Building a More Intelligent Enterprise
Paul J.H. Schoemaker (University of Pennsylvania) and Philip E. Tetlock (University of Pennsylvania) pp. 28-37
To succeed in the long run, businesses need to create and leverage some kind of sustainable competitive
edge. Although the authors say that advantages can still come from sources such as lower cost, intellectual property, motivated employees, and strategic leaders, they argue that in the knowledge economy,
strategic advantages will increasingly depend on a capacity to make superior judgments and choices.
Intelligent enterprises today are being shaped by two distinct forces. The first is the growing power of
computers and big data, which provide the foundation for operations research, forecasting models, and
artificial intelligence. The second is our growing understanding of human judgment, reasoning, and
choice. Decades of research has yielded deep insights into what humans do well or poorly.
In this article, the authors examine how managers can combine human intelligence with technology-enabled insights to make smarter choices in the face of uncertainty and complexity and thus gain a cumulative advantage in business. They note five strategic capabilities that intelligent enterprises can use to
develop an advantage over competitors:
1. Find the strategic edge. In assessing past organizational forecasts, home in on areas where improving
subjective predictions can really move the needle.
2. Run prediction tournaments. Discover the best forecasting methods by encouraging competition,
experimentation, and innovation among teams.
3. Model the experts in your midst. Identify the people internally who have demonstrated superior
insights into key business areas, and leverage their wisdom using simple linear models.
4. Experiment with artificial intelligence. Use deep neural nets in limited task domains to outperform
5. Change the way the organization operates. Promote an exploratory culture that continually looks for
better ways to combine the capabilities of humans and machines.
REPRINT 58301. For ordering information, see page 4.
The Most Underrated Skill in Management
Nelson P. Repenning (MIT Sloan School of Management), Don Kieffer (MIT Sloan School of
Management), and Todd Astor (Massachusetts General Hospital) pp. 39-48
According to the authors, there are few questions in business more powerful than “What problem are
you trying to solve?” The authors argue that leaders who can formulate clear problem statements get
more done with less effort and move more rapidly than their less-focused counterparts. Clear problem
statements can unlock the energy and innovation that lies within those who do the core work of an
organization, whether it be manufacturing, product development, or service.
As valuable as good problem formulation can be, it is rarely practiced. Psychologists and cognitive
scientists have suggested that the brain is prone to leaping straight from a situation to a solution without pausing to define the problem clearly. Such “jumping to conclusions” can be effective, particularly
when done by experts facing extreme time pressure, like fighting a fire or performing emergency surgery. But, when making change in an organization, neglecting to formulate a clear problem statement
often prevents innovation and leads to wasted time and money.
A good problem statement has five basic elements:
• It references something the organization cares about and connects that element to a clear and specific goal;
• it contains a clear articulation of the gap between the current state and the goal;
SPRING 2017 • VOLUME 58 • NUMBER 3