StrategyDriven

In today’s data rich world, it is often difficult to identify the meaningful patterns and relationships that yield information decision-makers need to set the direction of their organizations. Additionally, complex market environments create a multitude of data analysis options; preventing any one person from seeing every possibility. Deriving compelling information from this sea of data and presenting it in simplistic, understandable, and actionable manner thus becomes the challenge of every business analyst. Helping solve this dilemma is the business model.

The power of models is threefold. First, models harness the knowledge and experience of people internal and external to the organization; knowledge and experience that has been tried and tested under a multitude of circumstances. Second, models are easily updated, often automated, providing results in near real-time. Third, models present information in a simplified view that is commonly tailored to suggest a particular course of action.

Model Risks

As with any tool, there exist certain risks when using models. Applying the wrong model to a particular circumstance can provide information that drives inappropriate actions leading to disastrous results. Constructing an overly simplified picture risks omission of influential nuances that may subsequently challenge the realization of desired outcomes. Therefore, those using models and analyzing their results must fully understand the model’s and data’s limitations as well as the situations for which the model is valid. Results, especially extremes, should always be validated for reasonableness and applicability.

Final Thought…

Applicable models will not be available for every situation or circumstance. During these times, multidiscipline assessment teams help bring to bear an increased level of knowledge and experience as well as raising the amount of data that can be evaluated. These teams can be further enhanced by the participation of peers from outside the organization.

Nathan A. Ives is a Strategy & Operations Manager at Deloitte Consulting LLP, a StrategyDriven contributor, and co-Host of the StrategyDriven Podcast. For over fifteen years, he has served as trusted advisor to executives and managers at numerous Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.

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