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Hi. I'm Dr. Michael McDonald.
I'm an University Professor
of Finance
and President of the consulting firm
Morning Investments, LLC.
Today, I'd like to talk to you
about "The Fundamentals
of Business Intelligence".
In particular, we're going to be
talking about business intelligence
from a high level.
What is business intelligence?
And why is it so essential
for you in corporate America?
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Module 1:
What is business intelligence?
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Let's start by talking about
decision making in businesses.
So there's two ways traditionally
of making different decisions
in businesses.
Whenever you're faced
with a tough conundrum,
you have two choices.
First, you're gonna rely
on intuition or guessing,
or gut-feeling, call it whatever
you'd like. But essentially,
you're relying on the native ability
of an individual
to figure out a situation
in the absence of any
external information or data.
The second way to look at making
a decision is through data
or past experience.
Now, traditionally
many businesses make decisions
based on a combination
of these two things.
But at the end of the day,
it's generally going to come down
either on the intuition side
or the data and past experience side.
Most businesses tend to lean
one way or another.
The problem, historically
has been, for most businesses,
they either don't have past experience
with many of their toughest decisions
or they don't have the data.
And so they're forced
to rely on intuition, guessing,
gut-feelings, things like that.
For instance,
on a recent engagement I was on,
I was dealing with a local brewery.
And they were interested
in potentially expanding
through a new deal
with a new distributor
for their product.
They would have liked to figure out
what the profit impact
was going to be on their business,
but they lacked the data to go through
and analyze that question.
So as a result, they ended up
having to make the decision
based primarily on the intuition
or the gut-feeling of the president.
Better data could have helped
to address this question,
could have helped them to decide
on what way to go with the decision
in a more substantive way.
Now both these methods have been around
for as long as business has.
Each one has its own adherents.
Not everyone is going to believe
in intuition or gut-feeling.
They're going to tend to be
a little bit more scientific.
They're going to value data
and past experience.
Where other people are going to say
that they want to trust their gut
and they're not necessarily
going to be interested in the data.
After all, there is an old saying
that if you pound the data hard enough,
it will tell you
whatever you want to hear.
Business intelligence
is an opportunity to move beyond
either of these two decision making
processes on their own.
And instead focus on combining the two,
and in particular, enhancing the data
and past experience method.
By using business intelligence,
we're able to go through
and look at data in a more
meaningful way without,
at the same time, forcing the data
to tell us what we want.
We're instead able to look
at the data dispassionately,
objectively, and in a scientific fashion
to make better decisions for business.
