Gut Check: It’s 2019, How Does Your Organization Defend Their Decision Making Without Data Driven Algorithms?

07/08/2019

 
Written by Bohdan Olinares

 

YOU’VE ASKED A HUNDRED TIMES FOR AN ADDITIONAL HEAD COUNT. To you it’s obvious, your department clearly needs another person. Maybe it’s not an extra person, maybe it’s a piece of equipment or an application.

No matter what the resource is you’re requesting, you are 100% confident it will be a net gain for your organization. So why haven’t you or your department been able to get the approval?

You’ve gotten the same song and dance every time, “we’ll look into it”. A few days/weeks later the response comes back something like, “we don’t have room in the budget right now”. You’re frustrated because you know the money from your request would be more valuable to the organization than a number of other investments that are already in the budget.

The problem starts with having to understand which goals/KPIs/metrics or simply value, are measured when making decisions.

I’ll go out on a limb and say you don’t have a good handle on that from an enterprise level, because in my past experiences the only value I’ve been given when requesting something is how is it going to make the organization more money.

For you Government folks, you’ve probably heard something more along the lines of “How is this going to improve our services to the public?”. At face value that is a fair question; a businesses’ overall goal is to make money and a government’s overall goal is providing service to the public.

BUT does it make sense that in order for you to get a request approved you have to understand exactly how every application or your department’s productivity is translated into dollars or how it directly translates to an improved service to the public?

Shouldn’t you just be able to provide your planning/budget office localized data on potential positive impacts and a risk assessment of the requested resource?

Shouldn’t the planning/budgeting team then be able to take the data and quickly understand the requested resource’s impact on value while maneuvering around financial constraints?

…Yes, this is exactly how it should work, because it’s 2019 and the technology is available to get this done without pretending something like a resource request is a task too complex to do quickly and efficiently.

For the sake of this thought experiment let’s say you did know what the planning/budget team’s value measurements are, and you’re able to quantify the impact your request has to your organization. That still doesn’t mean you’re definitely getting approval when you need it or approval at all.

Your request being denied can be as simple as the budget has already been set for the given time period. Yes, in 2019 a set budget somehow is still a good enough excuse to not make a change that can have a material impact to your organization.

WHY? Well it would take days or weeks, maybe even months, to do the manual effort of making a change to the budget while factoring in all of the value variables, cost/time constraints and risk to determine if a small request is a better choice than the investment mix that has already been budgeted.

One change can have a huge ripple effect throughout the whole organization.

All of a sudden, it’s not just a decision based on making money or even value, but now it’s timelines, how does the change impact the yearly /quarterly /monthly departments goals/targets and even what the organization has put out as expectations to their customers. At best a budgeting tool will be utilized to try and accomplish this.

The tool may have capabilities for advance calculations and be able to measure financial impacts such as ROI, NPV etc. and at worst your organization is using a spreadsheet (again it’s 2019). The budgeting tool might even have scenario planning and what-if analysis capabilities. That means your bases are covered, right? You have an easy button to quickly understand scenarios and the tradeoffs between those scenarios! Well, actually it’s not actually addressing the real issue…

With scenario planning and what-if analysis capabilities the limiting factor is still needing to create the scenarios to then compare. How does a team or person, within a reasonable amount of time, complete the almost impossible task of having to factor hundreds to thousands of investments, timing constraints, budget constraints, impact to value, and then create the best investment scenario that is easily defendable?

WE HAVE COMPUTERS TO DO THIS!! More specifically ALGORITHMS to do the calculations necessary to then enable the employee or team to quickly produce scenarios and perform the what if analysis within the parameters they set.

STOP TRYING TO HAVE EXPERIENCE COMPETE WITH DATA SCIENCE! THEY SHOULD BE WORKING TOGETHER! Enough with the thinking of, “I’ve done this for years I know what investments to select” because what you are saying is, you can compute all the possible scenarios by factoring all the possible variables together in your head and you will always select the best selection of investments.

It sounds pretty stupid doesn’t it? Utilize data science to augment your experience to make decisions; it’s a tool that is designed to enhance your decision powers. Humans own companies/governments so humans will always make decisions to drive their strategic objectives.

A strategic budgeting/planning tool that utilizes algorithms should never be positioned to give you the perfect investment mix. Instead, it should power your ability to quickly create scenarios based on your framework of value (not just allow you to compare user created scenarios) and inform you of the trade-offs of whatever measures are important to your organization. From there it’s time for the human element to weigh the trade-offs of each scenario and select the scenario most in line with their organization’s mission.

Imagine a world where decisions weren’t just made based on who has the political power to push their agenda through, but measured against values that are predetermined and agreed upon with every investment tied to growing value. It’s time for decision makers to drop the equivalent of their brick cell phone and start using smart phones.

The obvious need is for a strategic planning/budgeting tool that utilizes algorithms which allows for decisions to be quantified and easily understood, while limiting the fog of politics. It allows for an agile/continuous planning process that provides a comprehensive understanding of potential changes to a budget in a fraction of the time versus the current process.

A tool that utilizes data driven algorithms enables changes to be made on the fly and get you that employee or resource you have been requesting when you need it. Or at a minimum, finally giving you a straightforward answer of why there is no room in the budget this year.