# Checkmating the Competition: What’s Your Best Move?

## As in chess, victory on the business battlefield goes to those who can make smarter decisions many, many moves ahead. Digital decisioning can help.

Mathematicians and computer nerds – and I know many – talk frequently about Ray Kurzweil’ssecond half of the chessboard,” the exponential explosion that results when things geometrically double in value with each iteration.

As the story goes, if you put a grain of rice on the first square of a chessboard and continue to double it… two on the second, four on the third, eight on the fourth, and so on, after 32 squares – the “first half” of the chessboard – you would have 2.14 billion grains of rice. But due to geometric progression, the 64th square would hold 9.22 quintillion grains (a quintillion is one thousand trillions.) In total, the full board would contain 18.44 quintillion grains of rice weighing 461 billion metric tons, in a pile larger than Mount Everest.

### Making the right moves

Similar mathematical magic happens in the game of chess itself, despite the fact that the game has seemingly very tightly constrained limitations, e.g.

• It is confined to a game board measuring just eight squares by eight squares
• There are only 32 pieces in play, declining as pieces are captured
• More than half the pieces can only move one square at a time; all are tightly limited

Chess starts out easily enough: you and your opponent have 20 possible opening moves. But after that, things get complicated quickly: there are 400 different possible positions after one move each; 72,084 different possible positions after two; nine million different possible positions after three; and more than 288 billion different possible positions after just four turns by both players. All that from a game that appears to be, to the untrained eye, relatively simple in terms of variables.

### The mind-boggling nature of business analytics

In the business world, companies need to make “optimal” moves every day with far more variables than a chess match and billions of dollars hanging in the balance.  As in chess, choosing the “right” next move in your business strategy involves hundreds or thousands of variables; humans could never perform all of the forward-looking scenario calculations in their heads… and even if they could, by the time they arrived at their go-forward strategy, the circumstances will have changed.

Winning business decisions are the result of not just good data… but understanding the interrelations of that data, and the impact of dynamic change. Slicing and dicing it to extract every possible shred of value. And using that value to build insights so incisive, you’d bet your company’s future on them.  It’s been said that “all data is old data.”  And while that’s true, it’s really all you have upon which base forward-looking decisions and strategies.

Optimization is the mathematical process of finding the best decision for a given business problem within a defined set of constraints.  Once the operating parameters of the environment are identified and modeled in a solution like FICO Optimization – part of the top-rated FICO Decisions Platform – powerful algorithmic and analytical techniques process millions of forward-looking scenarios per second, and quickly determine the best possible moves. When infused into an enterprise decisioning solution like FICO Centralized Decisioning optimization results can help to ensure smarter, faster, more profitable decisions across the worldwide operations.

When it comes to companies optimizing their enterprising decisioning strategies and their outcomes – or their data science, operations research, and supply chain strategies – how do companies monetize the difference between the “right” answer and the “almost right” answer?  Here are just 10 examples of hundreds among FICO customers worldwide:

1. Siam Commercial Bank increased its number of applications processed per day by 10x, and its approval rate more than 40%.
2. Toyota Financial Services increased auto loan approval rates with 40% fewer credit exceptions, prevented 1,600 repossessions, and reduced annual losses by up to \$12 million.
3. Nestlé developed optimization models for load building that saved over \$35 million in transportation costs.
4. Česká Spořitelna, the largest bank in the Czech Republic, increased portfolio profit by 26% and new sales by 29% by optimizing the origination of consumer loans.
5. A UK insurer reduced its quote-to-enrollment time from 22 days to under six minutes, and the time to process most claims to four minutes.
6. A leading North America bank optimally balanced profit and risk with credit line increases, which resulted in growing balances by 9% and reducing the loss rate by 9%.
7. A major Canadian bank is launching hyper-personalized customer strategies over 60 decisioning areas, while simultaneously shortening cycle times and reducing risk
8. A popular Australian bank implemented transaction-level optimization for authorizations, fueling an increase of \$111 million in approved transactions and \$6 million in annual revenue.
9. A major South America bank developed a customer-level optimization solution generating a 6:1 ROI in the first six months, with a \$44.20 and \$120.79 increase in profit-per-customer in its standard and elite card products.

Unlike an 8x8 chess board with 32 “employees,” these are companies whose operations span their national borders or even global ones.  Some have billions of dollars in assets or revenue, tens of thousands of employees, and manufacture/ship billions of units worldwide.  Their optimization strategies involve far, far more moving parts and variables than a “simple” game of chess… and yet, with FICO optimization solutions, they are declaring “Checkmate” over their competitors more and more.

Novelist and satirist Mark Twain, known for his exquisite command of words, once wrote, “The difference between the almost right word and the right word is really a large matter… it’s the difference between the lightning bug and the lightning.”  The same holds true with decisions: a good decision could be worth millions… but a great decision is worth far more.