3 min read

Optimize Business Decision Making: A Quick Guide

Optimize Business Decision Making: A Quick Guide

Most Business Decisions Aren't Decisions, They're Optimizations

When I think of optimization, I often think of the data analyst down the hall who buries herself in mathematical calculations, data mining and feats of logic. I was pleasantly surprised to see a great example of managerial optimization during a presentation by Davina Kent from Comcast Spotlight at a recent event, Everything is Connected.

Davina was demonstrating her companies ability to measure advertising across television and online channels and help adjust ad weight to be most effective. She presented a four quadrant visual example with recommendations on what to keep, what to stop and what to rebalance or reallocate when comparing spend to advertising impressions.

What's the difference between business decision making and optimizing?

The differences between mathematical and managerial optimization include exactitude, complexity and method, but the underlying principles and goals remain the same the best or most effective use of a situation, opportunity or a resource.

The more interesting question is what is the difference between business decision making and optimizing? For business decision making we create lists of pros and cons, decision trees, matrixes, models and loops. Most of these methods are not about decisions, they are about collecting enough information to evaluate or optimize a result.

If we build foundational knowledge of optimization and how to approach improvement in utilization, these decision making tools can be used more effectively, transformed or maybe at some point, within the arts and magic of simplicity, made unnecessary.

 

Optimizing_spiritual_data_message

Thing that matters

What matters is the goal or objective. It could be the performance you want to maximize, the costs you want to minimize, the experiences you want to improve or a situation you want to change.

a) Things you can’t control

If there are variables related in some form or fashion to the objective that you can’t control, they will become your constraints. They won’t tell you how to reach your objective, but instead define your boundaries.

Gravity is a constraint for launching a rocket. The endlines and sidelines on a football field are a constraint for legal play. A budget is a constraint for spending. These may not all be indomitable constraints, but for the purposes of finding an answer now, they will clearly show things you cannot do.

When you take stock of your defined constraints you will have a playing field, or realm of feasibility. They are guardrails that you cannot cross and still achieve your objective.

b) Things you can control 

These are actions that you choose or decisions that you make. The combination of actions result in different outcomes. For advertising, you could choose a variety of different channels and invest a certain dollar amount in each channel. For office furniture, there are different configurations of desks, cubicles and shared work space that can be used to fit your company or team. For a game of draw poker, with the objective of winning a hand, you may chose to try for 4 pair or maybe a flush.

Data + the Human Touch

By trying different combinations of actions, you will see different outcomes. Some combinations will be sub-optimal. Others will reveal outcomes that come closer to your objective. You may be able to analyze immediately or you may need to experiment, depending on how much information or data you have and how much you still need to collect. 

In_God__Data_We_Trust_

You may ask why we need managers to optimize when these type of decisions could be made programmatic?

The Reality of Business

A computer can beat a human at the game of chess because it is able to calculate all possible alternatives within the rules of the game of chess and therefore make better choices - some may say optimal choices. Calculations can be predictive, but still we face the reality that life and business rules are not fixed and defined, relevant information is not an all-inclusive list and assumptions about the future are based on an ever-changing reality.

And so ... we still have the power of judgement and choices that aren’t calculated.

Good Sign believes digital transformation (and one of it's core capabilities of unified data) is a necessity for competitiveness in the future. Our systems offer access to granular information in your business and service operations, connectedness to other business tools, and real time visibility. This commitment to information enables day to day busines insight, decisions and consequently optimization.

I want to write so much more about this topic and hope to address in future posts, but here is a quick optimization process:

 

  1. Understand and define your objective. Learn how it will improve your business, affect your stakeholders and change your customer experience.
  2. Explore related activites, resources, limitations, relationships, ideas and implications.
  3. Create a 360 degree view of your variables to understand relationships, cause and effect, and the ability to change or influence them.
  4. Decide which variables can be changes, which are hard constraints and define your model.
  5. Test, experiment, change, try and learn.

 


 

Thanks for your interest and please comment or contact me directly. Don't forget June 16th:

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i want to share our insights into the telecommunications ecosystem, the effects of digitilization and share what you can do to capitalize on the latest opportunities. 

 

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