Fernando Alcoforado*
In general, the principles guiding public and private organizations in the process of planning and operational management are the following: 1) they seek to reach some stable state of equilibrium by adapting the organization to changes in the external environment; and 2) they believe that decisions taken and subsequent actions will lead to desired results based on the principle of cause and effect relationship. Conventional management models consider management as a negative feedback activity, that is, it establishes a strategy and leads the organization in the desired direction by correcting the deviations between the plan drawn and the results achieved.
At a time when everything is changing rapidly, it can be said that the principles governing these management models are outdated because it is impossible to achieve a stable state or equilibrium in organizations in an external environment such as the current characterized by the instability of the capitalist system which makes the decisions made by its leaders at a given moment may not lead to the desired outcome because it will be inexorably affected by mutations that occur within and outside the organization over time.
The major challenge facing organizations in the contemporary era is represented by the need to manage their systems in a highly complex environment and often chaotic changes. To be effective, the planning and management process must necessarily take into account instability, uncertainty, its turbulence and its risks. In the contemporary economic environment, the world economic crisis in the United States that affected all countries globally is a good example of turbulence and market instability.
One of the major flaws in the planning process of many organizations is to minimize uncertainties when it is known that change is the only stable rule in the present moment and that the past serves less and less as a basis for projecting the future. In the effort to overcome these crises, the organizations adopt negative feedback trying to keep functioning as before the productive system, when the correct one would be to adopt the positive feedback that would imply in the adoption of structural changes in the productive system to deal with the disorder and prevent its collapse.
The classical views of disorder were all deprecating, because science was always oriented towards the discovery of certainties. All knowledge was reduced to order, and all randomness was merely appearance, the fruit of our ignorance, to be necessarily overcome at some future time. The development of Chaos Theory from the 1970s contributed to the formulation of a very different model from what prevailed until then that was basically deterministic and linear. In the Chaos Theory model, the world is more complex and fundamentally non-deterministic and non-linear.
What the Chaos Theory is doing, in essence, is to demonstrate that everything in the Universe is composed of both order and disorder, and it is incumbent upon science to accept that uncertainty cannot be eliminated. In the Chaos Theory model, organizations come to be seen as systems subject to oscillations that could be damped, that is, systems would be able to move towards a new equilibrium by performing deep structural changes.
The model considered is now that of a self-regulated system, where deviations are identified by positive feedback signals and then compensated, corrected, attenuated or neutralized, always with the realization of profound changes. Such a model was built on the belief that oscillations that amplify over time would lead the system to collapse if the effort were to keep the system operating as it was before, and that only systems capable of producing profound changes would remain stable and would survive over time.
In order to address environments that are classified as “unstable” or “turbulent”, organizations must be dynamically self-organized and therefore avoid their decay and death. The self-organization that is being adopted in modern companies in the contemporary era contemplates the adoption of an intelligent and consistent decision-making way that enables decision-makers to have the right information at the right time about the current internal situation and future scenarios of external environment evolution (local, national and global economy, competitors, technology, consumer market, etc.) to the organization that can only be feasible since there is collection, management and distribution of data to turn them into insights. Self-organization can be achieved with the adoption of Business Intelligence in operational planning and management.
Business Intelligence is a Gartner Group term that emerged in the 1990s that describes the abilities of corporations to access data and to explore information and financial resources by analyzing and developing perceptions and understandings about them, which allows them increase and become more informed in decision-making information. The implementation of a Business Intelligence (BI) in a company is primarily intended to provide its managers with managerial and operational information, quickly and consistently. Business Intelligence is basically about the way entrepreneurs deal with data.
In a highly complex environment and often chaotic changes like today, Business Intelligence enables organizations to have a reliable and consistent set of information that seeks to support the decision-making process within the organization. The use of Business Intelligence proves to be one of the pillars of the business competitiveness of the new millennium, bringing with it more dynamism, flexibility and cost reduction, always aiming at improving the quality of the product or service offered.
It is important to note that a Business Intelligence project does not end after its implementation. BI is a set of processes that aims to deliver the right information to the right person at the right time that requires great alignment between three pillars of support:
- Data collection: everything that happens in the business is analyzed to determine key aspects such as productivity, use of opportunities, bottlenecks, reputation in the market, etc.;
- Organization and analysis: all data captured in each company action are organized in a database and presented visually, to facilitate the analysis of decision makers; and,
- Action and monitoring: the responsible make decisions based on the information analyzed, and monitor their results to see if they are succeeding.
If there is something a company should not have is the problem in generating data and information about their own processes. The problem is to manage all the information and organize it so that it is a source of clarification and not of confusion or frustration. Through the BI system, all relevant data appears on dashboards that facilitate decision making at all organizational levels. Companies that use Business Intelligence can optimize processes much more quickly and directly compared to those that do not. The processes of a company make a big difference in results, whether in terms of product quality, sales and customer retention, employee satisfaction, etc.
As there is no perfect company, it is crucial to look for bottlenecks to prevent them from becoming serious problems that threaten the organization’s future. Through BI, it´s possible to find all these breaking points in the business of the company and take practical steps to solve them as soon as possible. The same principle cited with respect to the recognition of failures applies to the identification of opportunities. Innovation is the engine of companies that stand the test of time, and this only happens when leaders are able to identify opportunities and pursue them before others do. With the powerful insights that Business Intelligence offers, it’s easier to find market opportunities to focus on.
The strong foundation in data analysis as a source of strategic information permeates both Business Intelligence and Big Data. In information technology, the term Big Data refers to a large set of stored data. It is said that Big Data is based on 5 factors: speed, volume, variety, veracity and value. Business Intelligence seeks to bring the right information to the right people at the right time for decision-making. This requires asking the right questions and analyzing the data knowingly to understand the dynamics of the business. Big Data, on the other hand, analyzes an enormous amount of information to show patterns and correlations, in many cases totally unknown. While Business Intelligence analyzes the current data and shows the next actions to take, Big Data opens up a wider range of possibilities that can turn into paths to innovation.
The ideal is to join the forces of Business Intelligence with those of Big Data for a more comprehensive understanding of the data generated, which will result in even better and more innovative decisions. Professionals from various sectors of a company should be encouraged to use the data as the basis of their decisions. But above all, it is crucial to remind them that this is not just about seeing obvious dashboard information. It is necessary to search in depth the best solutions noting also the data that are not on the surface. With all the company members involved, using Business Intelligence as a form of mining, not just consulting, the company will have a Business Intelligence strategy that works.
Business Intelligence should serve as a model for the deployment of what can be called Intelligence in Government Organizations, which along with Big Data could also be used in the planning and management of public organizations and the government itself as a whole facing the highly complex environment and often chaotic changes like the current one. Like modern private companies, public organizations should not make important decisions based solely on the intuition of their leaders, guided by their past experiences. This means that decisions by intelligent and consistent government organizations can happen if decision makers have the right information at the right time that can only be made available through data collection, management, and distribution to turn them into insights. In order to do so, it is necessary for governments to implement intelligence systems that, at the level of public organizations, may be called Intelligence in Government Organizations similar to those implemented in private companies, Business Intelligence, as well as Big Data.
In practice, what is intended is to perform knowledge management as a management process, to provide private and public companies with the systemic competence to acquire, transform, store and disseminate knowledge in a useful, personalized, responsible and profitable way for its employees and agents of relationship. Knowledge management means organizing and systematizing at all points of contact (process nodes, departmental links, interactions with stakeholders, etc.), the organization’s ability to capture, generate, create, analyze, translate, transform, model, store, disseminate, deploy and manage information, both internally and externally. It should be noted that stakeholder is a person or a group, that legitimizes the actions of an organization and that has a direct or indirect role in the management and results of that same organization. Example of a company’s stakeholder can be its employees, directors, managers, owners, suppliers, competitors, NGOs, clients, the state, creditors, unions and various other people or companies that are related to a particular action or project. Internal and external information must be effectively transformed into knowledge and distributed making it accessible to stakeholders. The applied information, the knowledge, becomes an asset of the company, an intangible asset of unique value, exponentially remunerated and difficult to imitate.
Managing knowledge is only one part of this process. Being able to identify, monitor, understand and absorb information, data, sensations, trends and turn them into knowledge is equally important skill that is gained through the use of Business Intelligence and Big Data. Private and public enterprises are like small societies that need to ensure their survival in the environment in which they live (and sometimes in the very environment in which they live) and for this they need to know their strengths and weaknesses and be able to perceive the threats and opportunities, both intrinsic to their environment, and caused by other competitors, collaborators and participants. Competitive Intelligence with the use of Business Intelligence and Big Data, as a management process, has been highly demanded by the top management of private companies as a tool capable of introducing the company to the new competitive scenario. We can therefore say that Competitive Intelligence is the antenna of the organization that acts as a sensor capable of attracting information that will be (or not) treated as knowledge. This is, therefore, the way to administer private and public organizations in contemporary chaotic capitalism.
BIBLIOGRAPHY
BAUER, Ruben. Gestão da Mudança: caos e complexidade nas organizações (Change Management: chaos and complexity in organizations). São Paulo: Atlas, 1999.
BARBIERI, Carlos. BI – Business Intelligence: Modelagem & Tecnologia (Business Intelligence: Modeling & Technology). Rio de Janeiro: Axcel Books do Brasil Editora, 2001.
PRIGOGINE, Ilya, STENGERS, Isabelle. O Fim das Certezas – Tempo, Caos e as Leis da Natureza (The End of Certainties – Time, Chaos and the Laws of Nature). São Paulo: UNESP, 1996.
SHERMAN, Rick. Business Intelligence Guidebook. New York: Elsevier, 2015.
WIKIPEDIA. Inteligência empresarial (Business intelligence). Available on website <https://pt.wikipedia.org/wiki/Inteligência_empresarial>.
* Fernando Alcoforado, 78, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is the author of 13 books addressing issues such as Globalization and Development, Brazilian Economy, Global Warming and Climate Change, The Factors that Condition Economic and Social Development, Energy in the world and The Great Scientific, Economic, and Social Revolutions that Changed the World.
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