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Lecture 02
Decision Making
Dr. Jorge Ramírez Medina
About the players
Dr. Jorge Ramírez Medina
Technology Life-cycle
Dissemination of technology
S-curve from Richard Foster
Dr. Jorge Ramírez Medina
Technology Life-cycle
S-curve from Richard Foster
Dissemination of technology
Dr. Jorge Ramírez Medina
Crossing this chasm
Dr. Jorge Ramírez Medina
Useful tools; Gartner Hype Cycle
Dr. Jorge Ramírez Medina
Hype Cycle for Business
Intelligence and Analytics, 2015
Dr. Jorge Ramírez Medina
Gartner Magic
Leaders execute well against their current vision and
are well positioned for tomorrow.
Visionaries understand where the market is going or
have a vision for changing market rules, but do not
yet execute well.
Niche Players focus successfully on a small
segment, or are unfocused and do not out-innovate
or outperform others.
Challengers execute well today or may dominate a
large segment, but do not demonstrate an
understanding of market direction.
Dr. Jorge Ramírez Medina
Magic Quadrant for Business
Intelligence and Analytics Platforms
Dr. Jorge Ramírez Medina
BI Magic Quadrant
2015
2014201320122010
Dr. Jorge Ramírez Medina
Class thoughts
• Business Intelligence (BI) is about getting the right
information, to the right decision makers, at the right
time.
• BI is an enterprise-wide platform that supports
reporting, analysis and decision making.
• BI leads to:
• fact-based decision making
• “single version of the truth”
• BI use information from yesterday and today , in order
to make better decisions about tomorrow
Dr. Jorge Ramírez Medina
The prisioner’s dilemma
Prisoner B stays silent
(cooperates)
Prisoner B betrays
(defects)
Prisoner A stays silent
(cooperates)
Each serves 1 year
Prisoner A: 3 years
Prisoner B: goes free
Prisoner A betrays
(defects)
Prisoner A: goes free
Prisoner B: 3 years
Each serves 2 years
Dr. Jorge Ramírez Medina
Decision Making
and to be a prisoner's dilemma
game in the strong sense, the
following condition must hold
for the payoffs:
T > R > P > S
Cooperate Defect
Cooperate R, R S, T
Defect T, S P, P
Merrill Flood and Melvin Dresher
Formalized by Albert W. Tucker (1950),
Dr. Jorge Ramírez Medina
How do we take decisions?
Prof Daniel Kahneman
Princeton University
two systems of thinking
Logical
Intuitive
Dr. Jorge Ramírez Medina
Strategy; the key word
Dr. Jorge Ramírez Medina
Strategy; the key word
Dr. Jorge Ramírez Medina
Dominant strategy
1. A strategy that always works better than any other strategy.
2. Because of that, this is always the first option of a rational
player.
3. A rational opponent plays to select the dominant strategy.
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dr. Jorge Ramírez Medina
Dominated strategy
1. A strategy that never works better than any other strategy.
2. For this reason there is not the option of a rational player.
3. A rational opponent never plays to select the dominated
strategy.
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dr. Jorge Ramírez Medina
The pastas war
Toothpastes war
They equitably share market (total sales of
10 MMP)
Each company plans to use a disruptive
technology (technology cost 2.5MMP)
• No effect on the total market size, or total
sales.
• Increasing 80% the company market size only if
the competitor does not use its disruptive
technology strategy
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dr. Jorge Ramírez Medina
Game scenario
Players
• Sensodyne, Colgate
Actions
• Use disruptive technology
• Do not use disruptive technology
Rules
• Simultaneous decision making
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dr. Jorge Ramírez Medina
Game scenario
Reward (Payment)
• both do not use disruptive technology, then
both win 5 MMP
• both use disruptive technology, then both win
5MMP-2.5MMP
• Only one of the players uses disruptive
technology
• First mover wins 8MMP–2.5MMP
• Laggard wins 2MMP
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dr. Jorge Ramírez Medina
Matrix
ColgateSensodyne
Disruptive
technology
No
Disruptive
technology
Disruptive
technology
2.5/2.5 5.5/2
No
Disruptive
technology
2/5.5 5/5
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dr. Jorge Ramírez Medina
Solving
ColgateSensodyne
Disruptive
technology
No
Disruptive
technology
Disruptive
technology
2.5/2.5 5.5/2
No
Disruptive
technology
2/5.5 5/5
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dominat Strategy
Dr. Jorge Ramírez Medina
Solving
ColgateSensodyne
Disruptive
technology
No
Disruptive
technology
Disruptive
technology
2.5/2.5 5.5/2
No
Disruptive
technology
2/5.5 5/5
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Dominat Strategy
Dr. Jorge Ramírez Medina
Nash Equilibrium
Colgate
Sensodyne Disruptive
technology
No
Disruptive
technology
Disruptive
technology
2.5/2.5 5.5/2
No
Disruptive
technology
2/5.5 5/5
Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
Combination of Strategies
No player may deviate from current strategy in
order to improve payment
Dr. Jorge Ramírez Medina
Data-driven decisions company
Organizations used to trust on the managers intuition to make
business decisions, due to data were scarce, expensive to obtain, or
not available in digital form. Usually those were the top managers in
the organization (known as HiPPO —the highest-paid person’s
opinion).
Andrew McAfee & Eric Brynjolfsson
Dr. Jorge Ramírez Medina
Data-driven decisions company
Companies data-driven were, on average, 5% more productive and
6% more profitable than their competitors.
Dr. Jorge Ramírez Medina
Demo; Power BI Microsoft
Dr. Jorge Ramírez Medina
End of session

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Business Intelligence S02

  • 2. Dr. Jorge Ramírez Medina About the players
  • 3. Dr. Jorge Ramírez Medina Technology Life-cycle Dissemination of technology S-curve from Richard Foster
  • 4. Dr. Jorge Ramírez Medina Technology Life-cycle S-curve from Richard Foster Dissemination of technology
  • 5. Dr. Jorge Ramírez Medina Crossing this chasm
  • 6. Dr. Jorge Ramírez Medina Useful tools; Gartner Hype Cycle
  • 7. Dr. Jorge Ramírez Medina Hype Cycle for Business Intelligence and Analytics, 2015
  • 8. Dr. Jorge Ramírez Medina Gartner Magic Leaders execute well against their current vision and are well positioned for tomorrow. Visionaries understand where the market is going or have a vision for changing market rules, but do not yet execute well. Niche Players focus successfully on a small segment, or are unfocused and do not out-innovate or outperform others. Challengers execute well today or may dominate a large segment, but do not demonstrate an understanding of market direction.
  • 9. Dr. Jorge Ramírez Medina Magic Quadrant for Business Intelligence and Analytics Platforms
  • 10. Dr. Jorge Ramírez Medina BI Magic Quadrant 2015 2014201320122010
  • 11. Dr. Jorge Ramírez Medina Class thoughts • Business Intelligence (BI) is about getting the right information, to the right decision makers, at the right time. • BI is an enterprise-wide platform that supports reporting, analysis and decision making. • BI leads to: • fact-based decision making • “single version of the truth” • BI use information from yesterday and today , in order to make better decisions about tomorrow
  • 12. Dr. Jorge Ramírez Medina The prisioner’s dilemma Prisoner B stays silent (cooperates) Prisoner B betrays (defects) Prisoner A stays silent (cooperates) Each serves 1 year Prisoner A: 3 years Prisoner B: goes free Prisoner A betrays (defects) Prisoner A: goes free Prisoner B: 3 years Each serves 2 years
  • 13. Dr. Jorge Ramírez Medina Decision Making and to be a prisoner's dilemma game in the strong sense, the following condition must hold for the payoffs: T > R > P > S Cooperate Defect Cooperate R, R S, T Defect T, S P, P Merrill Flood and Melvin Dresher Formalized by Albert W. Tucker (1950),
  • 14. Dr. Jorge Ramírez Medina How do we take decisions? Prof Daniel Kahneman Princeton University two systems of thinking Logical Intuitive
  • 15. Dr. Jorge Ramírez Medina Strategy; the key word
  • 16. Dr. Jorge Ramírez Medina Strategy; the key word
  • 17. Dr. Jorge Ramírez Medina Dominant strategy 1. A strategy that always works better than any other strategy. 2. Because of that, this is always the first option of a rational player. 3. A rational opponent plays to select the dominant strategy. Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
  • 18. Dr. Jorge Ramírez Medina Dominated strategy 1. A strategy that never works better than any other strategy. 2. For this reason there is not the option of a rational player. 3. A rational opponent never plays to select the dominated strategy. Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
  • 19. Dr. Jorge Ramírez Medina The pastas war Toothpastes war They equitably share market (total sales of 10 MMP) Each company plans to use a disruptive technology (technology cost 2.5MMP) • No effect on the total market size, or total sales. • Increasing 80% the company market size only if the competitor does not use its disruptive technology strategy Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
  • 20. Dr. Jorge Ramírez Medina Game scenario Players • Sensodyne, Colgate Actions • Use disruptive technology • Do not use disruptive technology Rules • Simultaneous decision making Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
  • 21. Dr. Jorge Ramírez Medina Game scenario Reward (Payment) • both do not use disruptive technology, then both win 5 MMP • both use disruptive technology, then both win 5MMP-2.5MMP • Only one of the players uses disruptive technology • First mover wins 8MMP–2.5MMP • Laggard wins 2MMP Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
  • 22. Dr. Jorge Ramírez Medina Matrix ColgateSensodyne Disruptive technology No Disruptive technology Disruptive technology 2.5/2.5 5.5/2 No Disruptive technology 2/5.5 5/5 Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU)
  • 23. Dr. Jorge Ramírez Medina Solving ColgateSensodyne Disruptive technology No Disruptive technology Disruptive technology 2.5/2.5 5.5/2 No Disruptive technology 2/5.5 5/5 Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU) Dominat Strategy
  • 24. Dr. Jorge Ramírez Medina Solving ColgateSensodyne Disruptive technology No Disruptive technology Disruptive technology 2.5/2.5 5.5/2 No Disruptive technology 2/5.5 5/5 Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU) Dominat Strategy
  • 25. Dr. Jorge Ramírez Medina Nash Equilibrium Colgate Sensodyne Disruptive technology No Disruptive technology Disruptive technology 2.5/2.5 5.5/2 No Disruptive technology 2/5.5 5/5 Tomado del curso Competitive Strategy del professorTobiasKretschmer. Ludwig-Maximilians-UniversitätMünchen(LMU) Combination of Strategies No player may deviate from current strategy in order to improve payment
  • 26. Dr. Jorge Ramírez Medina Data-driven decisions company Organizations used to trust on the managers intuition to make business decisions, due to data were scarce, expensive to obtain, or not available in digital form. Usually those were the top managers in the organization (known as HiPPO —the highest-paid person’s opinion). Andrew McAfee & Eric Brynjolfsson
  • 27. Dr. Jorge Ramírez Medina Data-driven decisions company Companies data-driven were, on average, 5% more productive and 6% more profitable than their competitors.
  • 28. Dr. Jorge Ramírez Medina Demo; Power BI Microsoft
  • 29. Dr. Jorge Ramírez Medina End of session