The Extra-Rational Manager

This MIT-Sloan piece hints at help with understanding business dynamics. Much of a business model is typically simple – the causality of the Income Statement, the productivity of equipment or staff, etc. The accumulation of resources is completely deterministic, and many changes in those are simply decisions we take – add equipment, launch products, borrow cash.
All of which leaves the question “If so much is clearly determined, where lies the uncertainty that makes performance so difficult to manage?” Part of the answer could be “… wherever human responses are involved” especially at flow-rates – why customers join us, why staff leave, why competitors react as they do, and so on.
The article points out that “Business Analytics” is now so powerful and has access to such vast data that we can really start to understand these mechanisms. Companies like CapitalOne go further – not just mining the data for insight but conducting large numbers of controlled experiments to test things like responses to promotional efforts, pricing and so on.

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