CIO Straight Talk - Issue 2 - 37

Tom Davenport holds the President's Chair in Information Technology and Management at Babson College.
His books and articles on business process reengineering, enterprise systems, knowledge management,
decision making, business intelligence and analytics have established him as perhaps the foremost thought
leader for each of these business ideas and practices. His books include Competing on Analytics: The New
Science of Winning (2007) and Judgment Calls, to be published in April 2012 by Harvard Business Review
Press.

Vivek Ranadivé is the CEO of TIBCO Software Inc., which he founded in 1997, with the vision of bringing
real-time, event-driven technology into the mainstream. He recently published The Two-Second Advantage:
How We Succeed by Anticipating the Future – Just Enough (co-authored with Kevin Maney), which
followed his New York Times business bestseller The Power of Now: How Winning Companies Sense and
Respond to Change Using Real-time Technology (1999) and The Power to Predict: How Real Time
Businesses Anticipate Customer Needs, Create Opportunities, and Beat the Competition (2006).

Despite their different backgrounds, their interests have converged on the issue of analytics and decision making. But they
don’t agree on everything. In fact, occasionally they can bump up against each other’s intellectual hot buttons, as you’ll see in
this edited conversation with Straight Talk Editor Paul Hemp and Contributing Editor Gil Press.
Let’s start by talking about the nature of decision-making
within a company, today and in the future.
TOM DAVENPORT: At one point I realized that all the
things that I had been working on over the past couple of
decades were all designed to facilitate better decision
making. I think we have not always succeeded in making a
direct tie between the investments we make in information
technology and how we make decisions. Decision making
is highly political; many executives don’t necessarily want
somebody else telling them how to go about it. As a result,
we have really under-leveraged the possibility for creating
better decision making.
VIVEK RANADIVE: A lot of the decisions in the
company of the future might not actually be made by a
human being. In fact, in what you might call the
low-latency capitalism of today, where things are happening at the speed of light, many decisions are already being
made by machines. If you look at all the information that
has been created from the beginning of mankind until a
couple of years ago, the world has created 10 times that
amount of information in the last couple of years. The
challenge is to look at all that information and act fast.

Are decisions made by a machine and decisions made
by a human two very different things? Or are they just
two sides of the same coin?
RANADIVE: Math is increasingly trumping science. What I
mean by this is that you don’t need to know why something is
happening. You simply need to find the pattern and the pattern
is that A and B happened, so C will happen. For a retailer in
the U.K., we found that if somebody buys razor blades,
champagne and diapers, they’re probably using a stolen credit
card to do that. For a telco in India, we found that if they drop
six calls made by the same customer in a 24-hour period, the
customer will switch services. With that knowledge, after the
fifth dropped call, they can offer free SMS messages to keep
the customer from switching.

DAVENPORT: I certainly agree that more and more
decisions are and will be made using some sort of
automated decision process. There are lots of opportunities
for automation and in some cases I think that’s a very good
idea. I’m personally not quite ready, however, for all of the
decisions made by, for example, my physician to be
automated. I would like some help from automated
systems, but I’d like a final decision to be made by the
physician in most cases. So, I think we just have to step
back and ask: “How much human expertise is there? How
much good data and models do we have?”
Even if a decision is automated, we have to very regularly
examine it to make sure that we still have the right criteria
in place. I would argue that that is one of the causes
(though certainly not the only one) of the recent financial
crisis. We had lots of models that we didn’t systematically
examine. The world had changed and the models didn’t
change with it.
RANADIVE: Tom, I agree with you and also disagree
with you. I agree that there is an essential role for people
because there are always exceptions to what has been
automated. Oftentimes, risks and opportunities lie in those
exceptions. That is very much a human role. There’s also a
big human role with regard to the whole discovery process.
But the problem for people is not too little, but too much
information. If content was king before, then context
becomes king now.
As for the financial crisis, I would say that if they had had
21st century tools, then we could have actually avoided
some of the mistakes that took place. At TIBCO, we are
applying these tools in areas as varied as cyber security,
where the government is using our software for finding
patterns which could tell you that something bad is about to
happen. So, I take exception to the argument that the
financial catastrophes we had were caused by machines. I
still blame people for that.
CIO Straight Talk //

37



CIO Straight Talk - Issue 2

Table of Contents for the Digital Edition of CIO Straight Talk - Issue 2

CIO Straight Talk - Issue 2
Contents
So What Do CIOs Want
Innovation at the Periphery
The CIO as Thought Leader
Career Move: From Managing Technology to Managing Change
Every CIO is in the Information Business
Analytics and Decision Making
Putting IT at the Center of the Customer Experience
Pick n Pay Focuses on Delivering Value to Customers
Bringing "Lean" to IT
Whither the Cloud in a Stormy IT Enviroment?
Management by Driving a Stake in the Ground
From Data Processing to Orchestrating Knowledge
Extreme Collaboration
Enterprise Mobility: Delivering the Connected Customer Experience
CIO Straight Talk - Issue 2 - CIO Straight Talk - Issue 2
CIO Straight Talk - Issue 2 - Cover2
CIO Straight Talk - Issue 2 - 3
CIO Straight Talk - Issue 2 - Contents
CIO Straight Talk - Issue 2 - 5
CIO Straight Talk - Issue 2 - So What Do CIOs Want
CIO Straight Talk - Issue 2 - 7
CIO Straight Talk - Issue 2 - 8
CIO Straight Talk - Issue 2 - 9
CIO Straight Talk - Issue 2 - 10
CIO Straight Talk - Issue 2 - 11
CIO Straight Talk - Issue 2 - 12
CIO Straight Talk - Issue 2 - 13
CIO Straight Talk - Issue 2 - 14
CIO Straight Talk - Issue 2 - 15
CIO Straight Talk - Issue 2 - 16
CIO Straight Talk - Issue 2 - 17
CIO Straight Talk - Issue 2 - Innovation at the Periphery
CIO Straight Talk - Issue 2 - 19
CIO Straight Talk - Issue 2 - 20
CIO Straight Talk - Issue 2 - 21
CIO Straight Talk - Issue 2 - The CIO as Thought Leader
CIO Straight Talk - Issue 2 - 23
CIO Straight Talk - Issue 2 - 24
CIO Straight Talk - Issue 2 - 25
CIO Straight Talk - Issue 2 - Career Move: From Managing Technology to Managing Change
CIO Straight Talk - Issue 2 - 27
CIO Straight Talk - Issue 2 - 28
CIO Straight Talk - Issue 2 - 29
CIO Straight Talk - Issue 2 - Every CIO is in the Information Business
CIO Straight Talk - Issue 2 - 31
CIO Straight Talk - Issue 2 - 32
CIO Straight Talk - Issue 2 - 33
CIO Straight Talk - Issue 2 - Analytics and Decision Making
CIO Straight Talk - Issue 2 - 35
CIO Straight Talk - Issue 2 - 36
CIO Straight Talk - Issue 2 - 37
CIO Straight Talk - Issue 2 - 38
CIO Straight Talk - Issue 2 - 39
CIO Straight Talk - Issue 2 - Putting IT at the Center of the Customer Experience
CIO Straight Talk - Issue 2 - 41
CIO Straight Talk - Issue 2 - 42
CIO Straight Talk - Issue 2 - Pick n Pay Focuses on Delivering Value to Customers
CIO Straight Talk - Issue 2 - 44
CIO Straight Talk - Issue 2 - 45
CIO Straight Talk - Issue 2 - 46
CIO Straight Talk - Issue 2 - Bringing "Lean" to IT
CIO Straight Talk - Issue 2 - 48
CIO Straight Talk - Issue 2 - 49
CIO Straight Talk - Issue 2 - 50
CIO Straight Talk - Issue 2 - Whither the Cloud in a Stormy IT Enviroment?
CIO Straight Talk - Issue 2 - 52
CIO Straight Talk - Issue 2 - 53
CIO Straight Talk - Issue 2 - 54
CIO Straight Talk - Issue 2 - 55
CIO Straight Talk - Issue 2 - Management by Driving a Stake in the Ground
CIO Straight Talk - Issue 2 - 57
CIO Straight Talk - Issue 2 - 58
CIO Straight Talk - Issue 2 - From Data Processing to Orchestrating Knowledge
CIO Straight Talk - Issue 2 - 60
CIO Straight Talk - Issue 2 - 61
CIO Straight Talk - Issue 2 - Extreme Collaboration
CIO Straight Talk - Issue 2 - 63
CIO Straight Talk - Issue 2 - 64
CIO Straight Talk - Issue 2 - 65
CIO Straight Talk - Issue 2 - Enterprise Mobility: Delivering the Connected Customer Experience
CIO Straight Talk - Issue 2 - 67
CIO Straight Talk - Issue 2 - 68
CIO Straight Talk - Issue 2 - 69
CIO Straight Talk - Issue 2 - 70
CIO Straight Talk - Issue 2 - 71
CIO Straight Talk - Issue 2 - 72
CIO Straight Talk - Issue 2 - 73
CIO Straight Talk - Issue 2 - 74
CIO Straight Talk - Issue 2 - Cover3
CIO Straight Talk - Issue 2 - Cover4
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