Podcast: The Hard Stuff and Beyond

March 2, 2009

Listen to the Podcast:

Professional Judgment is truly the “Achilles Heel” of corporate decision-making. Daily, we see the media condemn how sound financial judgment has been undermined by an overreliance on opaque and complex risk calculations using flawed theories.

In reality, making a professional judgment is a cognitive process that happens inside the head of a decision-maker. By itself –and regardless of the inputs or tools used– this is a risky process because it relies on assumptions, speculation, intuition and personal experience. Inherently it lacks transparency. It can also be subject to biases and it usually fails to effectively balance quantitative and qualitative data.

However, corporations must make decisions –from Boards of Directors, to IT and finance managers, to the large number of qualified experts that oversee business processes in real-time. All of these executives and managers rely on their judgments and those of others. Given this complexity, how does one ensure that they’re actually making the best decisions possible?

Managing Risks: Consistency, Rigor, and Transparency
The best way to combat this complexity is to apply a decision rubric that enhances transparency and consistency while leveraging mathematical rigor. By documenting the key considerations, capturing evidence about these key factors and imbedding corporate knowledge, one can rigorously estimate the plausible ranges of risks. For decision makers, this offers the opportunity to simultaneously; mix hard and soft data, build an audit trail and apply clear risk tolerance policies using consistent estimates for the plausible risks of acceptable and speculative (or undesirable) outcomes.

Observations: Accountable, Responsible and Defendable
Complex decisions always involve a large human element. Today, because of media coverage decision processes are being diverted into debates over chaotic uncertainties like “outliers” or “black swans”. Since decision-makers are held accountable and are exposed to heightened scrutiny, they are receptive to BI techniques that ensure judgments are both defendable and transparent. This is visible for governance, regulatory, risk management, investment and other decisions in public and private organizations. Fortunately BI analytics can help. Some techniques even can exploit the characteristics of chaotic systems to provide predictive insights that offer an early diagnosis for undesirable outcomes.

Ray Gilbert is the Director if Decyde’s Business Advisory Board. Ray resides in Toronto Canada and has earned Bachelors and Masters Degrees in Engineering Science and an MBA from the University of Toronto. He has 20 years of combined experience in CIO-IT, engineering and customer service roles with Alcatel-Lucent, Lucent Technologies, Nortel and other high tech organizations. Ray has extensive experience as a keynote speaker on enterprise CIO-IT issues. He can be reached at (905) 855-1684 and at rg@decydeinc.com.

Kelly Hagen is the Co-Founder and COO of Decyde Inc. Kelly has 15 years of technology management experience with small and large companies. She is a co-founder and the Chief Operating Officer of Decyde Inc., a provider of cutting-edge software to make professional judgment calls consistent and transparent. Previously she was CFO and then President of InQuent Technologies Corp, a web hosting provider for Bell Canada, Cox Communications, and Telecom New Zealand which was acquired by Network Solutions in 2005. She can be reached at (416) 644-3194 and kh@decydeinc.com.

Posted by Carl · Filed Under Interviews