Another dimension of the analytics revolution is balancing intuition with analytical insights. Decision-makers, especially in the context of strategic judgment, often need to strike the right balance between a course of action suggested by data and a different course of action indicated by intuition. On one hand, there is a clear sense in which the distinction between intuition and data is false: Many judgments must be made about which data to use and how to interpret it in order for data to become insights in the first place. But on the other hand, as analytical insights grow in number and influence within an organization, the need to put these insights into a broader context will become even more important. Caesars Entertainment Corporation is a case in point. Led by chairman and CEO Gary Loveman — a former Harvard Business School professor with a doctorate in economics from MIT — Caesars was offered the chance to bid on a gambling concession in Macau, China, in 2006. The asking price of the concession was $900 million. Loveman, who had established a reputation for himself by profitably using analytics to fine-tune customer segments and build effective loyalty programs, ran the numbers but couldn’t produce a valuation anywhere near $900 million. He declined to bid. The global financial crisis hit the next year — but not in Macau, which enjoyed a growth explosion. Caesars bought a golf property in Macau in 2007 for close to $600 million in the hopes of turning it into a gaming property. Unfortunately for Caesars, no more gambling concessions have been (or are likely to be) issued to foreign investors. One of Caesars’ competitors is now profiting more from its properties in Macau than from its properties in Las Vegas. Loveman has been open about his missteps in Macau. “You had to have a kind of intuitive courage, and I am not well-suited to those kinds of decisions,” he said in 2010.i “Big mistake.
1. “The New Initiative on the Digital Economy,” press release, MIT Sloan School of Management, n.d.
2. P.C. Evans and M. Annunziata, “Industrial Internet: Pushing the Boundaries of Minds and Machines,” GE Reports, November 26, 2012.
3. Evans, “Industrial Internet.”
4. R. Bean and D. Kiron, “Organizational Alignment Is Key to Big Data Success,” January 28, 2013.
5. “Governor Patrick Announces New Initiative to Strengthen Massachusetts’ Position as a World Leader in Big Data,” press release, Commonwealth of Massachusetts, May 30, 2012.
6. ”Governor Patrick Announces New Initiative.”
7. A. Pentland, “Reinventing Society in the Wake of Big Data,” August 30, 2012.
9. J. Manyika, M. Chui, et. al, “Big Data: The Next Frontier for Innovation, Competition and Productivity,” May 2011.
10. Capgemini Consulting and MIT Center for Digital Business, “The Digital Advantage: How Digital Leaders Outperform Their Peers in Every Industry,” November 5, 2012.
11. E. Brynjolfsson and A. McAfee,“Big Data, The Management Revolution,” Harvard Business Review 90 (October 2012): 61-67.
12. T.H. Davenport and J.G. Harris, “Competing on Analytics: The New Science of Winning” (Cambridge, MA: Harvard Business School Press, 2007).
13. M. Lewis, “Moneyball: The Art of Winning an Unfair Game” (New York: W.W. Norton, 2004).
14. L. Melnick, "Moneyball Strikes Again: How to Use Analytics for Sustained Competitive Advantage,” October 3, 2012.
15. The two questions were:
(a) To what extent does information and business analytics create a competitive advantage for your organization within its industry or markets?
(b) To what extent do you agree with the following statement? Analytics has helped improve my organization’s ability to innovate.
Managers that checked “great extent” for both questions were placed in the Analytical Innovators category.
16. T.H. Davenport and D.J. Patil, “Data Scientist: The Sexiest Job of the 21st Century,” Harvard Business Review 90 (October 2012): 70-76.
17. “Chief Consumer Advocate: How Social Data Elevates CMOs,” white paper, Bazaarvoice and the CMO Club, Austin, TX, July 25, 2012.
18. Respondents in Analytically Challenged companies differ demographically in subtle but important ways from other survey participants. They tend to be in less senior management positions and have a slightly higher likelihood than other survey participants to work in operational functions. These demographic differences might be a contributing factor to their evaluations of their organizations as less analytically mature.
19. The prisoner’s dilemma refers to a non-zero-sum game that shows why two people may choose to betray each other even if cooperation is in their best interest. It’s based on the premise that two isolated prisoners involved in the same crime have the independent opportunity to either collaborate with each other by remaining silent or sell the other prisoner out. Each combination of possibilities results in a different outcome, with the best for both stemming from cooperation. The sucker’s side is the prisoner who remains silent but is betrayed by the other prisoner.
i. K.T. Greenfeld, “Loveman Plays ‘Purely Empirical’ Game as Harrah’s CEO,” August 6, 2010.