who doesn’t!?), you must enable better decisions.” He went on to argue, “To support smarter decisioning, your business needs at least two things: the right kinds of platform, and the right kinds of techniques and organizational skills. These two things are often confused. … The Decision Center focuses squarely on the latter — the right kinds of techniques and skills.”
During the pandemic, the business landscape changed so rapidly that many companies had difficulty keeping up with unfolding events. During that time, George Bailey, a senior Fellow for the Center for Global Enterprise (CGE), noted that many companies were asking, “What should we do?”[3] His answer to that question was, “Set up a ‘war room’.” He also made it clear that the “war room” should become a permanent decision center. Why? “[Because] the Coronavirus supply chain impact [was] not an abnormal exception, but [was] an expected occurrence given a world where political disruptions, health issues, technology advances, and climate change are all happening at the same time.” To help our clients through the pandemic, Enterra Solutions® created the Enterra Global Insights and Decision Superiority System™ (EGIDS™) that helped business leaders rapidly explore a multitude of options and scenarios. EGIDS is part of the Enterra System of Intelligence™, a cutting-edge approach that combines the power of a human-like reasoning and trusted generative AI with explainable machine learning and real-world optimization to drive intelligent decision-making and fuel business growth.
The Enterra System of Intelligence includes our set of integrated cross-enterprise business applications that break down traditional organizational siloes between marketing, sales, supply chain and planning functions. This unique System of Intelligence acts as an autonomous “brain” within an organization, enabling real-world optimization and decision-making across the value chain at market speed, with the subtle judgment and expertise of an organization’s best subject matter experts or data scientists. The system builds upon accumulated business logic, ways of working, and practices of an organization in a proprietary-for-the-client capability. This System of Intelligence can be controlled through a Decision Center; however, thanks to Generative AI, its advantages can be leveraged across business functions, geographies, and lines of business.
The Case for Decision Democratization
As I mentioned at the beginning of this article, companies will likely gain the most value by adopting a hybrid decision-making approach that involves both a Decision Center and democratized decision-making. Ross explains, “[A Decision Center] is not the execute part of the organization; that is, it’s not where operational decisions are actually made on a minute-to-minute basis. Rather, it’s where the techniques and skills needed to improve and deploy decisions (or rather, deploy the rules to make the decisions) are managed. … The Decision Center is a center of excellence where operational decisions are enabled (not made).” Ross makes a clear distinction between strategic decisions, which are best made centrally, and operational decisions that are made throughout an organization. The point I’m trying to make is that most business leaders are reassessing how and where decisions are being made throughout their organizations.
According to Ganesh Gandhieswaran, cofounder and CEO of ConverSight.ai, “We are now seeing … more supply-chain organizations embrace a new model of decision intelligence to rewrite the rules of the game.”[4] He explains, “The next generation of decision-making is already here. Decision intelligence delivers early and immediate access to data and trends, driven by artificial intelligence and forward-looking predictive analysis and with a middleware layer capable of abstracting multiple sources of data to provide a single, unified view, and all of it delivered with a natural language interface.” During the pandemic, researchers from Aon found, “What separates companies in a position of strength from those who feel weakened by the pandemic is this: The understanding that better decision-making is data-driven — but not data-only. Insights driven by data, paired with expert analysis and advice, is critical to navigating a path forward in a world of interconnected risk.”[5]
One of the challenges of decision democratization, even AI-assisted decision-making, is that decision fatigue can affect almost anyone. Letting cognitive systems make routine decisions can improve both morale and productivity. That’s why Enterra® is focusing on advancing Autonomous Decision Science™ (ADS®). As I noted in another article, “ADS technology can autonomously analyze data, generate insights and make subtle, contextually informed, judgment-based decisions quickly, accurately and with limited human intervention, and then learn from the results of those decisions. It can effectively reshape the way companies structure and optimize their value chain.”[6] The Enterra System of Intelligence is able to Sense, Think, Act, and Learn®.
Concluding Thoughts
Although there has been a lot written about why it’s important for companies to be data-driven, I’m convinced that the most successful companies will be decision-driven. As journalist Jeff Haden explains, “Contemplation and reflection are important, but nothing ever gets done until you actually get started. In business (and in life), a bias toward action is important.”[7] Journalist Pam Baker adds, “Data mining, as it is done today, tends to be less insightful and more of a mandate on what to think. By flipping the model to put the decision first, you are taking aim at the desired outcome you want to cause. That outcome can itself be positive or the best of bad options, but it is at least what you intended to happen. In this way, intention directs the process rather than the data. In the decision-driven enterprise, every data-fueled project is directly pointed at an acceptable and expected result or return on investment. This creates better control over where the company or project is steered. It should also substantially reduce project failure rates.”[8] Being decision-driven helps close the gap between reality and aspiration. The kind of decision that must be made determines the location where it should be made.
Footnotes
[1] Michael C. Mankins and Lori Sherer, “Creating value through advanced analytics,” Bain Brief, 11 February 2015.
[2] Ronald G. Ross, “The Decision Center ~ A Center of Excellence for Coordinating Business Rules and Other Process ‘Smarts’,” Business Rules Journal, Vol. 8, No. 12, December 2007.
[3] George Bailey, “Coronavirus And The Remaking Of Global Supply Chains,” Forbes, 6 March 2020.
[4] Ganesh Gandhieswaran, “The Pandemic Is Driving a New Model for Supply-Chain Decision Making,” SupplyChainBrain, 4 March 2021.
[5] Staff, “A New Approach to Volatility: The Importance of Making Better Decisions,” Aon, October 2021.
[6] Stephen DeAngelis, “Why Manufacturers Need to Rethink AI in Supply Chain,” Industry Today, 27 May 2022.
[7] Jeff Haden, “How to Make Better Decisions, Faster,” Inc., 9 June 2023.
[8] Pam Baker, “Why Your Company Should Evolve From Data-Driven to Decision-Driven,” InformationWeek, 7 March 2022.
