Stuart Wells, FICO’s executive vice president of products and technology and chief technology officer, began his talk with a birthday celebration. Moore’s law is celebrating its 51st birthday. The axiom goes that “the number of transistors on an integrated circuit will double every two years.” There is also Gilder’s Law, “bandwidth grows at least three times faster than computer power” and of course, Metcalfe’s Law, “value of a telecommunications network is proportional to the square of the number of connected users of the system.”
All of these laws, albeit conservative approximations, point to the amazing pace of growth in innovation that we’ve experienced over the last few decades. Yet, there has been another trend lurking under the surface. Well’s points to the productivity crisis. We’re entering an era where productivity is shrinking, and the only way to increase it is to raise output per worker. This could be done by requiring employees to work longer or be more productive.
In Wells view it comes down to complexity. We’re in a time of …
- Increased regulations. The cost of not be compliant isn’t just the fines, it’s the legal fees. And it isn’t just financial services, which is only the third most regulated industry.
- Greater security threats. The criminal element makes it so companies need to tie the hands of IT, to keep out the bad guys. In doing so it increases the complexity and prevents IT people from doing their jobs.
- Stronger global competition. The majority of IT spend is on keeping legacy systems going. This detracts resources away from competing with the disruptors. And the number of start-ups is increasing as well. And big companies tenure in the S&P is a lot shorter than it used to be.
- Failed Big Data deployments. IT is urgently trying to implement Big Data deployments. But these are failing, as for IT this means building data lakes, and starting projects without a clear business intent. Once in place, executives still go with their gut to make decisions and businesses find it impossible to put insights into action.
Yesterday, FICO launched FICO Decision Management Suite 2.0, which aims to help address this complexity and the productivity crisis. The new suite enables businesses to record their decisions (in the same way that they record their quarterly earnings), rapidly develop analytics applications and codify decisions, revise the decisions, and ensure that decisions are stored and drawn from.
Wells told an interesting story of three elephant herds in Tanzania. Every 30 years there was a draught, which killed off 20 percent of the herd (mainly calves). But after the most recent draught, zoologists noticed something very interesting. Two of the herds had better survival rates because they left the park to seek food and water. The difference between those two herds and the one that stayed came down to 30+ year old matriarchs who had lived through the last draught and had institutional memory. As businesses we need to capture our subject matter expertise, leverage analytics to make our decisions, and treat decisions as assets – so we can learn from them and improve our productivity.