The future of Decision Analysis is Embedded Decision Analysis where DA is embedded as part of the natural work process. See the webinar on this topic.

1. Embedded Decision Analysis
David Matheson
President and CEO
SmartOrg, Inc.
@SmartOrgInc
#DecisionMgt
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© 2000-2013 SmartOrg. | Confidential and Proprietary.

2. SmartOrg software and services helps companies find
the most profitable projects
Life science
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(c) 2000-2013 SmartOrg, Inc.
Aerospace
Technology
@SmartOrgInc
Other

3. What is the largest scale DA instance you have
been directly involved in?
10 people
50 people
100 people
500 people
1,000 people
5,000 people
People = those directly involved in the decision
somehow, e.g. providing information, creating
alternatives, etc. Does not include those affected by a
decision.
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

4. How many decision were directly in play?
i.e. on the “focus” part of the decision hierarchy
1 decision
5 decisions
10 decisions
50 decisions
100 decisions
500 decisions
1,000 decisions
5,000 decisions
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

5. Why is Decision Analysis not as prevalent as
Accounting?
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

6. Decision Analysis has not even made it to the list
of “management fads”.
Management by objectives
Matrix management
Theory Z
One-minute management
Management by wandering around
Total quality management
Business process reengineering
Empowerment
ISO 9000
Knowledge Management
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

7. Our profession has a weak value proposition.
What we offer: good decisions
What people want: results
The Goal—
Decision Quality
Information
Alternatives
Values
DQ
Reasoning
Frame
Commitment
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

8. We have been outclassed by algorithms.
Decision Analysis
8
VS
© 2000-2013 SmartOrg. | Confidential and Proprietary.
Predictive analytics
Business intelligence
Big data
(insert computer decision buzzword here)
@SmartOrgInc

9. Spam filtering is among the largest scale highest
impact applications of decision analysis
The Way Forward
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Embedded Decision Analysis
© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

10. Delivering A Billion Dollars
– Lessons In
Portfolio Evaluation
Global Leader
Dow AgroSciences

11. To Succeed We Must Be Better
Than Competitors
DAS Is Being Outspent In R&D
Low Project Success
% Of Value Promise
R&D As % Of Sales
16%
14%
12%
10%
8%
6%
4%
2%
0%
100
Sales
Margin
50
0
ay
on er
sa
Sy nto
ng
en
ta
B
A
SF
D
O
D W
uP
on
t
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Performance Comparison Of Projects*
Actual Vs. Forecast (pre-2000)
M
B
R&D Spend ($ Bil)
Competitive comparison of R&D spending in 2000
Source: Phillips McDougal May - 2000
Source: Internal Study

12. Our Results Show Our
Performance To Be Better
DAS #3 In New
Ag Chem Product Introductions
Improved Project Success
45
Performance Comparison Of Projects*
Actual Vs. Forecast
40
100
% Of Value Promise
35
30
25
20
15
10
5
Sales
Margin
50
0
Pre-CPS
Post-CPS
0
Ba
ye
r
BA
SF
DO
Sy
W
ng
en
t
Du a
Po
M
nt
on
sa
nt
o*
New Ag Chem Introductions
Competitive comparison 1990-2007
Source: Cropnosis
* Does not include Biotech introductions
Source: Internal Study

13. Process And Tools Support
A Complex Global Portfolio –
1500 Concepts And 150 Projects
Our Portfolio
Over a hundred
active ingredients
and biological
traits for …
That work
differently in
dozens of
different
crops…
And are sold in
dozens of local
markets with
products formulated
to support specific
agricultural
practices.
Our Tools
Our Teams
Central executive
management overall
affordability, targets, and
project priority.
Global project leaders
prioritize concepts
and manage the
overall project value
and risk.
Local teams assess
commercial value and
uncertainty of a specific
concept.
Technical
Market
Technical
Market

14. Our Portfolio Process Is Built On
Best Practice Decision &
Risk Analysis Tools
Issues &
Assumptions
Identifying key project
Uncertainties and their
Impact (Value Drivers)
•
•
•
•
•
•
•
•
Probability
Distribution
Valuing Projects and
Characterizing alternatives
Less Emphasized
Project Risk
Assessment
Sensitivity
Analysis
Technical
Expected
Future Value
H
Market
Mean
L
Decision
Analysis
Investment
Intensity
Risk Reward
Bal. Portfolio

15. Impact of Decision ($)
Where does the future of our community lie?
Strategy
Major Projects
Portfolio
Management
DQ Training
Spam Filtering
Number of Decisions
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

16. Where does the future of our community lie?
Impact of Decision ($)
Premium
Consulting
Firms
Strategy
Internal
Consultants
Major Projects
Portfolio
Management
Training &
Courses
Smarter
Computers
DQ Training
Spam Filtering
Number of Decisions
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

17. Impact of Decision ($)
We have to scale decision analysis.
Strategy
Embedded
Decision
Analysis
Major Projects
Portfolio
Management
DQ Training
Spam Filtering
Number of Decisions
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

18. Where embedding DA make the biggest
difference to your company’s results?
Mergers & Acquisitions
Capital Investment / Capital Stewardship
R&D / Innovation / NPD
Planning & Budgeting
Product Management
Marketing Investment / Mix
Demand Forecasting / Capacity Planning
Other
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

19. We have great strengths
Decision Analyst Advantages:
Knowledge of decision structure and human processes
Our systems do modeling and decision analysis
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

20. Scaling requires shifting our thinking.
Before
After
DA Consultant
Interventions
Decision Focused
One-time
Expert judgment
Careful assessments
Decision Analysis / DQ
Power tools for specialists
Embedded DA
Ordinary business process
Learning Focused
Iterative / ongoing
Consumes & provides data
Good enough assessments
Role of DA/DQ in evaluation
Scalable tools for non-DA users
Good Decisions
Valuable Results
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© 2000-2013 SmartOrg. | Confidential and Proprietary.

21. The scariest shift
DA Consultant
A highly specialized person
intervenes in a situation
to facilitate a group
to a great decision
as measured by decision quality.
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
Embedded DA
Ordinary people
doing routine work
drive their organization
to great decisions
as measured by great results

22. Reframing a decision situation to learning.
Decision Focus
Learning Focus
ENPV
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© 2000-2013 SmartOrg. | Confidential and Proprietary.

23. How did Intel “decide” to get out the memory
business and focus on CPUs?
Source: Fading Memories, Burgelman, 1994
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© 2000-2013 SmartOrg. | Confidential and Proprietary.

24. A new take on Decision Quality
Decision Analysts Want
Embedded DA Reframes
Explicit Alternatives
Alternatives emerge and
evolve
Information based on careful
expert assessments
Change jobs so that uncertain
information is generated
Evaluation based on models
focused in great detail on
complex issues
Simple: 80-20 rule to generate
good results most of the time
Commitment follows decisions
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
Committed action is already
underway when decision gets
made

25. Who has a case of Embedded DA or other large
scale DA deployment?
I have a successful one
I have one well underway
I intend on starting one (or have just gotten started)
I do not have an example
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

26. Systems are transformational in enabling
embedded DA.
Internet, cloud and process automation
Ubiquity of Excel as a business “language”
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
Analytics and data-driven decisions
Computing power
@SmartOrgInc

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© 2000-2012 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

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© 2000-2012 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc

29. I am committed to making DA a powerful force
in the 21st century.
Innovating the tools for Embedded DA
• Need your help getting it right
Rangal is in beta, and we want people to use it.
• Please contact me if you would like to have a personal demo
and try it out.
I’d like to collect examples of Embedded DA and other
large scale implementations of DA.
• Please contact me / send me cases.
dmatheson@smartorg.com
650-470-0180
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© 2000-2013 SmartOrg. | Confidential and Proprietary.
@SmartOrgInc