Optimizing the extended enterprise through Causal network analysis.

The Extended Enterprise Delivered Latitude Fact Sheet Paths to Optimizing the Extended Enterprise Causal Network Analysis Causal networks analysis from Latitude provides a predictable behavioral model showing how influencing various behaviors will statistically impact overall organizational performance. By analyzing the causal network map, a manager can more effectively allocate resources to those areas that result in the greatest desired impact on target performance. 1 In a large extended enterprise, defined processes, best practices, common values, knowledge sharing, financial incentives and other approaches are all attempts to influence and manage organizational behavior for the purpose of improving performance. Managers are the organizational key to improving performance, and experienced managers typically make decisions in two ways: decisions based on instinct (“gut”), and decisions based on relevant “raw” data. Instincts tell a manager to respond in a manner consistent with his or her past observations. Decisions using raw data are based on information managers obtain from reports. To a sales manager, sales trending downward may mean incentives should go up. To a manufacturing manager, warranty costs trending upward may mean he or she should increase expenditures involving quality controls and/ or manufacturing training. But what if the equation is more complicated than that? What if there are many factors contributing to sales growth or manufacturing quality? Which factors or variables do you attempt to control, and in which way do you wish to influence them (up or down)? How can you predict the way in which these factors will impact the target behavior (such as key performance indicators)? Causal Networks Based on a statistical analysis or performance data and other information, a causal network shows how the many-to-many relationships of a set of Latitude Consulting Group 888-577-2797 www.latitudecg.com LATITUDE CONSULTING GROUP FACT SHEET Causal Network Analysis activities will impact overall organizational performance. Using structured equation modeling, Latitude can help organizations identify which interrelated factors most impact targeted performance goals. By analyzing the causal network map, a manager can more effectively and efficiently allocate resources. A mapped causal network can also provide a way of modeling predictable ROI in technology investments. Combined with Latitude’s learning management and performance tracking tools, a mapped causal network can help the extended enterprise continuously refine its certification programs and optimize channel performance. Causal mapping. Representing an actual study of a public school system, this causal map shows the relationship between variables in terms of standard deviations from the mean. Note how the map reveals relationships that may seem counter-intuitive or contrary to some samples of relevant data. 2 CAUSAL NETWORK INITIATIVES • Develop predictive model for resource allocation • Use structural equation model to define causal network LATITUDE SOLUTIONS • Causal network study using statistical techniques to identify key performance drivers • Predictive models