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The Decision-Centric Approach – What is it and How does it help us?

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A Decision Centric Approach is key to enabling organizations to innovate in business ‘moments’. After all, deciding whether to engage a customer or conduct a transaction is an integral part of everyday commerce. These are the decisions that really matter to businesses. No matter whether these are made by a human, AI, or by using a traditional business rules approach, they are at the heart of any enterprise.

Companies are investing heavily in analytics, machine learning, data science, AI, RPA and other related technologies. The belief is that such technologies can drive better decision-making in order to improve business outcomes and also to reduce operational costs. However, there is a real gap between this belief and the reality of decision-making in day-to-day business transactions.

The missing link is a Decision Centric Approach that addresses the business challenge, enabling innovation in those crucial business moments and improving both efficiency and business agility.

The Decision Centric Approach brings People, Rules, Data and Processes together and empower organisations to increase business agility. The Decision Centric Approach will explicitly define the context of the transaction and any related decisions.

This in turn allows business decisions to benefit from whatever technology has been adopted. Without the Decision Centric Approach, regardless of whether any of these great advanced technologies (i.e. AI, Data Analytics, Machine Learning, RPA and etc.) are used or not, it is a shot in the dark.

Decision Model

The Decision Centric Approach defines decisions explicitly in a way the business can understand, and can also explain the reasoning and dependencies behind these decisions. For example, the Decision Requirement Diagram (DRD) below shows an explicit model of how a car premium can be calculated.

decision centric approach

In the above example, each blue box represents a decision to be carried out. Each individual decision in this model can be implemented using a different technology (i.e., Analytics, AI, Machine Learning, Business Rules, etc) and the decision hierarchy shown above models the relationship and dependencies between decisions, while putting the results of every decision together to conclude a final result.

OODA Loop – Decision Cycle

By using the observer-orient-decide-act (OODA) decision cycle, the Decision Centric Approach puts explicitly defined decisions into the business moment.

Observe: Observing and taking into account new information about our changing environment and competition. Connecting and accessing data and information in the moment, which can be incomplete and imperfect. What is important, what can be ignored and how do you establish these facts quickly?

Orient: Orientation shapes the way we observe, the way we decide and the way we act. It brings perspective into the information that has been gathered in order to create a context for decision-making. The goal of orientation is to create a more accurate model of reality with which to make better decisions and take better actions.

Decide: Models the decisions to be made in the business moment, explicitly defined business decisions, their relationships and dependencies. By executing the decisions, the results are created and ready for the next part.

Act: Allows actions to be taken based on decision outcomes. A decision might have multiple answers, therefore testing, optimizing and creating new data for the cycle as input to Observe is part of the Act.

decision centric approach OODA loop

Apart from increased organizational efficiency, the Decision Centric Approach also releases the potential for making the right decision at the right time based on particular customer needs. This will allow organizations to implement customer-centric processes and also enable them to provide personalized and fully customized products and services to their customers. This highly customized, personalized product and services is the true differentiation point for organizations.

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Conclusion

A Decision-Centric Approach enables the organization to learn and adapt as quickly as possible, and that is why it is a critical tool to increase business agility. It enables a feedback loop and explicitly defines business decisions in the business moment. The decisions then can be carried out using AI, Machine Learning, Business Rules and so on. The important part is to understand these decisions by having a framework to put the decisions into the context of business moments, thereby enabling the business to iterate as quickly as possible:

  1. An organization that goes through a successful, consecutive Decision-Centric loop will win the market from its competitors.
  2. A Decision-Centric Approach enables your organization to rapidly innovate in the business moment, which resets the opponent’s cycle by causing confusion. It sends them back to square one! Back to observation and figuring out how to proceed.
  3. A Decision-Centric Approach empowers organizations to continuously deliver and innovate in an iterative manner based on what matters for the business.

 

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