1 operations research consulting solving complex business problems for fun and profit harlan crowder...

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Operations Research Consulting

Solving complex business problems for fun and profit

Harlan CrowderPrincipal

Dieselbrain Partnersharlan@dieselbrain.com

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Agenda

Consulting taxonomy Decision support v. decision automation OR consulting value proposition Clients, engagements, and getting paid Three of the Golden Rules of OR consulting

© The New Yorker

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Consulting and services

Strategic

Solution

Technical

strategic consulting

solution consultingtransformational consulting

technology consultingIT services and integration

OR Consulting

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Decision support v. decision automation

Decision support Giving managers and executives the insight and information to

make hard business decisions Ad hoc, what-if, investigative analysis Incremental development Solve the problem, and the problem changes Relatively inexpensive to design and build

Decision automation “Hard-coding” of a prescriptive model for some core business

process; “Master Planning” Runs periodically to determine well-defined business metrics Static problem and solution statement Usually expensive to design, implement and change

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The OR consulting value proposition

Quantitative framework – If you can’t measure it, you can’t manage it

Business process abstraction for decision making –optimization, simulation and statistical modeling

Confronting and taming complexity, uncertainty and chaosToo many choices, too little information

“You’re not an expert in broadband hyperdrive infrastructures, so how

can you help my company?”

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The OR consulting process for decision support

compelling business questions

“How do I reduce inventory?”“How much should I buy?”“When should I build a new production

facility?”

analytical model/framewor

k

OptimizationSimulationStatistical analysis

actionablebusiness

recommendations

Recommendations that help managers and executives make decisions and answer the compelling business questions

analytical solution

Results of computational solution process; suitable for analysts, not managers

criticalsuccess points –requiresskill andimagination

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Models and prototypes for decision support

1. Insight a wind tunnel for business –

test it before you build it uncovering non-obvious relationships;

get surprised early not just what and when, but also why

2. Collaboration* building analytical business models is a team sport operational prototypes are rallying points for discussion,

experimentation, assumption-testing, and validation a “concept document” means something different to everybody;

a team can collectively get their mind around an operational model

3. Analysis dealing with complexity, uncertainty and chaos charts, graphs and numbers to help people make decisions

*Serious Play: How the world’s best companies simulate to innovate, Michael Schrage, Harvard Business School Press (2000)

© The New Yorker

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Evaluating clients

Who’s in charge, and who is paying the bills?

Does the client already know the answer before the right question is asked?

What’s the client’s main concern: the problem or the process?

Does the client want to be your partner or your boss?

If you think it’s too good to be true, it’s too good to be true.If you smell something rotten, something’s rotten.

The client will be evaluating you, but you should also be evaluating the client

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Designing successful OR consulting engagements

Know the engagement scope What will be included in the engagement?

More importantly, what will not??!!

“Scope Creep” produces failed engagements, unhappy clients and hungry consultants

Know what you know, and what you don’t know Does this engagement use well-known technology and

methodology? (And do I know how to do it?)

Or does it require inventing new ideas?

Don’t start consulting and adding value until you have a signed engagement agreement in place.

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The consulting engagement agreement

Why it is important Sets everybody’s expectations

in writing Defines the engagement scope Specifies the completion criteria

(when can I go home?) Elements

Key assumptions and dependencies Consultant and client responsibilities Deliverable materials – content, format, level of detail Schedule – for both client and consultant Fees Change control procedure

© The New Yorker

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Consulting fees

Time-and-materials especially useful for “soft-scope” projects

good for beginners

delays and disruptions impact the client’s pocketbook

Fixed price make sure the scope is rock-solid and you know how

to execute the engagement

charge a premium over T&M

when (not if) things go wrong, you will take the hit

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Data: the really hard part of OR consulting

Most IT projects are concerned with the form of data; OR is about content: accuracy level of detail completeness

Your opening position with the client: where practical, data is a client responsibility

Document in detail the data requirements: form and content of project data solution scenarios for testing and validating application prototypes

If the client says, “Don’t worry, we have all the data,” then worry.

© The New Yorker

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Three of the Golden Rules of OR consulting

Rule #1:

Your product is not computers, application software systems, user interfaces or database connections;

Your product is reliable information that helps answer compelling business questions.

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Three of the Golden Rules (cont)

Rule #2:

Talk to the decision maker.

Don’t talk only to his or her assistant, right-hand-man, trusted associate, surrogate, Number Onebusiness analyst, guru, etc.

a) most decision makers don’t really know what they want; part of your job is to help them figure it out;

b) if you only communicate second-hand, you’re screwed.

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Three of the Golden Rules (cont)

Rule #3:

The Fundamental Transaction –

You tell, show or give somethingof value, and the client is so delighted they give you large checks and beg for more.

Create infoaddicts.

DILBERT ® by Scott Adams

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Questions&

Discussion

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The main thing is to keep the main thing the main thing.

— Jim Barksdale