Remember What Six Sigma Did to 3M?

"We've had management by objective and total quality management. Now it's time for the latest trend in business methodology: management by data.

"The success of enterprises as diverse as Harrah's Entertainment, Google, Capital One Financial and the Oakland A's has inspired case studies, books and consultants promising to help executives outpace rivals by collecting more information and analyzing it better. There is much to be said for the approach...

"Running a complex enterprise can't be reduced to a spreadsheet, however. Even the most detailed statistical analysis has limitations, as [Professor Robert] Sutton acknowledges.

"For one, conditions may change, rendering the analysis misleading. Thomas H. Davenport, a management professor at Babson College and co-author of 'Competing on Analytics: The New Science of Winning,' says such change helps explain why so many sophisticated lenders and investors got burned by the downturn in subprime mortgages. For years, default rates followed a predictable pattern based on the borrower's credit score. Last year, that pattern changed slightly and many lenders didn't adjust.

"Jeffrey Pfeffer, Mr. Sutton's colleague and co-author, offers a more insidious pitfall: Managers can be so focused on perfecting today's business that they lose sight of tomorrow's...

"That helps explain why companies seem invulnerable one minute and aimless the next. For a decade, Dell captured an increasing share of sales and profits in the PC industry by mastering supply-chain logistics. But Dell couldn't diversify its business, making it vulnerable once Hewlett-Packard matched its expertise.

"The real trick, then, is to combine these skills, gaining advantage by analyzing today's problems while looking creatively for tomorrow's opportunities. That's a tough combination, like juggling while riding a unicycle."

(“Now, It's Business By Data, but Numbers Still Can't Tell Future.” by Scott Thurm. Wall Street Journal: July 23, 2007. pg. B.1)

THEY SAY, "Find me a left-brainer who's good with their right brain, or a right-brainer who's good with their left, and I'll hire them in a minute." Surely, we can develop our whole selves for balancing both.

No comments: