decisionmaking (32)

Finally I get stats 101

8219693079?profile=originalI don’t know if you have noticed, but I have been blogging about measurement, data, and statistics for the past 19 weeks. All to defeat quantifornication – the act of pulling numbers out of thin air for decision making. Numbers that are seemingly reliable but are not.

This week, Tuesday 10th November at 15:00hrs AEDT, I am presenting with my colleague Dr Andrew Pratley. Our presentation is Statistics 101 Applied to Controls – How to test and measure control resilience. Our presentation is part of

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Optify your advice

8219694066?profile=original“Provided with the freedom to choose, decision makers are likely to act more rationally and be more fully behind the decision.” Is how I finished last week’s blog.

Optifying your advice is delivering the freedom to choose in the optimum way. Your optimum way. And it follows the Rule of Three.

People like things in threes. Think of The Three Little Pigs or The Three Musketeers or Superman’s: ‘truth, justice and the American way’. Or ask Shakespeare’s Julius Caesar: ‘Friends, Romans, Countrymen’; or

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Hating Restraints

8219691475?profile=originalPeople mostly don’t like to be restrained. We also don’t like some constraints but we like others. For example, we like choice when buying but we don’t like too many choices.

Restraints on the other hand are an attack on our freedom.

Take seat belts for example. They were first invented the century before last! The modern retractable 3-point seat belt was invented in the 1950s. However, seat belt wearing was not compulsory and it took government legislation, regulation and enforcement to get more

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Beyond Nudging

8219692657?profile=originalSometimes you need to go beyond nudging decision makers. However, the personal risk you take when challenging a decision depends on culture.

Last week I was given cause to reflect on my time at HIH Insurance and the causes of its demise in 2001. While there were many, and people with different lenses could easily come to different conclusions, my view is that the culture did not allow sufficient leaders to speak their mind.

The CEO, Ray Williams, was a powerful personality. One of the most caring,

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Nudging the CFO

8028339277?profile=originalCan you make a difference with measurement if the culture of your organisation is one that does not respect, let alone crave data? In my experience it is tough to go hard against the grain of an organisation’s culture. The better way is to nudge it.

How might you nudge it? Culture change can start from outside the executive team but ultimately it has to be adopted by a key executive and then the whole executive. So no better place to start than with the strategic risks of your organisation.

How do

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Getting under the skin of Mr Assume

8028335696?profile=originalBack in 2015, McKinsey published a paper on the future of risk management in the banking sector. At the time I sent it to many of my clients in other sectors because of its very important messages, including this one in their summary:

“Bank risk management will likely look dramatically different by 2025, when it has become a core part of banks’ strategic planning, a close collaborator with business heads, and a centre of excellence in analytics and de-biased decision making.”

The paper includes co

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Early indications are …

8028333875?profile=originalWhere should your lead indicators (KRIs or Key Risk Indicators in the field of risk) come from?

A few years ago my colleague Andrew Prately and I toured the country to speak at Chartered Accountants Business Forums. We spoke on KPIs – Key Performance Indicators. We talked about lead and lag indicators and we talked about limiting the number of KPIs, as having too many creates its own industry of measurement and reporting with very little influence on decision making. Because more often than not o

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Data problems are not the real problem

8028338883?profile=originalMy colleague Dr Andrew Pratley and I are on a mission to defeat quantifornication. Last week we ran the first of two free interactive webinars we are running to explore the topic. We had attendees from a range of industries including banking, emergency services, energy, insurance, health, policy agencies and regulators from federal and state governments, local government, engineering consultants, risk and cyber risk consultants, IT service providers and many more.

Everyone was there for the same

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Finding directionality

8028330463?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Last week was supposed to be our final blog we are co-writing but we couldn’t resist sneaking in another one after the great response from our last one.

Last week we wrote about the concept of directionality, taking what you know having applied the three-question framework and testing with more data to gain even more certainty of your decisions. We defined directio

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When uncertain, seek directionality

8028335274?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the seventh in a series we are co-writing.

Nothing is certain. Not even death and taxes. Because the only certainty is uncertainty, there’s no foolproof way to make the right decision. Most organisations deal with this by putting in a time constraint. Forcing a decision, however imperfect it may be.

While keeping the organisation moving by forcing decisions

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Testing Relationships

8028329290?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the sixth in a series we are co-writing.

Relationships are the branch of statistics that describe how one thing influences another. We know these as regression analysis, x-y plots or scatter plots. The classic regression plot involves a line of best fit. We tend to think that the better the line of fit, the better the statistical relationship. That’s true,

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Taste Testing Quantification

8028334495?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the fifth in a series we are co-writing.

The story of statistics started with a question about differences. R.A. Fisher set out to test if someone really could taste the difference between tea where the milk was poured in before or after the tea. Fisher’s experimental design was simple. Eight cups of tea were prepared, four with the milk poured before, four

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8028335098?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the fourth in a series we are co-writing.

We all have a tendency to overestimate our knowledge. And as a result, we believe that we know things which we don't. Our understanding of what is random is even worse – hence Nassim Taleb’s book Fooled by Randomness. It's the overconfidence that is the problem. It causes us to jump to the wrong answer and believe i

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My stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornicationthe plucking of numbers out of thin air. Here is the third in a series we are co-writing.

Why do so many educators in statistics consistently fail to translate these ideas into something that people can both remember and use? The problem is the language, not the numbers. Part of the problem with statistics, as is the case with most technical subjects, is the unique terminology. The COVID-19 pandemic has s

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The Danger of the Guessing Game

8028331099?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornicationthe plucking of numbers out of thin air. Here is the first in a series co-written together.

We’re far better at identifying good and bad writing than we are identifying good and bad numbers. The premise of this idea almost doesn’t seem logical. How can a language like English, with all of its oddities, be easier to separate the good from the bad?

Our education in English has a substantial amount of time de

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Pointed Estimates

8028325483?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornicationthe plucking of numbers out of thin air. Here is the first in a series co-written together.

One of the biggest problems with estimates is that it takes a long time to find out if you were right. A year for a budget, two, three or more years for a strategy. Political polling is the best example of being able to assess if the estimate was correct. On election night - and we all know how that has been going

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Accuracy over Buckshot

8028324084?profile=originalWARNING – If you are a vegetarian, vegan or an animal lover you may be offended by the story in this blog post.

When you're presented with numbers you don't know if they are buckshot or accurate. You often assume the later when it is often the former.

You must often witness people plucking out of thin air, numbers such as budget estimates, estimates of probability and estimates of impact. It is very common because it takes time to get accurate. We often prefer the buckshot approach because we hit

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The Strategy Funnel Part II

8028320082?profile=originalOne of my readers reached out to me after I introduced the strategy funnel last week which made me decide to prepare an example of how the approach works for a prolonged crisis, like COVID-19. One of my sons co-manages the bars in a three-level restaurant offering a variety of dining experiences. It is located in Manly here in Sydney, which is a tourist area. I have been thinking a lot about the restaurants and hence his future. So I thought I would use the restaurant’s owners as an example.

A la

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The Strategy Funnel

8028324681?profile=originalI’ve taken a sales and marketing tool and turned it into a strategy tool that you might find very helpful right now. The concept works like this:

There are a range of possible futures playing out for each of us. None we can be certain about. The further out in time we look the more uncertain the view. Nothing new here. What is our response? Generally, scenario planning and forecasting. The questions you should be asking yourself now is how many scenarios should I be considering and how can I move

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Observe within as much as (with)out

8028318490?profile=originalObserve your team and look for signals from the outside.

Two weeks ago I wrote about the need to diagnose challenges in order to lead. Last week I wrote about the behaviours you are seeing from customers. This week I want you to think about the behaviours you are seeing in your team. There are clues there about the “system”. The economy, how the government might act, how the populace might act as our world rapidly changes.

What behaviours do you see? Do you see fear, hubris or something in between

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