The challenge in managing big data is prompting the emergence of the extra-rational manager: someone who listens to reason and the spoken word but also uses new observational tools to monitor communication patterns.

The challenge in managing big data is prompting the emergence of the extra-rational manager: someone who listens to reason and the spoken word but also uses new observational tools to monitor communication patterns.

Image courtesy of Flickr user Mike Licht, NotionsCapital.com.

Big Data is often associated with big numbers, but less often with a big picture. The basic question — How can increasing the quantity, velocity and variety of captured data really impact how people manage? — can go unanswered.

In the MIT Sloan Executive Education course Big Data: Making Complex Things Simpler, MIT professors Erik Brynjolfsson and Alex Pentland offer that big picture view of the economic, societal and managerial transformations that they see on the horizon.

At a recent session of the course, Brynjolfsson and Pentland argued that just as revolutions in science are preceded by revolutions in measurement, so, too, are revolutions in business preceded by revolutions in measurement. And indeed, big data today is enabling a measurement revolution within the business context.

One example: Much has been made about new advances in analyzing unstructured data, such as twitter feeds and email. But this is just the beginning, according to Brynjolfsson and Pentland. It’s the way we can now overlay and combine multiple data sources that give us the most valuable insights.

Although Brynjolfsson and Pentland don’t actually put it this way, they are describing the emergence of the extra-rational manager: someone who listens to reason and the spoken word, but also uses new observational tools to monitor communication patterns that have little to do with rational decision-making.

Could managers improve their ability to manage if they knew who is talking with whom, and how often, and where these conversations are taking place and what the tone of these interactions are? New approaches to monitoring communication patterns — through the use of sociometric badges that measure people’s proximity, location, face-to-face interactions and social signals — are revealing valuable patterns and relationships that have a direct and measurable impact on individual and team performance.

“Ignoring these influences when you’re running a company is crazy,” contends Pentland. “The data shows that they are at least as important as our rational behavior.” (See more of Pentland's comments in the strategy + business article "The Science of Subtle Signals.") In fact, Pentland’s research suggests that 40% to 60% of individual performance is determined by communication patterns that are seldom recognized or addressed by today’s managers.

In one application, Pentland’s team analyzed communication patterns at a Bank of America call center, without listening to a single spoken word. After studying communication patterns among the call center staff, Pentland’s team suggested what seems like a tiny change: staggering coffee breaks. But the change generated a $15 million return in just over a year — at one call center. Imagine the benefits when simple solutions like that get applied across the rest of an organization, across many organizations, in many industries, around the globe.

The global value of big data-related productivity improvements and innovations? Brynjolfsson and Pentland say it will one day reach trillions of dollars.

The Big Data course next takes place October 30-31, 2012. Registration information and a sample schedule are online.

3 Comments On: The Emergence of the Extra-Rational Manager

  • rosariotoday | May 31, 2012

    I am one of those ‘rational managers’ but I am also concerned about the risk of ‘death by Quant’ a.k.a. financial market crisis. See my blog at http://intothecore.com/2012/03/13/the-big-bang-of-marketing-big-data/ on “The Big Bang of Marketing: Big Data.”

  • globalroundhouse | June 5, 2012

    The benefits of new metrics notwithstanding, it seems we are returning to holistic education. What you’ve described here is essentially “listening” to people chatter and integrating the frequencies of language patterns, snippets of captured conversation, etc., into effective strategies for management.

    Conductors do this everyday, on stage during performances but also in preparing new works of music because conductors first have to listen carefully to the piece under consideration. After listening carefully, the conductor can arrange a piece according to his/her vision and have it executed through the multiple voices in the orchestra. These articulated voices are the practical applications of strategies and lead us right back to core beliefs.

    You’ve made the case for more arts education in schools from the primary through the most advanced graduate levels of study. I thank you for this but, alas, who is listening?

    http://www.theglobalroundhouse.com
    @GlobalJackie

  • What Peter Drucker Would Be Reading | The Drucker Exchange | June 5, 2012

    [...] 3.     The Emergence of the Extra-Rational Manager:  Maybe you learn about what’s happening in the office by reading emails or talking to people. But in the era of so-called Big Data, the executive of tomorrow will harvest nonverbal communication information and use it for better management, suggests David Kiron at the Improvisations blog on MIT Sloan Management Review.  That person, says Kiron will be someone who “uses new observational tools to monitor communication patterns that have little to do with rational decision-making.” Not scared yet?  Try this: “Could managers improve their ability to manage if they knew who is talking with whom, and how often, and where these conversations are taking place and what the tone of these interactions are?” [...]

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