​Building a More Intelligent Enterprise

In coming years, the most intelligent organizations will need to blend technology-enabled insights with a sophisticated understanding of human judgment, reasoning, and choice. Those that do this successfully will have an advantage over their rivals.

- Paul J.h. Schoemaker and Philip E. Tetlock

TO SUCCEED IN the long run, businesses need to create and leverage some kind of sustainable competitive edge. This advantage can still derive from such traditional sources as scale-driven lower cost, proprietary intellectual property, highly motivated employees, or farsighted strategic leaders. But in the knowledge economy, strategic advantages will increasingly depend on a shared capacity to make superior judgments and choices.

Intelligent enterprises today are being shaped by two distinct forces. The first is the growing power of computers and big data, which provide the foundation for operations research, forecasting models, and artificial intelligence (AI). The second is our growing understanding of human judgment, reasoning, and choice. Decades of research has yielded deep insights into what humans do well or poorly. 

In this article, we will examine how managers can combine human intelligence with technology-enabled insights to make smarter choices in the face of uncertainty and complexity. Integrating the two streams of knowledge is not easy, but once management teams learn how to blend them, the advantages can be substantial. A company that can make the right decision three times out of five as opposed to 2.8 out of five can gain an upper hand over its competitors. Although this performance gap may seem trivial, small differences can lead to big statistical advantages over time. In tennis, for example, if a player has a 55% versus 45% edge on winning points throughout the match, he or she will have a greater than 90% chance of winning the best of three sets.