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Are your business decisions driven by data, consensus or vision?

Knowing how your company makes business decisions could be the difference between an innovation project's success or failure. The Data Mill reports.

Even the best ideas can crumble under the weight of a bad sales pitch. An inappropriate tone of voice or an ignorance as to how the potential buyer measures success can sound the death knell for a sale. The same goes for innovation projects.

That's why Daniel Ostrower, CEO at product design and consulting company Altitude Inc. in Somerville, Mass., believes CIOs (chief innovation officers, in this case) need to map out a company's "innovation identity" before diving in to your next big thing.

"We don't measure the success of innovation by how cool our ideas are; we measure by commerce," Ostrower said at the recent Chief Innovation Officer Summit in New York City. "You have a responsibility to understand the organization you are working within."

A key part of a company's innovation identity lies in how decisions are made in general. From his experience, Ostrower said businesses are one of three decision-making archetypes: data driven, consensus driven or vision driven. While it's true that some combination of all three can be found in most organizations, only one archetype reigns as king, according to Ostrower. CIOs will need to "listen and feel around to see which one is dominant," he said.

Ostrower provided attendees with a quick understanding of the three archetypal business decision types and tips on what drives them, their strengths and weaknesses and what tools you'll need to succeed within each one.

Data-driven organization

Decisions are driven by data. Ostrower said "old guard" organizations such as Procter & Gamble Co. and General Electric tend to fit this bill, but so does Google. Not only does the Internet company test new features on its search site, but it is also known for "moon shot" projects such as driverless cars, which require data-generating experiments to refine and tweak the project's hypothesis.

Data-driven innovation is a double-edged sword. Innovators are "capable of making high-quality decisions with a high likelihood of success," Ostrower said, but also crave certainty "and, in innovation, we know there is no certainty."

Here's what you need to know about the drivers, strengths, weaknesses, tools for success and niceties when operating in a data-driven organization:

  • Fuel: Evidence.
  • Super power: Making high-quality decisions. Data-driven organizations are also programmed to "kill the bad ideas quickly," Ostrower said.
  • Challenge: Taking risks. These organizations can fall into the "analysis paralysis" trap or act too conservatively.
  • Tools for success: Quantify everything. That includes the qualitative research that is likely at the heart of finding and understanding new opportunities, Ostrower said. He also advised creating projections for success, which will need to be updated as the project progresses. Case studies and analogies can be useful here to illustrate potential benefits and build confidence.
  • Tone of voice: Be objective, scientific and even dispassionate.
  • Process: Highly structured, which facilitates incremental improvements but can be a drag on "moon shot" projects. For those transformational innovation projects, consider something akin to the scientific method of hypothesis, test, experiment, analysis and repeat to create a structured process that can be measured, Ostrower said.

Consensus-driven organization

Decisions are driven by a high level of agreement. Ostrower surprisingly described the Department of Defense as a consensus-driven organization, something he's witnessed firsthand. When his client -- a chief of staff for one of the four military branches -- was given a project briefing, Ostrower remembers him saying, "This is absolutely the right thing to do. I'm not going to do it until the heads of my major commands agree."

The big drawback for consensus-driven organizations? It can take forever to do anything, Ostrower said. Plus, organizations like these run the risk of railroading the best ideas for the sake of unanimity.

What you need to know when operating in a consensus-driven organization:

  • Fuel: Buy-in from core team members.
  • Super power: Alignment. When the organization releases an innovative product to market, it will have full commitment from the organization, and likely the necessary investment for it to succeed, Ostrower said.
  • Challenge: Speed to market and avoiding mediocrity. Movement can be frustratingly slow at these organizations. Plus, "all that consensus building can lead to regression to the mean, and we end up with mediocre ideas -- ones that actually aren't that good, but we all believe in," Ostrower said.
  • Tools for success: Socialization. "It's communication jujitsu. You have to do it," Ostrower said. The trick is figuring out how to quickly work the group for enough input and feedback to be incorporated into the project. Internal crowdsourcing is another tool, which Ostrower said can help "ideas bubble up from within and have consensus built around it."
  • Tone of voice: Be open and listen.
  • Process: It's impossible to script, Ostrower said. The best process at consensus-driven organizations is to follow "the rules of power and politics within the organization," he said.

Vision-driven organization

A company mission influences decisions at vision-driven organizations. Ostrower used Method Products, a benefit corporation that sells cleaning products, as an example. Although he's never worked with Method Products, he said having the company mission -- "people against dirty" -- printed on every bottle reflects the company's vision to produce products that clean cleanly, or without using typical cleaning-product chemicals.

These organizations are driven by "passion around purpose and mission and a vision of the future," Ostrower said. And they'll take big risks to drive that mission forward.

What you need to know when operating in a vision-driven organization:

  • Fuel: Conviction.
  • Super power: Boldness. These organizations are risk takers.
  • Challenge: Blinded by purpose. Being driven by a mission can sometimes lead to questionable decisions and wasted investments, Ostrower said. 
  • Tools for success: Emotion-building tools such as visualizations, storyboards, concept videos and experiential modeling. "Words can't convey mission," he said. "People have to feel it."
  • Tone of voice: Be the evangelist, and be inspirational. Talk about the alignment between the innovation project and what that organization is trying to achieve, Ostrower said.
  • Process: Build toward a big reveal. "That will build alignment; it will build emotion; it will build energy," he said. But he warned that a "ta-da" moment in any organization other than a vision-driven one is a recipe for failure.

Welcome to The Data Mill, a weekly column devoted to all things data. Heard something newsy (or gossipy)? Email me or find me on Twitter at @TT_Nicole.

 

Next Steps

Previously on The Data Mill

The secret to a disruptor's success? Question everything

What the Hortonworks IPO should signal to CIOs

Big text and thinking in data

Walmart reboot being driven by big data applications

 

This was last published in December 2014

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At your business, who determines the decision-making strategy?
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As one who works for a startup acquired by a larger entity, I would say that we have a dual personality, where the immediate organization is definitely vision driven, while the larger organization is data driven. Getting those two tendencies to balance out can sometimes be a challenge ;).
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Alas, all three. and though it seems like we'd be doomed from that approach, it's actually worked, more or less, for quite some time. Let me explain a bit.

Everything in my industry has to be supported by data. We meticulously examine previous attempts and only move forward when the bones predict success. We rarely gamble. We use many metrics, from worldwide income (on similar projects) to consumer popularity (ranked by "Q Scores") to previous track records (from source as close as the accounting department).

But bean-counters be damned, we're a business of artists. So we look for a unique vision that is totally new, utterly unexpected and exactly (but not too much) like something else that's succeeded before. It's a tightrope, yet our business succeeds, mostly, because....

...because we only move forward by consensus. We look for internal agreement on almost every project. Corporate-wide support is essential.

If you think this is a formula for chaos you'd be close to correct. It makes our products unduly expensive and a high risk at best. Yet when projects succeed - and that happens more often than not - they can generate undue profits.
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