Recent research has suggested that political and cultural organizational factors are the greatest challenge in adopting advanced decision analytics programs (articles referenced below). ‘Analytics culture’ is framed as being a complex of: 1) fact-driven leadership, 2) expertise (tools and skills), and 3) processes (linking analytical insight to strategy and operational decision making).
Critics and commentators have extended such analysis by questioning whether a change management program is enough to adopt fact-driven / evidence-based leadership or ‘analytics culture’. A reliance on and belief in intuition-based decision making from heroic, omniscient ‘leader/experts’ is a deeply ingrained generational belief tied to the Anglo-Saxon business paradigm. Barbara Kellerman’s recent work ‘The End of Leadership’ treats this topic in detail.
Such traditions are not easily or quickly routed, despite the clear value creating power of efficacy and efficiency demonstrated by advanced decision analytics (i.e. Walmart, Amazon, Google, FedEx). Organizational decision making is deeply embedded in organizational architecture, the complex of decision rights and access to information (role-based power), incentives (motivation for ‘selfless cooperation’ beyond agency interests to achieve organizational goals), and assessment systems (how performance is measured and leads to rewards and punishment).
The Anglo-Saxon business paradigm deifies the heroic and omniscient leader/expert, a sort of enlightened warrior/king or queen character. This is starkly resident in the individual-focused incentive and assessment systems underlying most corporations. The 360-degree performance assessment is focused on individuals, but also locks agents into vassal-patron networks.
It is atypical for a corporation to promote team/group assessment and incentive programs over individual assessments. It challenges the myth of independent heroism and the political paradigm of individual meritocracy. Indeed, to assess and grant bonuses to teams and groups solely would strike some as distasteful: something smacking of socialism in all its perfidy. The notion that organizational performance is tied foremost to groups and collections of people challenges the deep core of the ‘Me Generation’ – the meritocratic, consumer-driven culture that embodied the post-WWII American and European economic surge.
It may take a decade or two to fully train and socialize a new breed of organizational “leader-follower” (as per Kellerman’s notion of ‘followership’), one that truly embraces evidence-based decision making processes and procedures. To an old-school heroic-expert, intuition-based manager, adopting evidence-based decision making is a prisoner’s dilemma: as long as their cohort is competing based on old school expert-heroics, they stand to lose standing in a particular organization.
The proper organizational-wide incentives and processes are not yet in place in the typical organization to support broad evidence-based management. The conundrum: as long as individuals en masse actively or passively resist the evidence-based decision paradigm, it will be difficult to gain proper traction to adopt decision analytics organizational culture. Such change needs to be top-down, yet the irony and challenge is that ‘the top’ is heavily invested in maintaining the status quo where arbitrary and mercurial individual intuition rules by fiat.
Decision making rights in commercial organizations are commonly hardened by agency politics and entrenched biases / heuristics (i.e. Dunning-Kruger effect, bandwagon, confirmation, attention, overconfidence, framing), making the adoption of new model-driven decision making processes fraught with both tacit and overt resistance.
In this context, there is a driving need for improved understandings of the specific ‘socio-structural’ mechanisms for facilitating efficient analytics-driven organizational decision making processes. Likewise, organizations increasingly need to explicitly confront the subtle tendency to overlook, abandon, or sabotage new decision making models and techniques due to entrenched heuristic biases and/or agency factors.
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Kellerman, B. (2012). The End of Leadership. New York: HarperCollins.
Kiron, D., & Shockley, R. (2011). Creating Business Value with Analytics. MIT Sloan Management Review, 53(1), 10.
Kiron, D., Shockley, R., Kruschwitz, N., Finch, G., & Haydock, M. (2011). Analytics: The Widening Divide. MIT Sloan Management Review(Special Report), 21.
LaValle, S., Hopkins, M. S., Lesser, E., Shockley, R., & Kruschwitz, N. (2010). Analytics: The New Path to Value. MIT Sloan Management Review, 22.
LaValle, S., Lesser, E., Shockley, R., Hopkins, M. S., & Kruschwitz, N. (2011). Big Data, Analytics and the Path From Insights to Value. MIT Sloan Management Review, 52(2), 13.
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[…] Implicit in the concern of rejecting advanced analytics is the notion that a decision model has marginal declining utility as the efforts dedicated to model management (principally design, validation, and implementation) increase as corresponding value decreases (see Figure 1 below). The danger is that organizations deem complex decision making too unmanageable, too costly, and too risky, and therefore retreat to a new ‘Dark Age’ driven by traditional intuition-based management. Such a retrenchment to traditional intuition-driven, top-down management paradigms contains its own danger, as addressed in another recent post: https://sctr7.com/2013/05/19/the-once-and-future-king-is-anglo-saxon-business-culture-its-own-worst-e… […]
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