123 Posts found for Source: Deloitte Review

For all of their promise, analytics projects are often stymied because of failures to appreciate that both data-driven analytics and expert decision-making have strengths as well as limitations; and that the strengths and limitations of each must be counterbalanced with those of the other. The image of “data mining” should give way to the image of “data dialogues”.

Content: Article | Authors: Jim Guszcza, John Lucker | Source: Deloitte Review | Subject: Management

Three years ago, Deloitte Consulting LLP launched The Persistence Project to identify the management practices that contribute most to sustained, superior corporate performance. Preliminary results have been published in the Harvard Business Review and the Annals of Applied Statistics. This article is the fourth in a series, providing a preview of the project’s findings.

Editor’s Note: This particular “best practices” research project is especially interesting in … [ Read more ]

Content: Article | Authors: Jeff Schulz , Michael E. Raynor, Mumtaz Ahmed, Ragu Gurumurthy, Rajiv Vaidyanathan | Source: Deloitte Review | Subject: Best Practices

In the digital world, data are everywhere. We create them constantly, often without our knowledge or permission, and with the bytes we leave behind, we leak information about our actions, whereabouts and characteristics.

This revolution in sensemaking—in deriving value from data—is having a profound and disruptive effect on everything from supply chains to corporate strategy. In particular, it is generally forcing executives to rethink how they … [ Read more ]

Content: Article | Authors: Dan Elbert, Doug Palmer, Vikram Mahidhar | Source: Deloitte Review | Subjects: Customer Related, IT / Technology / E-Business

Disruption, as originally described by Clayton Christensen, is a theory of innovation of how particular types of new products and services achieve success or dominance in markets, often at the expense of incumbent providers. But is disruption just another theory, or does it promise predictability? An excerpt from The Innovator’s Manifesto.

Content: Article | Author: Michael E. Raynor | Source: Deloitte Review | Subject: Innovation

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As the economy bounces between recession and recovery, financial executives have to make a bet between whether the economy, their industry and their business will experience rising prices going forward or whether they will have to grapple with the balance sheet and operational effects of deflation. They will have to choose wisely as this has the potential of being a bet-your-business risk. The decision is … [ Read more ]

Content: Article | Authors: Carl Steidtmann, Dan Latimore, Elisabeth Denison | Source: Deloitte Review | Subjects: Economics, Finance

Strategy is defined by the trade-offs you exploit, while innovation is defined by the trade-offs you break.

Content: Quotation | Authors: Heather A. Gray, Michael E. Raynor | Source: Deloitte Review | Subjects: Innovation, Strategy

Exceptional companies all have the same recipe (better before cheaper, revenue before cost) but use different ingredients. In addition to creating superior levels of performance, exceptional companies deliver superior levels of performance for longer than anyone has a right to expect. It seems worth exploring, then, if and how exceptional companies adapt. Is exceptional performance a function of deep moats and thick ramparts, or does … [ Read more ]

Content: Quotation | Authors: Michael E. Raynor, Mumtaz Ahmed | Source: Deloitte Review | Subject: Best Practices

The conventional wisdom [on mergers and acquisitions] has crystallized into “buyer beware,” which is certainly not bad advice but not particularly helpful. (When would one ever think it is good not to beware?) Research on the topic is largely consistent with this view, observing that acquirers, on average, earn about the going rate of return on their investments but are subject to wide variation, sometimes … [ Read more ]

Content: Quotation | Authors: Michael E. Raynor, Mumtaz Ahmed | Source: Deloitte Review | Subject: Mergers & Acquisitions

Advice on how to compete successfully is subject to an irony that borders on paradox. If the advice is right, then it will be universally adopted; if it is universally adopted, it does not improve your relative performance; if it does not improve your relative performance, it is wrong. In other words, if the advice is right, then the advice is wrong.

Content: Quotation | Authors: Michael E. Raynor, Mumtaz Ahmed | Source: Deloitte Review | Subject: Best Practices

The same body of psychological research that underpins behavioral economics also suggests that we are very poor natural statisticians. We are naturally prone to find spurious information in data where none exists, latch on to causal narratives that are unsupported by sketchy statistical evidence, ignore population base rates when estimating probabilities for individual cases, be overconfident in our judgments, and generally be “fooled by randomness.” … [ Read more ]

Content: Quotation | Authors: David Steier, Harvey Lewis, Jim Guszcza, John Lucker, Vivekanand Gopalkrishnan | Source: Deloitte Review | Subjects: Organizational Behavior, Personality / Behavior, Statistics, Thought

Decision framing is often minimized or overlooked. In developing capital project business cases, people tend to start gathering inputs right away and to fill out spreadsheets too soon. When we start building a financial model and collecting data without first framing the decision, we run the risk of falling prey to collecting the wrong data and the common cognitive biases.

Content: Quotation | Authors: Charles Alsdorf, Elayne Ko, Igor Heinzer | Source: Deloitte Review | Subject: Decision Making

Asking the right, sometimes difficult, questions is a key ingredient of framing. When structuring a large strategic investment decision, it is crucial to understand how risks and uncertainties may affect the investment decision. One useful question to ask stakeholders is: “How could we be wrong?” This requires participants to analyze or otherwise consider the assumptions underlying the decision and explore how the investment might turn … [ Read more ]

Content: Quotation | Authors: Charles Alsdorf, Elayne Ko, Igor Heinzer | Source: Deloitte Review | Subject: Decision Making

[In comparing the performance of companies,] to learn something useful, we must decompose each company’s ROA, which exposes the underlying structure of the relevant profitability advantages. Specifically, ROA is the product of two very different elements of a company’s operations—return on sales (ROS = income/sales) and total asset turnover (TAT = sales/assets). One company’s ROA advantage over another need not be a function of advantages … [ Read more ]

Content: Quotation | Authors: Michael E. Raynor, Mumtaz Ahmed | Source: Deloitte Review | Subject: Finance

Changes in absolute performance can be misleading: Declines might not signal that anything needs fixing, just as increases might not mean you’re doing anything right. Instead, the key to long-term survival seems to lie in knowing when material change is required in order to preserve one’s relative performance position.

Content: Quotation | Authors: Michael E. Raynor, Mumtaz Ahmed | Source: Deloitte Review | Subjects: Management, Strategy

Professor Michael Porter’s work was very powerful and influential in the ‘80s and the ‘90s about strategy. It was really a model, you could say, of closed innovation where you figure out what your key strategic assets were and you either went low cost or went for differentiation or you found a niche. You were constantly looking for ways to compete against the other guy. … [ Read more ]

Content: Quotation | Author: Henry Chesbrough | Source: Deloitte Review | Subjects: Innovation, Strategy

Our intuitions can lead us badly astray in a way that is as surprising as it is straightforward. Kahneman identifies two types of mental processes. “Type 1” mental processes are fairly automatic, effortless and place a premium on “associative coherence.” In contrast, “Type 2” mental processes are controlled, effortful and place a premium on logical coherence. Although we fancy ourselves primarily Type 2 creatures, many … [ Read more ]

Content: Quotation | Authors: Jim Guszcza, John Lucker | Source: Deloitte Review | Subjects: Decision Making, Organizational Behavior, Personality / Behavior, Thought, Trends / Analysis

Remember that all models are wrong; the practical question is how wrong do they have to be to not be useful.

Content: Quotation | Source: Deloitte Review | Subjects: Decision Making, Trends / Analysis

The axiom of “if it isn’t broken, don’t fix it” is an archaic and restrictive mindset. Innovation often occurs when one determines that even if it isn’t broken, he/she will fix it anyway.

Content: Quotation | Author: Mark McCord | Source: Deloitte Review | Subject: Innovation

From a policy standpoint, many countries continue to focus on privatization, liberalization, deregulation and modernization as growth strategies. Unfortunately, according to Jean-Eric Aubert of the World Bank Institute, these policies typically do not yield the expected fruits due to their lack of sustainability, because they often fail to take into account emerging opportunities. For instance, the privatization of aging factories does little to enhance economic … [ Read more ]

Content: Quotation | Author: Mark McCord | Source: Deloitte Review | Subjects: Economics, International, Politics