The Evidence-Based Organization: A Platform for Innovation
The Evidence-Based Organization:APlatform for InnovationAPlatform for InnovationProfessor Dr Jan ReckerWoolworths Chair of Retail InnovationInformation Systems School Queensland University of TechnologyInformation Systems School, Queensland University of Technology
Innovation and Evidence pave the way to the futureInnovation, research and customer‐orientated transformation are key tosurviving a rapidly changing retail landscape according to Woolworths Ltd CEOg p y g g p gGrant OBrien.Mr OBrien addressed the QUT Business Leaders Forum today saying theinvestment of nearly $1 million to fund a Chair of Retail Innovation would helpthe sector better recognize the needs of customershttp://www.news.qut.edu.au/cgi‐bin/WebObjects/News.woa/wa/goNewsPage?newsEventID=56077the sector better recognize the needs of customers.
Innovation and Evidence pave the way to the futurehttp://hbr.org/2012/10/data‐scientist‐the‐sexiest‐job‐of‐the‐21st‐century/ar/pr
Innovation and Evidence pave the way to the futurehttp://statements.qld.gov.au/Statement/2013/6/24/queensland‐looking‐for‐data‐gurus
Recognizing the relevance of Evidence− Relying on status (confidence) rather than facts (evidence)− Using flawed decision models− Using flawed decision models+ Seeking an understandingof true cause-effect relations+ Realizing the availability of potential evidence+ O i t diti i t iti f lkl d l f th b+ Opposing tradition, intuition, folklore and rules of thumb“If the decision is going to be made byIf the decision is going to be made byfacts, then everyone’s facts […]are equal.If the decision is going to be made on thebasis of people’s opinions, then mine countfor a lot more.“ James Barksdaleformer CEO Netscape
EVIDENCE-BASED DECISIONSBasic ConceptsBasic Concepts“Relying on valid and reliable evidenceRelying on valid and reliable evidenceand translating them into practices thatsolve problems and innovatesolve problems and innovateorganizations.”
Levels of EvidenceWhich le el is the basis for o r decisions?Which level is the basis for your decisions?
Some examplesWhich le el is the basis for o r decisions?Which level is the basis for your decisions?http://www.youtube.com/watch?v=aXV yaFmQNkhttp://www.youtube.com/watch?v=ksO35s3Bffctch?v=aXV-yaFmQNk /watch?v=ksO35s3Bffc
Some examplesSome examplesSocial media usage statistics(Source: David Cowling, SocialMediaNews.com.au, 2013)Social network Feb 2012 Feb 2013Facebook 10,703,160 11,677,680YouTube 11,000,000 11,000,000YouTube 11,000,000 11,000,000Blogspot 3,500,000 3,200,000Tumblr 1,100,000 2,800,000Li k dI 2 220 000 2 400 000LinkedIn 2,220,000 2,400,000Twitter 1,800,000 2,200,000Instagram 250,000 1,101,667Flickr 920,000 850,000Pinterest 650,000 630,000Google+ (estimates) 1 200 000 340 000Google+ (estimates) 1,200,000 340,000Myspace 520,000 310,000
Some examplesSome examplesSocial media “noise” has noSocial media noise has nomeasurable impact on short-termsales.(But Digital ROI remains key measurefor media selection and marketingstrategies.)
BUT BEWARENot all decisions requirescientific examination…
What is your source of evidence?yE t l External Where have other organizations produced relevantevidence? Where has research produced relevant evidence? Typically the focus of R&D departments orcollaborations with research institutes Internal Where do we produce relevant evidence? Where can we produce relevant evidence?
Example – creating evidencep gForecasting for Promotion PlanningForecasting for Promotion Planning
Example – status quop q Promotion planning methoddecided byproject team Relying on status(confidence) rather thanfacts (evidence)project team Method based on linearregression modelfacts (evidence) Using flawed decisionmodelsregression model No systematic review ofaccuracymodels Seeking an understandingof true cause-effectyperformed conducted daily for 30,000relations Realizing the availability ofitems across 1,000 stores “we have used this systemi 2004 d it hpotential evidence Opposing tradition,i t iti f lkl d lsince 2004 and it hasserved us well”intuition, folklore and rulesof thumb
What is your source of evidence?yE t l External Where have other organizations produced relevantevidence? Where has research produced relevant evidence? Typically the focus of R&D departments or collaborationswith research institutes Internal Where do we produce relevant evidence? Where can we produce relevant evidence?
Example – find your internal evidencep y“What can we learn about successfrom within our own company?”from within our own company?
Inserting scientific principlesPositive DeviantInserting scientific principles What is theevidence forsuccess?Positive DeviantPositive DeviantPositive DeviantPositive Deviant Who is trulysuccessful? Why are theyssperformancePositive DeviantPositive Devianty ytrulysuccessful? Which trueSalesprocesAverageroot causescan we insertelsewhere?Number of customers
What Causes Performance? “It’s not necessarily the process” everyone follows the same process model everyone follows the same process model “It’s not the competition” process performance independent from local context Individual motivation and the willingness to Individual motivation and the willingness to‘do something extra’ Clever use of mark-downs Culture: collaboration and communication between Culture: collaboration and communication betweendepartments Exchange of ideas inter-departmental Creativity: finding new solutions for products Creativity: finding new solutions for products,display and service; willingly deviate fromstandardized process. Exchange of knowledge between stores Exchange of knowledge between stores
The Underlying Model: “Research as a Service” Inserting scientific principles into emerging evidence‐b d i tibased organizations.Research as an innovation support serviceResearch as an innovation support service.Novel conceptual perspectivesRigorous scientific principlesQuality empirical evidenceIncreased research bandwidthUnbiased observationExplores evidence internallyand externallyAbility to develop capability.
Requirements for evidence-basedinnovation decisionsData awarenessData awarenesswhat data is appropriate?What data is available?What is the quality of available data?What is the quality of available data?The ability to understand scientific conceptsValidity and reliabilitySt ti ti l i ifi d l iStatistical significance and sample sizeReplication and biasThe ability to analyze, interpret and evaluate statistical informationDetermine appropriate analysesIdentify appropriate visualizationsConsider limitations and assumptionsCommunicate effectively and accurately23 |
Wrap-Up: From Confidence to EvidenceWrap Up: From Confidence to EvidenceMoving to reliable, valid and ultimately credibledecisionsdecisions.Means levelling of hierarchiesMeans levelling of hierarchies.Requires data and scientific analysis capabilities.q y pCan be provided by university and research institutions, but arealso increasingly sought as internal capability.Allows capitalizing on external and internalevidence for organizational innovation.g24
Key LessonsInnovations require decisions about unstructured andInnovations require decisions about unstructured andcomplex problems. Risk of failure is high.Evidence-based decision-making increasesginnovation reliability, credibility and ultimatelychance of success.Y d h t b t t ilYou do have access to – but not necessarilyawareness of – internal and external evidence.Data scientists are becoming an essential resourceData scientists are becoming an essential resource.
Prof. Jan ReckerWoolworths Chair of Retail InnovationInformation Systems SchoolQueensland University of Technologye email@example.com www janrecker comw www.janrecker.comt janrecker