James Taylor's Decision Management

Adaptive Control is about continuously improving the way you make decisions. Some of these changes will come from changing business conditions that force a change in the approach being taken to the decision. Mostly, however, it is a case of making a decision better and better over time to boost profits, reduce losses, or improve retention. You constantly learn more about your customers and gather more information about their behavior. New insights and market trends come from you, your competitors and from third parties. A process for continual review and improvement of how you take a decision allows you to detect and respond to changes in the behavior of your customers without having to start a special project and helps you show an ROI for the data you collect and analyze.

At the point of decision it is not known what the long-term outcome of that decision will be. Therefore:

• If you use a single approach for every decision then you will only plot one of these curves and will have no data about how other actions might have resulted in better (or worse) results.
• It is important to track your results and know what kind of impact you are looking for - short term or long term? Low risk or high risk?

To this you need to adopt what is known as the Champion/Challenger approach. Your current approach is a "Champion". "Challenger" approaches are then developed. Each Challenger differs from the Champion in some measurable and defined way. Perhaps it has different business rules, perhaps it uses a different risk model, perhaps it is more aggressive about retaining customers. Each Challenger will therefore deliver different results from the Champion. These results may be better or worse but only testing the approaches with real transactions, in a live environment, can really show. A decision service is therefore configured to push a small percentage of the transactions through each of the Challenger approaches while pushing the majority through the Champion. Results from the different approaches can be compared and measured over time. If a Challenger does better than the Champion, it can be made the new Champion and the process of identifying and testing new Challengers repeated to continually improve the decision.