Business analytics or predictive modelling is a $100 billion industry, and $41 billion is spent on outsourced business analytics every year. I think that’s about twice the size of the movie industry – it’s really big. – Anthony Goldbloom
You’re probably familiar with the idea of facilitation – the art of getting people to talk about a situation of interest or concern to them. What’s less common is the idea of using a model to help with facilitation.
A model is a representation – some kind of thing that can be used to hold important ideas and talk about what’s going on without relying on remembering what people say. A model is different from a list of bullet points because it has elements and relationships – nodes and links. The picture above is an example of a causal loop model, something I’ve been trying to understand recently.
Causal loop models show cause and effect flows – plausible streams of activity that could explain what’s going on. They are simplifications that help us focus on important points and create a story, a narrative that explains what’s going on.
For example, if you run a business you can spend your time creating outputs that customers value. If they value what you do they will buy more time from you. That’s a positive loop – as you do more and better work you’ll get more customers.
If you spend time promoting and marketing yourself you’ll attract prospects some of whom will turn into customers. So that’s another positive loop.
The problem with spending your time marketing, however, is that it takes time and so you have less time to focus on output that customers find valuable. Spending all your time on marketing can end up reducing what you do, pulling down value for customers and causing them to spend less with you by going elsewhere.
This is a very simple causal loop that captures some of the considerations you need to look at when you’re coming up with a marketing strategy. You could assume that there is a limitless pool of customers out there and so losing some is ok as long as your promotion strategy brings in new ones. Or you could decide that your time is best spent creating your product and pay for promotion and marketing, either through advertising or by investing in a partner that does marketing for you.
Causal loops can be used to think through all kinds of issues – they’re the foundation of some of Peter Senge’s work on The Fifth Discipline about Systems Thinking. They are a subset of a wider group of graph models that show relationships between elements and help you deal with complexity.
Familiarity with facilitated modelling can help you deal with problems that are significant concerns to people and organisations – from business analytics to climate change. Al Gore, in a recent TED talk, described the sustainability revolution as all of the industrial revolution’s potential plus digital transformation.
The challenge practitioners face is that they have to be experts in facilitation and experts in the modelling process. This can be hard. Some modelling can be done in groups with people while other modelling needs to be done in the studio and then the results from the model shared and discussed with others.
This may be a topic that’s a little too niche for most people. But it’s a useful skill that could do with more attention. I might try and spend some time exploring the space in a few posts.