Collective intelligence
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Both predictive markets and collaborative decision making aim to access the knowledge of the workforce
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The AHM is based on an insight into the function of the brain – human beings are far better at making pairwise comparisons (‘X weighs more than Y’) than individual assessments (‘X weighs this amount’). It breaks any prioritisation task into a number of pairwise comparisons, which can be undertaken by any number of people. The model then mathematically evaluates the sentiment of the group by aggregating these pairwise comparisons.
In 2003, Thomas Saaty’s sons, John and Daniel, founded Decision Lens, a company that sells collaborative decision-making software based on the AHM. Today, it is employed by organisations including the US Department of Defense, NASA and Lockheed Martin, which uses the software to prioritise projects for its F35 production line.
“The idea is to bring together a broad stakeholder group and have them structure a decision,” explains Decision Lens CEO John Saaty. The software invites each member of a group, which could be the board of directors or a marketing operations team, to complete the pairwise comparisons individually. This, says Saaty, helps to counteract some of the psychological factors that are often at play in decision-making meetings.
“You will often have A-type personalities that drive these meetings, and there will be other people in there with real expertise but because they are not the types that want to offer the information in the meeting they’re just quiet about it.” he explains. “This software allows everyone to understand each other’s priorities. You don’t have to agree, but you have to be explicit about what your judgement is.”
The second phase of the process is to assess alternative courses of action according to the aggregate priorities of the group. “For some of our customers, this is the first time they are actually able to tie the evaluation of alternatives directly back to their strategic imperatives.”
During his tenure as head of marketing strategy for auction website eBay, Kip Knight – now a consultant – used Decision Lens to choose which marketing projects merited investment. This, he reports, made the decision-making process more collaborative, more transparent and, therefore, more successful.
“We made better decisions for two reasons: first, they were a little more thoughtful because they were looked at from various criteria; and second, because of the debate and the collaboration, because everybody felt they had a little more ownership of the decision,” he explains.
“Previously, there were too many back-room deals going on,” he adds. “I’ve done traditional budgeting for many years, and you can game it so that you get the budget that you want. But you can’t game this, it’s way too transparent.”
Saaty argues that the popularity of his product – the company grew 70% in 2009 and was used to allocate around $98 billion of budget, he says – reveals that conventional decision-making practices are broken. A common malaise, he says, is the expectation that information systems and data analysis can somehow direct strategy.
“We met with [pharmaceuticals giant] Astra Zeneca’s head of global portfolio,” recalls Saaty. “He said they had tried to drive decision-making off data. They had a whole project last summer where they were looking into various possible products, and they thought by evaluating all this data and plotting it on a graph that it would soon emerge what the correct direction would be for the products. But what happened was that all the products ended up landing right on top of each other – there was really no differentiation.”
“His point was that looking for your strategy to emerge out of the data is not really that effective,” Saaty concludes. He adds that making the priorities of the various stakeholders within the organisation explicit – and providing a mechanism for reconciling those priorities – is more likely to provide useful guidance than statistical analysis of financial records.
Reflected in Saaty’s comments is a broader point. Not only are the minds of an organisation’s employees its most valuable source of information, they also contain invaluable insight, analysis and forecasts. Any tool that helps an organisation build all of this into its operational management and strategic leadership must surely make that organisation stronger.
