Decision Management Systems: A book review by Bob Morris

Posted on: November 3rd, 2012 by bobmorris

Decision Management Systems: A Practical Guide to Using Business Rules and Predictive Analytics
James Taylor
IBM Press/Pearson 2012

How business principles and predictive analytics can help to prepare leaders and their organizations for almost any contingency

Opinions are divided, sometimes sharply divided about the nature and extent of what can be accurately predicted in a business world in which change often seems to be the only constant. In his latest book, Antifragile, for example, Nassim Nicholas Taleb asserts that “by grasping the mechanisms of antifragility we can build a systematic and broad guide to nonpredictive decision making under uncertainty in business, politics, medicine, and life in general — anywhere the unknown preponderates, any situation in which there is randomness, unpredictability, opacity, or incomplete understanding of things.” I agree with Taleb that we cannot predict what is unpredictable but we can formulate, establish, and then sustain the “system” to which he refers.

These are among the passages that caught my eye and of interest and value to me:

o Managing Risk (Pages 8-18)
o Real-Time Responsiveness (20-23)
o Maximizing Assets (41-44)
o Principles of Decision Management Systems (47-66)
o Characteristics of Suitable Decisions (72-81)
o Develop New Decision-Making Models (176-183)
o The Three-Legged Stool (191-197)
o Table 8-1, Center of Excellence Profile Attributes (198-204)
o A Culture of Experimentation (222-228)
o Business Rules Management System (235-238)
o A Service-Oriented Platform (255-281)

Taylor is convinced, as am I, that individuals as well as organizations cannot control everything but they can control how they respond to what happens. The best responses are based on the best decisions and there are different types. Taylor discusses three in Chapter 4: strategic (“high-value, low-volume”), tactical (“focused on management and control”), and operational (“(of lower value and usually involve a single situation). He suggests four principles that address the characteristic capabilities of a Decision Management System: Begin with the decision in mind; Be transparent and agile; Be predictive, not reactive; and finally, Test, learn, and continuously improve). These principles will guide and inform decisions made both by individuals and by groups.

In Tom Davenport’s latest book, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment . That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” In all organizations, individuals at all levels and in all areas must make dozens (if not hundreds) of decisions each day, most of less but nonetheless of (at least potentially) significant value. Whatever their nature and impact, the best decisions are based on the best information, especially information gained from prior experience.

As Taylor explains, a repeatable decision “is one that is made more than once by an organization following a well-defined, or at least definable decision-making approach.” Of course, non-repeatable decisions cannot be automated according to any system, including the one Taylor proposes. However, it is also true that circumstances change. In this context, I am reminded of an incident that occurred many years ago when one of Albert Einstein’s colleagues at Princeton pointed out to him that he always asked the same questions on his final examination. “Yes, that’s quite true. Each year, the answers are different.”

A brief commentary such as mine cannot possibly do full justice to the scope and value of the information, insights, and advice that Taylor provides. Also, presumably he would agree with me that it would be a fool’s errand to attempt to apply all of that material immediately. It remains for each reader to select whatever is most relevant to the needs, objectives, resources, and culture of the given organization and then make whatever modifications may be needed.

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