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Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Clarification Workshop.

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Presentation on theme: "Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Clarification Workshop."— Presentation transcript:

1 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Clarification Workshop

2 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Clarify Cost/Benefit Model Purpose: Develop a comprehensive spreadsheet-based model of the costs, benefits and risks of the proposed system investment Approach: Use clarification methods to develop a specific cost/benefit formula 3. Conduct Measurements 3. Conduct Measurements 4. Conduct VIA 4. Conduct VIA 5. Conduct Risk & Return Analysis 5. Conduct Risk & Return Analysis 6. Make Recommendations 6. Make Recommendations 1. Classify & Plan 1. Classify & Plan 2. Clarify Intangibles & CBA 2. Clarify Intangibles & CBA

3 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Risk/Return Analysis Intangibles Customer Satisfaction Strategic Alignment Flexibility Technology Risk Information Quality etc... Measurables Errors in Decision X Change to Strategic Measure M Productivity in Activity Y Cycle Time of Process Z Chance of cancelation of Project Etc... 5%10%15% 10%20%30% $2 mill$4 mill $6 mill Measurements $ $$$ $$ Value of Info. Calculate Risk/Return Position "expected" ROI 50%100%150%200%250%-50%0% Probability of a negative ROI Probability of a positive ROI Organization's investment limit Acceptable region of investment Return Risk

4 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Schedule Highlights

5 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Workshop Schedule Workshop 1 – Workshop 2 - Workshop 3 - Workshop 4 - Workshop 5 – We will also rely on additional interviews and assignments outside of workshops to complete the objectives

6 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Workshop 1 Objectives Confirm investment objectives and approach Scope the decision model –Identify parts of the investment are fixed vs. optional –Confirm the list of independent investments –Confirm the acceptance criteria for investments (annual review, etc.) Identify key benefits, costs and risks Repeat for each investment in portfolio

7 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Workshop 2-3 Objectives Clarify the Intangibles & identify key variables –Benefits –Costs –Risks Develop spreadsheet models

8 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts The Object of Measurement Objects are the costs, benefits and risks that impact the return (i.e. cash flow) for the investment analysis If an object seems like an immeasurable intangible it may just be ill-defined ?

9 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts The IntangiblePossible Meanings After Clarification Employee Empowerment Information Availability Strategic Alignment Less management overhead Certain decisions are more accurate and faster Time and cost of searching is reduced Certain costly errors are less frequent Stated organizational objectives (which should be measurable) are more likely to be met Clarifying Intangibles Tools like The Clarification Chain are used to identify unit-of- measure variables hidden beneath the intangible label I offer a challenge that given any intangible, I can clarify it and identify a method of measurement within 15 minutes (Ive never lost)

10 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Measurement requires unambiguous definitions Ambiguity and uncertainty are not the same Ambiguity is an unclear definition Uncertainty still exists after ambiguity is removed Narrowing the possible values of a quantity is a reduction in uncertainty Ambiguity vs. Uncertainty

11 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts The Clarification Chain AIE assumes that if a benefit or cost is defined unambiguously, then it is measurable. If it is Better it is different in some relevant way... If it is relevantly different then it is observable... If it is observable it is observable in some amount... If we can detect in some amount then it is measurable.

12 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Imagine that you are a scientist capable of making clones of entire companies and that you have a cloned pair of your organization Change one of the organizations so that one has the stated intangible and the other does not Ask what would you actually observe that would be different between the two organizations The Clarification Thought Experiment

13 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Overview for Clarification Remember that one of the reasons things may seem to be immeasurable is that we do not understand the object of measurement Use unambiguous definitions (ambiguous benefits always seem to be Intangible) Use the Clarification Chain and Thought Experiment The output of the clarification step should be to agree on a specific spreadsheet model

14 Hubbard Decision Research The Applied Information Economics Company Review Workshop Process Overview Working Concepts Model Concept


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