The heart of active business intelligence (BI) is the challenge of making information actionable. When information is displayed by BI systems, users should understand the information within their business situation and take the appropriate action based on that information. If there is no action, then there is no business benefit derived from the information.
What are the factors in making information actionable? The answer involves the concept of action distance, which is the distance (broadly defined) between the set of information generated by the BI system and the set of actions appropriate to a specific business situation. Figure 1 illustrates this concept by showing a business situation in which an information set is separated from an action set by some distance.
In other words, action distance is the measure of the effort required to understand information and to affect action based on that information. By reducing action distance, the information becomes more actionable.
Action distance could be the physical distance between information displayed and action controlled, or it could be the time between information available and action taken. It involves a mixture of technological (dashboard design), behavioral (motivation) and organizational (authority) concerns.
Figure 1: Action Distance in a Business Situation
Consider a simple analogy. In an airplane, the instruments (gauges, dials) and controls (switches, levers) are intermixed in the cockpit. Over decades of evolution, the design of an airplane cockpit has systematically placed instruments and controls so as to minimize action distance. Information about unusual situations is quickly displayed to the pilot, and the pilot can quickly take the appropriate action. The next time you fly, thank the aircraft designers for minimizing action distance for the pilot.
Consider what would happen if we place the instruments in the rear of the airplane, leaving the controls in the front. The pilot would have to walk to the back to determine where the airplane was heading and then return to the front to take corrective action. Or, the copilot could sit in the rear, telling the pilot over the intercom what was happening. Would you fly on such an airplane?
Yet, this is often the way that we design and manage our businesses. The people who have the information are not the ones who must take action based on that information. In fact, we usually put a committee in the middle to "enhance" the information flow.
There are two ways of reducing action distance. We can adjust the action set so that it is more relevant to the information set, or we can adjust the information set so that it is more relevant to the action set.
The first way is the approach of traditional BI. The typical sequence of questions is: What information do we have in our operational systems? How can we extract, transform and load that data into our warehouse? How can we analyze the data so that it is of use to a specific user?
The second way is the suggested approach of active BI. The typical question sequence is: What is the business process that needs improvement? Who has the responsibility and authority for the critical points in this process? What are the possible actions that this person could take? What information is required to discern and direct those actions? How can we obtain and organize that information?
The second approach is preferred if we are serious about making information from our BI system truly actionable. This implies that BI professionals must radically change their thinking from a left-to-right data flow to a right-to-left decision flow. We need to be more concerned about the effectiveness of business processes than the efficiency of query workloads.
Consider my fantasy of an intelligent enterprise. I walk into my bank to withdraw funds. The branch manager comes over and says, "Dr. Hackathorn, I am very sorry about your check that bounced last week. It was entirely our fault for not recognizing your prior deposits. Your account has been corrected and any penalty fees have been waived. Were there any other problems caused by our mistake?"
Nice fantasy! However, this scenario is quite plausible for a small rural bank that really knows all of its customers. How could the typical large bank behave in the same manner?
There are three requirements to enable this intelligent behavior.
First, the manager should be alerted. The system should recognize an unusual business situation. For example, a profitable customer is unhappy, the bank is at fault, and the customer is engaged in a subsequent transaction. Bells and whistles should sound. The normal workflow of the manager should be interrupted.
Second, the manager should be informed. The system should display a situational-specific analysis so that the manager quickly understands the business situation. The manager needs to judge the priority of this situation relative to current demands and the precedence of similar situations.
Third, the manager should be guided. The system should suggest the appropriate actions for the situation. For example, the manager should walk over to teller number six and introduce himself/herself to the customer standing there.
The BI bottom line: Business value of BI systems is determined by the degree to which information produced is actionable. Action distance is a measure of the effort required by the person responsible for a specific business situation to understand that information and to take proper action. The key aspects of action distance are alerting, informing and guiding. Therefore, minimizing action distance enables BI systems to maximize their business value.
Challenge: Do you know of real-world illustrations of action distance? If so, please contact me at email@example.com. I would like to devote one of my future columns to those illustrations.
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