ANALYSIS: Success is the goal

10 Aug 2010

Facts, not opinions, are now the bedrock of decision-making at the top level. But while this is as proven on the pitch as it is in the boardroom, why are Irish companies taking their eye off the ball? Gordon Smith looks at how analytics turned football into a numbers game, and what the implications are for business.

In sport, as in business, the devil is in the details. In Jonathan Wilson’s excellent history of football tactics Inverting the Pyramid, a quote from the late Valeriy Lobanovskyi sums up a situation that managers in many businesses could identify with: “When I was a player it was difficult to evaluate players. The coach could say that a player wasn’t in the right place at the right moment, and the player could simply disagree. There were no videos, no real methods of analysis.”

Substitute ‘players’ for departments or even line managers, and the analogy holds up remarkably well. In the absence of facts, all any business leader has to go on is gut instinct.

To shift the balance away from intuition Lobanovskyi brought a systematic approach to bear on the teams he managed, notably at Dynamo Kyiv. (As well as being a handy footballer in his youth, he was also a dab hand at mathematics and it seems his time studying at the Polytechnic Institute helped to shape his views of the game.)

Lobanovskyi developed an extremely thorough method of recording and analysing matches in great detail. “The players … know that the morning after the game the sheet of paper will be pinned up showing all the figures characterising his play. If a midfielder has fulfilled 60 technical and tactical actions in the course of a match, then he has not pulled his weight. He is obliged to do a hundred or more.”

Lobanovskyi’s legacy

He may never have heard the phrase but what Lobanovskyi had developed was a form of business intelligence – in the USSR of the Sixties and Seventies.

Lobanovskyi’s legacy is alive and well today in places like AC Milan’s Milanello training compound, where reams of data is collected to help the management. Meanwhile in the Ireland of 2010, the foresight that sees value in insight is lacking, and adoption of analytics technology remains stubbornly low.

That’s despite a wealth of compelling evidence that this approach works.

The titles that followed show Lobanovskyi’s relentless focus on data brought success: on his watch, Dynamo Kyiv won eight Soviet titles, six Soviet Cups, five Ukranian titles and three cups, along with two European Cup-Winners’ Cups.

Transplanting that to the business arena, on a recent visit to Ireland, Citrix CEO Mark Templeton shared his thoughts on how the company arrives at its decisions through data. As head of a company that successfully broke through the mythical US$1bn revenue barrier two years ago, I asked him how much he relies on data and business intelligence and how much is gut instinct and feel, gained talking to customers and to peers.

“It’s always both,” he said. “We make tonnes of decisions based upon our data warehousing – we use Hyperion – but it depends on what the business decisions are. I’d say this: the timing of strategic decisions is made more on instinct and the content of them is made on data, because in any decision, there’s a what and a when.”

Then there are just tonnes of decisions that get made, out of my view, on a daily basis that are highly related to the data, but in terms of resource allocation, I think that is as much instinct.

Team instinct

In a sentiment that any football manager could empathise with, Templeton is quick to point out that he is part of a framework, and not a solo performer. “It’s the instinct of the team, not of the individual. Companies, whether it’s media or whoever, have to have a personality through a figurehead and so that person gets either credit or blame for the things the company does. That goes with the job, it’s not a complaint, but it’s not the way the companies work.

“When you look at Steve Jobs’ team, those are really sharp guys. And yes, Steve has an opinion and any of the guys at Citrix will tell you I have an opinion on everything. But that doesn’t really mean anything. The way these things tend to work is, it’s the intuition of a team that’s accountable to the results,” he said.

A recent example of this in action was last year’s decision – “the most strategic in many years” – to provide Xen Desktop 4, where Citrix created a licence for customers to buy our full desktop virtualisation stack including the app virtualisation technologies. The timing and content of the decision is paying off with promising sales numbers, claimed Templeton.

“That’s an example where there was a lot of BI data that was just pored through, over and over, and my comment to everyone was, ‘we looked at this data 10 times; the data hasn’t changed’. People always want some level of surety and there’s a perception that in data there’s the answer. Like there’s a fact, a solution.”

Business intelligence or its forerunners used to be called decision support systems – not decision-making ones – and Templeton believes this distinction is important. “You get to the point where we’re going to decide so it’s only a matter of what and when, and that really calls on the intuition of the team. As CEO, you have to press it. That’s my contribution, but it’s not my intuition.”

Templeton said there can be a natural tendency for people to seek out independent validation for making any step. It’s a kind of safety in numbers and it explains the popularity of task forces, surveys, more research or consulting analysts.

“People ask ‘what do you do as CEO?’ and I say: ‘My job every single day is to turn grey into black or white’,” Templeton reasoned. “People will study data, and debate about it, and talk about it … There’s all good rationale for that, but you have to go one way or the other, because if you never decide, I know exactly what’s going to happen: nothing.”

Gordon Smith was a contributor to Silicon Republic