Events & Decision-making


Between Internet-of-Things and ubiquitous social networks, enterprises’ environments are turning into unified open spaces, transforming the divide between operational and decision-making systems into a pitfall for corporate governance. That jeopardy can be better understood when one consider how the processing of events affect decision-making.

Making sense of event (J.W. Waterhouse)

Events & Information Processing

Enterprises’ success critically depends on their ability to track, understand, and exploit changes in their environment; hence the importance of a fast, accurate, and purpose-driven reading of events.

That is to be achieved by picking the relevant facts to be tracked, capturing the associated data, processing the data into meaningful information, and finally putting that information into use as knowledge.

From Facts to Knowledge and Back
From Facts to Knowledge and Back

Those tasks have to be carried out iteratively, dealing with both external and internal events:

  • External events are triggered by changes in the state of actual objects, activities, and expectations.
  • Internal events are triggered by the ensuing changes in the symbolic representations of objects and processes as managed by systems.

With events set at the root of the decision-making process, they will also define the time frames.

Events & Decisions Time Frames

In principle, decision-making can be defined as real-time knowledge management:

  • To begin with, a real-time scale is created by new facts (t1) registered through the capture of events and associated data (t2).
  • A symbolic intermezzo is then introduced during which data is analyzed, information updated (t3), knowledge extracted, and decisions taken (t4);
  • The real-time scale completes with decision enactment and corresponding change in facts (t5).
Time scale of decision making (real time events are in red, symbolic ones in blue)
Time scale of decision making (real time events are in red, symbolic ones in blue)

But that phased approach is now becoming obsolete as it cannot cope with digitized environments and the ensuing collapse of fences between enterprises and their environment.

Once carried out separately and periodically, decision-making is to be carried out iteratively at operational, tactical, and strategic level; while each level is to be set along its own time-frames, all are to rely on data-mining, with cycles following the same pattern:

  1. Observation: understanding of changes in business opportunities.
  2. Orientation: assessment of the reliability and shelf-life of pertaining information with regard to current positions and operations.
  3. Decision: weighting of options with regard to enterprise capabilities and broader objectives.
  4. Action: carrying out of decisions within the relevant time-frame.

Given digitized environments, decision-making processes have to weave together material and digitized flows, actual contexts (aka territories) and symbolic descriptions (maps), and overlapping time-frames (operational tactical, strategic). That operational loop could then be coupled with the broader one of business intelligence:

The next step is to bring together events and knowledge.

Events & Changes in Knowns & Unknowns

As Donald Rumsfeld once suggested, decision-making is all about the distinction between things we know that we know, things that we know we don’t know, and things we don’t know we don’t know. And that classification can be mapped to the nature of events and the processing of associated data:

  • Known knowns (KK) are traced through changes in already defined features of identified objects, activities or expectations. Corresponding external events are expected and the associated data can be immediately translated into information.
  • Known unknowns (KU) are traced through changes in still undefined features of identified objects, activities or expectations. Corresponding external events are unexpected and the associated data cannot be directly translated into information.
  • Unknown unknowns (UU) are traced through changes in still undefined objects, activities or expectations. Since the corresponding symbolic representations are still to be defined, both external and interval events are unexpected.
Knowledge lifespan is governed by external events

Given that decisions are by nature set in time-frames, they should be mapped to changes in environments, or more precisely to the information carried out by the events taken into consideration.

Knowledge & Decision Making

Events bisect time-scales between before and after, past and future; as a corollary, the associated information (or lack thereof) about changes can be neatly allocated to the known and unknown of current and prospective states of affairs.

Changes in the current states of affairs are carried out by external events:

  • Known knowns (KK): when events are about already defined features of objects, activities or expectations, the associated data can be immediately used to update the states of their symbolic representation.
  • Known unknowns (KU): when events entail new features of already defined objects, activities or expectations, the associated data must be analyzed in order to adjust existing symbolic representations.
  • Unknown unknowns (UU): when events entail new objects, activities or expectations, the associated data must be analyzed in order to build new symbolic representations.

As changes in current states of affairs are shadowed by changes in their symbolic representation, they generate internal events which in turn may trigger changes in prospective states of affairs:

  • Known knowns (KK): updating the states of well-defined objects, activities or expectations may change the course of action but should not affect the set of possibilities.
  • Known unknowns (KU): changes in the set of features used to describe objects, activities or expectations may affect the set of tactical options, i.e ones that are can be set for individual production life-cycles.
  • Unknown unknowns (UU): introducing new types of objects, activities or expectations is bound to affect the set of strategic options, i.e ones that are encompass multiple production life-cycles.

Interestingly, those levels of knowledge appear to be congruent with usual horizons in decision-making: operational , tactical, and strategic:

Decision-making and knowledge level
The scope of decision-making is set by knowledge level
  • Operational: full information on actual states allows for immediate appraisal of prospective states.
  • Tactical: partially defined actual states allow for periodic appraisal of prospective states in synch with production cycles.
  • Strategic: undefined actual states don’t allow for periodic appraisal of prospective states in synch with production cycles; their definition may also be affected through feedback.

Given that those levels of appraisal are based on conjectural information (internal events) built from fragmentary or fuzzy data (external events), they have to be weighted by risks.

Weighting the Risks

Perfect information would guarantee risk-free future and would render decision-making pointless. As a corollary, decisions based on unreliable information entail risks that must be traced back accordingly:

  • Operational: full and reliable information allows for risk-free decisions.
  • Tactical: when bounded by well-defined contexts with known likelihoods, partial or uncertain information allows for weighted costs/benefits analysis.
  • Strategic: set against undefined contexts or unknown likelihoods decision-making cannot fully rely on weighted costs/benefits analysis and must encompass policy commitments, possibly with some transfer of risks, e.g through insurance contracts.

That provides some kind of built-in traceability between the nature and likelihood of events, the reliability of information, and the risks associated to decisions.

Decision Timing

Considering decision-making as real-time knowledge management driven by external (aka actual) events and governed by internal (aka symbolic) ones, how would that help to define decisions time frames ?

To begin with, such time frames would ensure that:

  • All the relevant data is captured as soon as possible (t1>t2).
  • All available data is analyzed as soon as possible (t2>t3).
  • Once a decision has been made, nothing can change during the interval between commitment and action (respectively t4 and t5).

Given those constraints, the focus of timing is to be on the interval between change in prospective states (t3) and decision (t4): once all information regarding prospective states is available, how long to wait before committing to a decision ?

Assuming that decisions are to be taken at the “last responsible moment”, i.e until not taking side could change the possible options, that interval will depend on the nature of decisions:

  • Operational decisions can be put to effect immediately. Since external changes can also be taken into account immediately, the timing is to be set by events occurring within production life-cycles.
  • Tactical decisions can only be enacted at the start of production cycles using inputs consolidated at completion. When analysis can be done in no time (t3=t4) and decisions enacted immediately (t4=t5), commitments can be taken from on cycle to the next. Otherwise some lag will have to be introduced. The last responsible moment for committing a decision will therefore be defined by the beginning of the next production cycle minus the time needed for enactment.
  • Strategic decisions are meant to be enacted according to predefined plans. The timing of commitments should therefore combine planning (when a decision is meant to be taken) and events (when relevant and reliable information is at hand).
The scope of decision-making must be aligned with architecture layers
The scope of decision-making should be aligned with architecture layers

Not surprisingly, when the scope of decision-making is set by knowledge level, it appears to coincide with architecture layers: strategic for enterprise assets, tactical for systems functionalities, and operational for platforms and resources. While that clearly calls for more verification and refinements, such congruence put events processing, knowledge management, and decision-making within a common perspective.

Further Reading

3 thoughts on “Events & Decision-making”

  1. Excellent post!
    I have been playing around with Donald Rumsfeld’s pronouncements on knowns/unknowns and I think he missed out “unknown knowns”
    i.e. as a result of big data, the organization “knows” things but decision makers are unable, possibly because of time constraints, to synthesize the data into information, so they make decisions in the absence of such information.

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