sascom voices - The sascom magazine blog

Yesterday at The Premier Business Leadership Series, I had the tremendous pleasure of attending the panel debate Balancing Intuition and Analytics in Decision Making. The panelists were: Malcolm Gladwell - Best-selling author of Outliers: The Story of Success, Blink and The Tipping Point; Tom Davenport - Best-selling author of Competing on Analytics: The New Science of Winning and President's Distinguished Professor at Babson College; and Thornton May - Futurist, Executive Director and Dean of the IT Leadership Academy .

The panel continued a discussion that Malcolm had introduced in his keynote address earlier about Judgment - the ability to make decisions in seconds based on the acquired experience of years of practical application (or the 10,000 hour rule - the amount of time it takes to be truly great at something). As an aside, I really wonder about this - why are there so many young successful people if you need a minimum of 10 years of experience; are they drawing on something more than just experience or raw talent?

At first glance, you would expect the panel to split pretty firmly into two camps: The "experience is king" camp led by Malcolm and the "you can't get enough data" camp led by Tom and Thornton. But what struck me as interesting was actually how close the two camps were: Malcolm admitted that experience needs feedback to be valuable (feedback from objective business analytics for example) and Tom and Thornton acknowledged that Analytics needs interpretation and judgment to put information into context and to formulate an appropriate response. As I paraphrased in Thornton's lunch, business analytics is the most powerful form of business decision-support not decision-making. In my opinion, when you get the mix of education, experience and (reliable) information right, you release executive creativity, not constrain it.

What they all agreed upon was that there has to be a greater understanding of the power and limitations of analytics in the boardroom - there are too many executives who are woefully underestimating or overestimating what can be done with these powerful tools. As the panel agreed, models don't kill businesses; fools with models kill businesses. On the other hand, what can't experts with models achieve?

Anyway, the panel was incredibly stimulating, all three panelists were insightful, funny, engaging story-tellers who could really get their points across and set us up for the afternoon Executive Workshops (I was in Thornton's). Although I must admit to some bias (Malcolm would pick me up on that anyway). I have to admit that, all things considered, this has been the best PBLS so far. If you were one of the unfortunate people who missed the conference (shame on you), I strongly recommend you visit the main site - the keynote sessions and panels were filmed and will be available as streaming video.It's not the same, but you would do yourself a disservice by not taking advantage of it.

Here's looking forward to the next event in the series in mid-2010 in Europe. I hope to see you there.

The second day of the conference began with a keynote address by Lord ‘Nick’ Stern of Brentford, the world-renowned economist and author of the Stern Review.

Firstly, Nick reviewed the carbon flow-to-stock cycle: we emit greenhouse gases as a by-product of our consumption, these gases build up (flow into) the atmosphere where they add to the global stock of such gases, finally the planet can absorb a certain amount of these gases. Historically a proportion of this absorption via the bio mass contributed via the carbon-cycle to fossil fuels which we then burn today as part of our consumption. Lord Stern also pointed out the critical interactions between this carbon-cycle and the water-cycle, and it’s most noticeable manifestation – climate change. Global warming is a major contributor to climate change, but it is not the only factor and is itself a result of the ‘double whammy’ of increasing greenhouse gases and the planet’s reducing capacity to absorb them.

From an economist’s point of view, this is a result of a fundamental failure of markets; we are not paying a realistic price for the things we consume because we do not properly account (pay for) the damage that our consumption does. To put it bluntly, we are passing a high proportion of this real (but hidden) cost of 'damage' on to our children and grandchildren. This doesn’t mean that we need to abandon the market system – but we do need to fix it. This has been done before; for example, prohibiting drink-driving does impact personal liberty, but reduces the ‘real cost’ of this irresponsible action by lowering the number of accidents, injuries and deaths. At the time it was controversial, but ask any young person today who has grown up with the legislation about whether they would repeal it now and they will laugh you out of the house. In my view, our current profligate abuse of the planet’s resources and biosphere is mass drink-driving, and the victims are going to be those not even born yet.

But Lord Stern wasn’t all doom and gloom. He is more optimistic that we can reduce the currently project risks of catastrophic climate change if we are prepared to act now and it need not mean an end to economic growth. In real terms, it will add 1-2% of cost onto global GDP, but this would be a one-time increment. This needs to be viewed as an exercise in risk reduction – by intervening now, we dramatically reduce the likelihood that our children will live in a totally different (and less pleasant) world. In a new initiative called the ‘Global Deal on Climate Change’ Lord Stern outlined what he believes we must do:

• reduce emissions of greenhouses gases by 50% by 2050
• engage the poorer countries
• make an international ‘cap and trade’ market work
• cut global deforestation by providing financial incentives and alternatives
• introduce and research new technological solutions and
• adapt (re-tool) our global economy

The role of business in all of this is to look at climate change as a ‘risk’ issue, as well as an opportunity, set an example to both government and consumers by moving on this issue ahead of legislation, communicate the opportunities and best practices and engage with government to drive the agenda.