Game theory and Business Intelligence, no really

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I followed a recent tweet from our Professional Services Manager recently linking to a blog here on game theory as it relates to social media activities.  It resonated with me immediately from a business perspective.

The synopsis of the blog (and I'm not doing it justice) is that the like of Twitter, World of Warcraft, Farmville etc are poster children for the practical application of Game Theory.  These phenomenon fuel increasing interest (which translates to absorbing vast amounts of individual time) through engaging their followers with a series of incentives that derive directly from the principles of Game Theory.

A great article – one quote in particular grabbed me:

So despite that nothing is actually being accomplished,
it generates a feeling of accomplishment.”

Humans will engage in activities that create no tangible value and yet feel that they are doing something important – achieving something.  The brain response is the same.  We have nothing more valuable to contribute than our time and focus of attention.  Yet perfectly sane and effective individuals choose to devote many hours of their precious time pursuing outcomes that are intangible and in most cases illusory.

What then is the link to business? Senior managers, particularly in large organisations are acutely aware that a significant proportion of their workforce are engaged daily in activities that contribute no actual value to their organisations' Mission and Vision.  In fact some activities are often downright detrimental.  The staff engaged in these activities are not bad people.  in their own assessment they are very busy and feel confident that what they are doing matters; that they are fully engaged in the task of improving the organisation and helping it pursue its Mission and realise its Vision.

Sadly, they are not.

Why the disconnect? The larger an organisation becomes, the weaker becomes the transparency between cause and effect.  In a small organisation, the impact of an absence or dereliction of duty is almost immediately evident and has an immediate impact on the business bottom line.  In large organisations, whole departments can spend their entire resources in the wrong headed pursuit of projects that should have been killed off months before – and business just keep rolling along.

Even in small organisations, staff become like the proverbial Frog in the saucepan”.  The temperature rises so slowly and imperceptibly that by the time the Frog decides its time to move, its dead.  Equally, flawed processes and inherited sacred cows that go unquestioned clump on information workers like parasites sapping both vitality and contribution.

Does Business Intelligence play in converting this errant focus to full engagement with the objectives of the organisation? Emphatically - "Yes".  I need look no further than the first tenets of our own approach to Business Intelligence when we work with our clients.  The first tenet of CALUMO Rosetta© describes the people impact of Business Performance Management .  I've extracted an image below that we often use to discuss this.

image

On the left we discuss what we call Business DNA.  The process of:

Cognition->Decision->Action

 

Cognition contains two components, Identification and Understanding.  When we visit with potential clients who are starting the journey of BI and ask them why they are thinking about BI, they say they "need better visibility”.

This is an unintentionally vague response; akin to answering What do you want for dinner?” with Food”.

Our experience shows that, more specifically these organisations are looking to:

  • guide the focus of attention of their teams toward the pursuit of outcomes aligned with Mission and Vision of the organisation.
  • bring what matters into focus (Visibility) and present it within a context that, when combined with individual skills and experience, facilitates Understanding so that decision cycles can shorten and effective actions can commence and complete more effectively.
  • ensure that people expend their valuable focus of attention on aligned actions rather than stumbling in the dark without useful information, wasting time in information starved decision making processes and constantly reacting or putting out fires”.

Back to game theory - BPM and BI provide the critical information infrastructure (systems and processes) that creates the healthiest Business DNA.  It informs the individual while facilitating critical feedback and collaboration activities that enable better decisions faster and the execution of more effective actions sooner.  In this way, staff are not only happy in the service, they are re-assured that their service is the right service.  Business managers can be confident that, to paraphrase a long standing expression from Scott McNealy CEO of Sun Microsystems, all the wood is behind one arrow.”

I'm interested in whether this resonates with you.

If you are interested in reading further about game theory or the raft of other interesting bits and pieces that Richard Parsons regularly uncovers; go ahead and follow him.

All the best,

Dom

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