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Planning Review
by Mark McNeilly and Steve Gessner, IBM Corporation

An Expert System for Strategic Analysis

Business Insight is an $800 expert system for strategic analysis that won the respect of the managers who tested it for us. By combining both qualitative and quantitative strategic analysis, it offers managers - especially those who lack a strategic planning background - a useful tool for considering and managing future outcomes.

Armed with Business Insight, a new expert system for strategic analysis, we analyzed the Applications Business System division of IBM, a multi-billion dollar unit. It took us ten hours to enter the data requested by the program and another hour to review our answers to make certain we had addressed the questions appropriately. The program then prepared a forty page analysis...

What We Learned. We think Business Insight is a good first step toward using decision support tools to integrate both the qualitative and quantitative data that managers must take into account when planning strategy. After collecting our answers to some 375 questions on a wide variety of topics - including organizational factors, human resources, product benefits, packaging, market definition, sales processes and financing - the software was able to synthesize an accurate and coherent strategic plan. Based on our experience with other strategic planning tools, we believe that Business Insight is breaking new ground in a wide-open market.

Business Insight presents you with a strategic analysis, observations about your business, key factors influencing the success of your business, your strengths and weaknesses, and predictions for the success of different strategic options. The analysis it did for us covered such topics as the business environment, the buyer, the product, the competition, the enterprise, development, manufacturing, marketing, service, suppliers, substitutes and management. As an example of its responses, Business Insight suggested that we consider the implications of our targeted customer base.

One questions we skeptically asked ourselves when we began this exercise was, "Will this software really give us any insights we had not thought of?" (After all, the program is called "Business Insight.") The answer is, surprisingly, it did. In addition to confirming several valuable perceptions we had gleaned during our previous analyses, it also provided new insights in the areas of competitive rivalry, upside potential for earnings and advertising. So, indeed, it did live up to its name.

Another feature that took us a bit aback is that the answers it gives are quite frank. For example, if it thinks you should consider replacing one of your managers, it tells you so explicitly. Thus, one side benefit of this expert system software is that it makes recommendations without concern for office politics, its job security, or its next promotion....

One concern we had when we started was that, since Business Insight is an artificial intelligence tool, would it be a "black box" that would not explain how it was coming up with answers? We were pleasantly surprised to find that, for every comment or recommendation it makes, it shows you a trail of its logic. For example, Business Insight warned us to expect strong competitive rivalry. It showed us that the two primary contributing factors to this potential rivalry were competitive commitment to the market and competitive liquidity. The program then traced this conclusion back to the detailed competitor information we had supplied. This type of documentation is critical to the credibility of the output.

Business Insight also tutors you on strategic thinking as it goes along. At the beginning of each set of questions, it briefly describes the strategic issues to consider when answering. For example, when collecting information about the characteristics of your buyers, it suggests that you weigh buyer sensitivity to price, geographic location and dispersion, profitability, growth rate, and attitudes toward alternative solutions....

Business Insight is designed for product marketing managers, planning consultants, manager/owners of small to medium-sized enterprises and entrepreneurs. As professionals responsible for product strategy, we fit best into the first category... So how can people like us use this tool to optimize the strategic planning process? ... to a certain extent, the learning experience of working with the system is more important than its suggested solutions. After all, as General Eisenhower once said, "It is not the plan but the planning that counts." In small companies, where the planning process consists of the owners setting down and creating a strategy, the best use of Business Insight is as an expert teacher rather than an answering machine. At a cost of $795, the tutoring the program provides may be a bargain for managers who are not familiar with the concepts of strategic planning.

 

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