The business community is reaching a critical point. Organizations have evolved to the point where the complexity of their solutions has created an environment increasingly challenging to govern.
This is apparent by the number of organizations now focused on data governance, regulatory compliance, and business process management initiatives. Management practices that had historically served
business and industry have not kept pace with the infusion of information technology.
A new perspective is needed to allow us to meet the needs resulting from the more complex environment. The Prime Business Decision Loop (PBD Loop) helps to fulfill this need. The PBD Loop maps the
natural parts of the human decision process to the business organization, providing a common target process for performance improvements.
Figure 1: Prime Business Decision Loop
Prime Business Decision Loop and Business Performance
The PBD Loop represents, in an elegant form, what businesses aim to govern: the movement of information needed to support intelligent business decisions. It provides a framework that
supports cohesive business performance management with a focus on efficiency and effectiveness. It merges concepts from Business Process Management, Business Rules Management, Enterprise
Architecture, Data Management, and Regulatory Compliance. By becoming the target for process improvement efforts, the PBD Loop creates an opportunity to focus those efforts and ultimately raise the
efficiency and effectiveness of the overall business. Under the PBD Loop model, governance of all data and resources is not the objective; rather the goal is to govern the handling of primary
information used within the Prime Business Decision Loop.
An important note: the PBD Loop is not a technology architecture. Rather, it provides a means to organize and structure decision support activities. These activities map to the natural elements of
a human decision loop and are an extension of the decision process governed by a company’s owner(s) or board.
Prime Business Decision Loop Cornerstone Processes
The PBD Loop addresses the fact that the evolution of technology shifted the manner in which business owners manage decision cycles. While delivering greater efficiency and handling higher volumes
of information, the shift to automation reduced transparency and reduced the number of roles needed to operate the business. The work became concentrated into four fundamental processes forming the
cornerstones of the PBD Loop.
- Acquire money and information in exchange for goods and services
- Integrate the information about money, assets, and customers in a common store
- Analyze the trends, patterns, and history of the money, assets and customers based on the information stored
- Act on the possibilities illuminated by analysis of integrated internal and external information
The following table outlines what makes up the process, who runs the process, and how the process is typically implemented. The answer to why they each exist is
to support operation of the PBD Loop.
Power and Influence
One feature of the PBD Loop is the ability to map the flow of power and influence within the model. In most organizations, power equates to the ability to dole out shares of the budget for the
entire organization. This, in turn, drives the degree of influence the four groups have on each other. They following diagram illustrates a typical organization mapping, which is one of many
possible distributions of power and influence.
Figure 2: Prime Business Decision Loop Power and Influence Map
If an organization is experiencing dissatisfaction with the information coming out of the Analyze Corner, that organization may be delegating too little authority over the Acquire and Integrate
Corners and doing so too low in the organization. Figure 2 illustrates this type of problem.
By being too far removed from the executive leadership, the managers over acquiring and integrating information lack sufficient influence and power to effectively coordinate with the other two
activities. They cannot govern or manage as peers. The managers of the Act and Analyze activities dominate all discussions. Their strategic needs are pushed aside. The result is data quality,
efficiency, and information relevancy being compromised, thereby eroding the value of the actions by leadership.
For example, much of the power in the organization typically ends up resting in the hands of those in the Act Corner. Since they are decision makers on projects and direction, they often reward
short-term behavior to the detriment of long-term needs. The Integrate Corner, being the most distant, typically has the least influence, so projects that would integrate the data better, improve
data quality over time, or improve the efficiency of the PBD Loop are overshadowed. This is the primary contributor to data dysfunction in any organization.
Typically, the dysfunction worsens in growing or larger organizations. As they grow, another factor comes into play, trust. When trust among the four corners of the PBD Loop runs high, as is
typical in smaller organizations, the support for recommended actions also runs high. Collaboration improves and the efficiency and effectiveness of the organization also thrives. It is when the
organization grows and distrust builds that collaboration declines, robbing organizational efficiency.
Communication within the Prime Business Decision Loop
Authority to govern and the erosion of trust complicate communication between the stewards of the PBD Loop Cornerstone Processes. Also contributing to the communication challenges are the
personality types that gravitate into leadership roles in each corner. Skills and personality traits that contribute to success by a leader governing a corner of the PBD Loop can undermine that
leader’s ability to garner buy-in from the other process managers.
People who function in the opposing corners of the PBD Loop typically have opposite communication styles as well. For example, consider the Data Warehouse Manager who has great concern for the
strategic needs to integrate and unify information moving through their integrate process. Being detail-oriented individuals, they often communicate in a manner that does not mesh with style used
by decision makers and power brokers overseeing the Act Process.
The Act process manager is concerned with projects normally tied to company performance, product performance, and their own performance. Typically, these managers want focused communication with
just enough detail for a decision and with relevance to the return on investment. Because of these differences in style, personality and incentive, the manager over the Act Process and the manager
of the Integrate process have difficulty communicating. The PBD Loop can be used to help address this problem by becoming the common basis for communication between the four cornerstone process
owners.
Governing the Prime Business Decision Loop
Given that efficiency and nimble behavior are among the success factors that define great organizations, within this model four goal setting rules need to be applied from the top of the
organization. These rules define the principles governing the decision cycle. This model works from top down and can be interjected at any point in the organization hierarchy. This permits pilots
and trials within the business to have a phased roll-out of the model.
- The primary goal of data governance efforts, and all process improvement efforts, must focus on this objective:
When managing goods and services, reduce the Prime Business Decision Loop cycle time while improving the quality of observed data.
- Secondary goals include the remaining business requirements for any projects, such as operational needs or the needs of any one corner of the PBD Loop.
- Secondary goals cannot trump the primary goal.
- Local goals must not trump enterprise, or company goals.
To obtain the goals listed above, the incentives driving the managers of each corner must be revisited with an eye toward eliminating conflicts. While some leaders view conflicts as good for
business, if unmanaged, conflict can also undermine the collaboration needed to build efficiency. Where the conflicting goals create a deadlock, the leader governing the loop must resolve the
issue.
With a primary goal of managing the PBD Loop focused on efficiency, then beyond adding new products and services, only four choices exist for promoting growth:
- Improve Data Acquisition Efficiency (get more data faster to enable completion of the Analysis Processes sooner)
- Improve Integration Efficiency (standardize terminology and taxonomies, or apply business rules to build consistency while merging data)
- Improve the Analysis Process (statistical modeling, business rules engines, etc…) to reduce the amount of data needed to support selection of an Action
- Improve the ability to plan and deploy the Action
It is impossible to get any of the processes within the corners to zero time. Trying to approach zero time will take exponentially more resources for exponentially diminishing returns. You do not
have to get to zero-time; you only need to get faster than your competitor.
Summarizing the Prime Business Decision Loop
To effectively and efficiently manage any business that has been highly automated requires a shift in thinking. The slow infusion of automation changed the landscape of what leaders manage, and
created the need for a new view of the business organization. The convergence of Business Process Management, Data Management, Business Rules Management, Organizational Management, and process
improvement disciplines drove the need for a common framework. The PBD Loop model provides that framework needed to enable coordinated efforts driving performance improvements, reducing cost of
ownership, and ultimately sustaining growth of the business.
