Puzzle versus Mystery
Recently I met Sharad Elhence who leads the Product Operations practice at Infosys Consulting. He shared some interesting thoughts on information usage (or lack of it) by corporations.
He says:
"Malcolm Gladwell’s article “Open Secrets” in the January 8, 2007 issue of The New Yorker made an interesting read on my long flight from Frankfurt to Bangalore last week. It provided a different perspective on the Enron scandal and Jeff Skilling’s prosecution. Did Jeff Skilling and other Enron executives withhold critical information from investors? Or did they share as much information as they could but nobody fully analyzed and interpreted that information? In other words, was the core of the Enron scandal a puzzle or a mystery? Malcolm cites the distinction between a puzzle (situation where we don’t have enough information available to us) and a mystery (where we have all the information available but the interpretation of the information requires analysis and judgment) from the work done by Gregory Treverton, a national security expert.
"What does this have to do with the Flat World ideas? I believe that the fundamental shift of making money from information is all about understanding the difference between a puzzle and a mystery. In the business world, there are a many more mysteries than puzzles. Collecting more information may help solve a puzzle or two but monetizing information will come from having the mindset of solving a mystery. Analyzing the data that companies already have collected to gain insights about their markets, competitors, customers, channels, products and operations is essential to delivering ROI (return on information). So let’s unravel the big mysteries in ours and our customers’ businesses and if we find a puzzle along the way, let’s gather the missing information to solve that puzzle and then get back to the bigger mysteries and the associated big payoffs."
Sharad Elhence leads the Product Operations Practice at Infosys Consulting, helping clients in strategy, process and technology issues related to improving end-to-end supply chain performance. He has more than 18 years of consulting and leadership experience. Most recently, he was the Chief Operating Officer for an early stage provider of enterprise performance and knowledge management solutions. Prior to that he was Vice President of Strategy at i2 Technologies and a management consultant with McKinsey & Company.
Comments
Great post, and Malcolm Gladwell's article is fantastic. I've always been puzzled (no pun intended) about why the vast majority of financial scandals were due to poor interpretation rather than lack of disclosure. Ironically, SOX and other compliance regimes are inadvertently making this problem worse - companies are making disclosures like never before, but interpretation lags far behind....
I'll bet that the first couple of SOX-related scandals will be the result of retrospective interpretation of data that had always been available.
Posted by: Rahul | February 5, 2007 07:50 PM
The post by Richa on Sharad's insight in to the La-affaire-Enron is an important one. It is not just Enron, many companies have their financial problems that get swept under the carpet after discovery. Actually, this indicates the importance of having flat think in organisations. It is flat think that endeavours information sharing rather than information controlling. And when sharing is there, there is demystification. Issues are no longer abstract & incorrigible. Further, sharing leads to discussions and thereby better insights. And all this obviates any possibility of a scandal. In fact this sort of information sharing is possible due to the IT technologies. In days to come it will not be a surprise to see a CXO position like the CIO (Chief Information Officer) becoming an important position in companies of every type.
Recently the pharma world was rocked by the torcetrapib failure of Pfizer. This has lead to manpower cuts at Pfizer and a lot of soul searching in the research and knowledge systems of pharma companies. That is because new drug research is a very costly affair. If information sharing and review was much better at Pfizer, who knows the losses due to torcetrapib could have been minimised.
Posted by: Sunil S Chiplunkar | February 6, 2007 03:31 AM
What I wanted to say about this piece is well summed up at a blog. I do not have access to the NYT article that the blog post mentioned but I like the posts that give me both sides of an argument. I don't think the entire Enron affair can be dismissed so simplistically. Even the comments at Gladwell's blog are quite nuanced.
Quoting from the blog:
http://katipunani.blogspot.com/2007/01/bill-simmons-malcolm-gladwell-enron.html
"I also liked "Open Secrets" but was nagged by a question he left unanswered: If he implies that Enron disclosed all their shady business practices but the mystery was just too large for people to discover it in time, then why was Skilling brought up on fraud charges and convincted? Gladwell makes the nation's response to Enron seem like a cathartic overreaction. I found the answer in Joe Nocera's business column in The New York Times Monday. (ESPN must pay for Times Select. You can get it there.) Gladwell didn't mention that on top of the disclosures Enron made, the company also engaged in old-fashioned, wholesale fraud that no one could have discovered by reading their SEC filings and year-end reports. The main idea of the article -- that with a mystery like the Enron scandal, there was information out there to alert the public to what was going on that Wall Street and others missed -- is still interesting, but I think Gladwell deliberately understated Enron's culpability to make the piece more provocative."
Posted by: Mridula | February 6, 2007 11:57 AM