The Economics of Behavior – A Way To Examine Failure in the Enterprise

first_img3 Areas of Your Business that Need Tech Now alex williams Tags:#enterprise#Trends Massive Non-Desk Workforce is an Opportunity fo… IT + Project Management: A Love Affaircenter_img Related Posts From time to time, it makes sense to step back and take a look at real stories about businesses that have transformed aspects of its IT infrastructure. It’s a rare feat as changing your mindset is the only way to fundamental change.That usually only happens when the failure is so overwhelming that complete overhaul is the only answer. We say this as it’s evident that both the public and the private sector are often mired in IT environments that continually require additional resources just to run. People are in so deep that it makes sense to do the same thing over and over again.The dynamics of why failure so often occurs can be analyzed by viewing the issue in terms of behavioral economics. Michael Krigsman wrote about the issue last week on IT Project Failures.Krigsman writes that people form biases and in turn make poor decisions that lead to failure. All too often, we convince ourselves that we are smart, intelligent people who can navigate with clarity and perfect sense.That’s the perception at least. From Krigsman’s post:“Harvard Magazine begins a discussion of behavioral economics by exploding the myth of purely rational decision-making:Economic Man makes logical, rational, self-interested decisions that weigh costs against benefits and maximize value and profit to himself. Economic Man is an intelligent, analytic, selfish creature who has perfect self-regulation in pursuit of his future goals and is unswayed by bodily states and feelings. And Economic Man is a marvelously convenient pawn for building academic theories. But Economic Man has one fatal flaw: he does not exist.”At some point, the problem becomes so overwhelming and complex that it rally is folly and insanity to approach it the same way.Lexus Australia is a prime example. According to ZDnet Australia, the company had nine suppliers and seven databases for its CRM environment.The situation became so unwieldy that it could not manage. Data came in at different times and in different formats. The supplier would keep throwing resources at the problem.Lexus moved its system to the cloud. The new method worked. The results are evident. According to ZDNet, before, a data extract took on average four days. Now it takes 10 minutes. Responses to queries used to take a day minimum, now it’s an hour maximum. Annual savings are at 43 per cent already this year.The laws of behavioral economics apply in almost any IT project. Companies and organizations in the public sector often require multiple departments to work together, each with its own goals and requirements. The results can be disastrous. The key is in understanding the biases before they become so ingrained that even the worst of situations seem normal.is that what makes the cloud so intriguing? is it why Enterprise 2.0 does get people excited?Both the cloud and the movement behind Enterprise 2.0 follow complete different paths to IT Nirvana than more traditional processes. Those who follow these routes are showing results. That’s refreshing and it’s infectious. Perhaps even enough so to change behavior so fundamental change can actually occur. Cognitive Automation is the Immediate Future of…last_img