James Taylor is the CEO and a Principal Consultant of Decision Management Solutions and a leading expert in decision management and decisioning technologies. He is passionate about using decisioning technologies like business rules and predictive analytics to help companies improve decision making and develop smarter and more agile processes and systems. James has over 20 years developing software and solutions for clients and has led Decision Management efforts for leading companies in insurance, banking, health management and telecommunications. He is also an active speaker, blogger and author.
James delivers webinars, workshops and sales training for clients and vendors. He is a keynote speaker at conferences such as the Business Rules Forum, Predictive Analytics World and IBM’s Business Analytics Forum. James wrote Smart (Enough) Systems (Prentice Hall, 2007) with Neil Raden, and has contributed chapters on decision management and business rules to multiple books that include Applying Real-World BPM in an SAP Environment, The Decision Model, The Business Rules Revolution: Doing Business The Right Way, and Business Intelligence Implementation: Issues and Perspectives. James is a faculty member of the International Institute for Analytics. James has experience at FICO, PeopleSoft R&D, and Ernst & Young.
His latest book is Decision Management Systems: A Practical Guide to Using Business Rules and Predictive Analytics, published by IBM Press (2012).
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Morris: Before discussing Decision Management Systems, a few general questions. First, who has had the greatest influence on your personal growth? How so?
Taylor: I would say my boys. Becoming a stepfather and then a father changed the way I thought about what is important, my approach to politics, the value I put on my community and much more.
Morris: The greatest impact on your professional development? How so?
Taylor: That’s a tough one. The boss at Ernst & Young who gave me the opportunity to move to the US, the people of PeopleSoft who showed how you could run a company that cared about and trusted its employees, my CEO when worked at a start-up who taught me a lot about small companies. Good bosses, peers and teams at these companies and at FICO. Hard to find one.
Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.
Taylor: I have always worked in software but soon after I joined the Blaze Advisor team (a business rules management system) we were acquired by HNC and then FICO (Fair Isaac as it then was). This was my first exposure to analytics and to the power of using analytics in operational, transactional systems – decision management as we began to call it. Realizing what was possible, how much “smarter” this could make enterprise software, was eye-opening and has been my business ever since.
Morris: What do you know now about business world that you wish you knew when you when to work full-time for the first time? Why?
Taylor: I wish I had internalized how important relationships and networks were earlier. I often feel I have lost touch with folks it would be good to still be connected to. Building and keeping your network takes time and effort and, while I am better now, I still have to work at it and wish I had started earlier.
Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.
Taylor: I remember watching Startup.com soon after the first Internet bubble burst. I had just experienced a great startup’s struggle to raise money in the immediate aftermath and the movie was so true to my experience that I had to leave the room several times – it was so painful. Not so much dramatizing (it’s a documentary if I remember correctly) but terribly vivid and well done.
Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-Tzu’s Tao Te Ching:
“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”
Taylor: A great summary of the power of teams and the danger for a leader in believing they did it alone. You see the flipside of this every day in Silicon Valley as individuals, who worked with great teams, fail to deliver on their next great idea despite VCs pouring money into them because they have been successful once before.
Morris: And then, from Oscar Wilde: “Be yourself. Everyone else is taken.”
Taylor: I like this one as a parent. It can be hard to persuade your children of this, but important to do so. I also like his quote “Only dull people are interesting at breakfast.”
Morris: From Albert Einstein: “We cannot solve our problems with the same thinking we used when we created them.”
Taylor: This is something I believe IT departments should have on the wall. I spend a lot of my time trying to persuade folks to build a new class of IT systems in a fundamentally different way to the way they built the previous set of systems. All too often we fail to change our approach, continuing to repeat our problems.
Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
Taylor: As someone who focuses on effectiveness and decisions – how to decide what we SHOULD do – rather than on processing efficiency, I will have to use this one! Peter has lots of great quotes about the important of decision making.
Morris: 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.” What do you think?
Taylor: I am a big believer in the power of little decisions, the decisions that are made throughout an organization well below its C-level. To deliver on this collective capacity in a large organization, though, requires us to re-think our information systems and make them partners in our decision-making not passive suppliers of information.
Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘Which mistakes should we make in order to test our deeply held assumptions?'” Your response?
Taylor: One of the biggest challenges for most companies is that they are rotten experimenters. They are reluctant to conduct experiments, poor at tracking the results of the ones they do run, and lack the skills for designing experiments that will let them challenge their assumptions. Success with Big Data, analytics, new technologies of all types requires us to get much better at experiments.
Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”
Here’s my question: How best to avoid or overcome such resistance?
Taylor: I don’t think there is one answer to this. Alignment of objectives, time to adapt, engagement, and buy-in – all these help, but organizations just need to remember that it is hard and takes time as well as real investment. Failure comes I believe from a reluctance to allow for “soft stuff” and the failure of the “driver” personalities in leadership positions to realize they can’t just “make it happen.”
Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the great need for immediate improvement? Any suggestions?
Taylor: I think we need to revisit the assumption that something is automatically better for a company simply because it is cheaper or has a higher margin.
Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any Advice?
Taylor: That they will need to understand how technology and analytics (data) can be used to drive change in their business at a much more fundamental level than ever before.
Morris: Now please shift your attention to Decision Management Systems. When and why did you decide to write it?
Taylor: In April of 2011 it had been a few years since I wrote Smart (Enough) Systems – a book also focused on Decision Management – with Neil Raden. I had been consulting with many companies using the technologies involved in Decision Management and I could see more technology vendors adopting the approach. I felt it was time for an updated book, a shorter and easier read that reflected the slightly more streamlined and focused approach I had evolved since 2007.
Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?
Taylor: Actually the book looks more or less exactly the way I originally envisioned. I was busy that summer and so the only realistic way to get the book written was to write it “straight” – exactly the way I talk about the topic all the time. So that’s what I did.
Morris: What are the most significant inadequacies of traditional decision management systems?
Taylor: Traditional systems tend to wait when they could (should) act on your behalf, they store and report on data without ever learning from it, and they are too hard to change in response to changing circumstances.
Morris: What are the greatest barriers to an effective decision management system?
Taylor: Two barriers immediately come to mind. The first is that organizations often don’t really understand how they make, or want to make, decisions making and that makes it hard to design the right system. The second is that IT departments tend to think of the component technologies as separate, making it hard to build teams that can use them as a set.
Morris: How best to avoid or overcome those barriers?
Taylor: Invest time and effort in decision requirements – discover the decisions that matter to your business, capture how you want to make them in the future, be precise about the decision-making you are going to automate. Put together teams from business, IT and analytics to bring all the relevant technologies to bear.
Morris: There are three terms to which you frequently refer throughout the book: agile, analytic, and adaptive. Why must an effective decision management system possess all three?
Taylor: Decisions are high change components – lots of things cause you to change your decision-making: regulations change, policies change, markets change etc. Agile Decision Management Systems can respond to these changes. Organizations have more data than ever before and this data is a critical asset because you have data about your customers and products that no-one else has. To take advantage of this data you need your systems to be analytic, to apply analysis of this data to making better decisions.
Finally, decisions can take a long time to play out and it is not always obvious what will make a decision effective. By building adaptive systems that can run experiments and learn what works — and what does not — you can continuously improve your effectiveness and respond to changes in the environment.
Morris: Please explain the meaning and significance of the title of Chapter 2, “Your business Is Your System.”
Taylor: Any large corporation cannot run without its information systems. Increasingly, too, customers and suppliers alike interact with you through your information systems. How these systems behave, what they do, is therefore critical.
Morris: You assert – and I agree – that one of the biggest changes facing organizations is the change in consumer expectations. Please explain.
Taylor: The new generation of consumers is social, mobile, and tech savvy. Today, consumers expect more from your website, your mobile app, your staff. The current generation of enterprise applications won’t get it done.
Morris: Please explain the reference to “breaking ratios” on page 36.
Taylor: Many businesses assume that more business means more staff – more claims means more claims adjustors, more tax returns means more auditors and so on. Decision Management Systems often allow organizations to change these ratios forever – to break them – by handling such a high percentage of decisions automatically that the staff you need is that required to supervise decision making not actually make every decision.
Morris: For those who have not as yet read your book, what are the core principles of decision management systems?
Taylor: There are four key principles for Decision Management Systems: They focus explicitly (and solely) on decisions (not process, not data); how they work is transparent so they are easy to change, agile; they use data to be predictive so they can make decisions in the light of these predictions; and they test, learn, improve and adapt – this capability is built into them.
Morris: Are these principles relevant to almost any organization, whatever its size and nature may be? Please explain.
Taylor: At some level yes, though an organization needs to be large enough to have a sufficient number of operational decisions. If, for instance, you only have 100 customers you probably don’t need a Decision Management System to handle your interactions with them!
Morris: How specifically does a decision management system embed deep into the system itself the analytics that help to predict risk, opportunity, and impact?
Taylor: Analytics are all about improving decision-making and predictive analytics are particularly useful at predicting risk, fraud and opportunity. These predictions are probabilities, about a specific transaction – how likely is this loan to go bad in the future, how likely is this claim to be fraudulent, how likely is this offer to represent the best cross-sell opportunity. Writing rules that use these predictions embeds analytics into the decision itself, into the Decision Management System.
Morris: How specifically does it also test new approaches, learn what works (and what doesn’t), and continuously improves?
Taylor: The key here is that a Decision Management System is built on the basis that experimentation, constant challenging of the status quo, should be a part of the system. Assigning some transactions to alternative rules or alternative models allows you to test those alternative approaches, adopt those that work and continually adapt your approach.
Morris: By what process is the decision management system that you propose designed and then built?
Taylor: A straightforward three-step process is best: Decision Discovery (what are my operational decisions, how do I want to make them); Decision Services (building a decision-making component using the right mix of business rules and predictive analytics); and Decision Analysis (ongoing monitoring of decision performance and experimentation to improve decision-making over time).
Morris: What are the most common, most serious mistakes made when embarking on that process? In other words, making bad decisions about how to make better decisions.
Taylor: The biggest two are adopting the technologies without understanding the decisions you are hoping to use them on – trying to automate business rules or make predictions without a clear decision-making framework defined – and failing to include the last step, so that the first version of the Decision Management System is also the last, causing a gradual but inexorable decline in decision-performance.
Morris: What are the criteria by which to determine what you characterize as a “suitable” decision?
Taylor: It must be repeatable (made in a similar way often and with consistent measures of success), non-trivial (in terms of the analysis, policies and regulations that apply), measurable (so you can tell if you have improved it) and something the organization is willing to automate (there’s no point in a system that no-one uses).
Morris: What is a Business Rules Management System and what are its primary functions and benefits?
Taylor: A Business Rules Management System is a set of software tools that allow you to document your business rules in an executable format, store and manage those rules in a repository and deploy all the rules needed for a decision into an IT environment.
Morris: What is a predictive analytics workbench and what are its primary functions and benefits?
Taylor: A Predictive Analytics Workbench is a tool for a data miner or analytics professional to obtain large amounts of data, analyze and understand it, apply mathematical techniques to develop insight about it, and ultimately package up a predictive analytic model so it can be deployed to a system or database.
Morris: I understand how and why a decision management system can help to improve substantially repeatable operational and tactical decisions. To what extent can the same system help to improve decisions in response to a wholly unexpected, major crisis? Please explain.
Taylor: The key things here are agility and impact analysis. Decision Management Systems are easy to change when you need to so you will be able to make a change quickly and accurately. Because they allow you to see the impact of a potential change in advance they also allow you to devise scenarios in advance, so you have a set of rules and analytic models ready to go for at least your most likely or highest risk crisis types.
Morris: Let’s say that a CEO has read and then (hopefully) re-read Decision Management Systems and wants to establish and then develop a decision management system throughout the given enterprise. Where to begin?
Taylor: Start with the key corporate strategy, the key measures of success. Then work out which decisions throughout the organization have an impact on these measures. Some of these will be decisions that are taken at the front-line – in call centers, stores, trucks or websites. These decisions are the place to start because they have a clear and compelling link to corporate goals while also being repeatable, operational decisions.
Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in Decision Management Systems, which do you think will be of greatest value to leaders in small companies? Please explain.
Taylor: I think for a small company just the idea that it is worth thinking of decisions as something to be explicit about – to inventory, model, understand. Over and over again I see real value for everyone in this. Just as we learned that being explicit about process made us more efficient (even when we don’t automate the process), being explicit about decisions makes us more effective.
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James cordially invites you to check out the resources at these websites: His blog and the white papers available at his company site. If you are interested in the technology available, the Decision Management Systems Platform Technologies report is a great resource too.