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BLOG: Data Analytics will fail if executives ignore the numbers

Rob Enderle | Jan. 7, 2013
One major selling point for data analytics is that it gives executives the information they need to make the decisions that are best for the company. However, if executives don't read the reports before signing on the dotted line, or if they expect research groups to write reports to justify their decisions, then there's no point.

This was also about the time I first ran into argumentation theory, which suggests that we are hard-wired to hold in high esteem people who win arguments. What's really screwy about this, when put in the context of human nature, is that we don't seem to care that much if someone is right, only that he prevails. To that end, we'll follow executives that win arguments no matter what.

Now think of Ballmer's position. (I'm picking on Microsoft because I really tried to fix this problem and was catastrophically unsuccessful, and argumentation theory may explain why.) Ballmer's a business guy in a company formed around a brilliant software developer, Bill Gates. This would be like putting a hockey coach in charge of a tennis team. I don't care how long you're there, chances are you won't survive unless you figure out a way to fix the game.

My working theory: Ballmer inadvertently tasked research with a role of making his positions look right after the fact to offset the problem of him running a company of experts in an area where he wasn't an expert himself. The sad thing is that, had he approached analytics a bit differently, he could have made better decisions, held his position of power and made Microsoft a better company. I still hope he'll eventually see this path before his time there is up.

Effective Data Analysis Comes Before a Decision

Perhaps the saddest decision I was ever part of was IBM selling ROLM. I was part of the analysis team-and my report on how to turn the unit around instead convinced Ellen Hancock to sell the unit in the first place, since it showed a number of areas that needed substantial work.

What was sad about the sale was that our internal study clearly said selling this business unit to Siemens would be a catastrophic failure for the unit. This should have prompted IBM to either sell to someone else or make the sale final. Instead, IBM sold half of ROLM to Siemens and carried 50 percent of the resulting losses for five years. The unit lost more money over that time than IBM initially paid to acquire it. Subsequent analysis showed that, had IBM just shuttered the business, it would have been billions of dollars ahead.

The ROLM mistake happened because the decision was made before the research was done. Apparently the IBM executive team forgot it had even commissioned the research in the first place. If you're going to do research, it needs to come before the decision is made-afterwards, as this decision shows, it has the high probability of making executives look like idiots.

 

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