Management Misinformation Systems
ABSTRACT Five assumptions commonly made by designers of management information systems are identified. It is argued that these are not justified in many (if not most) cases and hence lead to major deficiencies in the resulting systems. These assumptions are: (1) the critical deficiency under which most managers operate is the lack of relevant information, (2) the manager needs the information he wants, (3) if a manager has the information he needs his decision milking will improve, (4) better communication between managers improves organizational performance, and (5) a manager does not have to understand how his information system works, only how to use it. To overcome these assumptions and the deficiencies which result from them, a management information system should be imbedded in a management control system. A procedure for designing such a system is proposed and an example is given of the type of control system which it produces.
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Vol. 14, No. 4, December, 1967
Printed in U.S.A.
MANAGEMENT MISINFORMATION SYSTEMS*
Russell L. Ackoff
University of Pennsylvania
Five assumptions commonly made by designers of management information
systems are identified. It is argued that these are not justified in
many (if not most) cases and hence lead to major deficiencies in the resulting systems.
These assumptions are: (1) the critical deficiency under which most managers operate is
the lack of relevant information, (2) the manager needs the information he wants, (3) if a
manager has the information he needs his decision making will improve, (4) better
communication between managers improves organizational performance, and (5) a
manager does not have to understand how his information system works, only how to use
it. To overcome these assumptions and the deficiencies which result from them, a
management information system should be imbedded in a management control system. A
procedure for designing such a system is proposed and an example is give of the type of
control system which it produces.
The growing preoccupation of operations researchers and management scientists with
Management Information Systems (MIS’s) is apparent. In fact, for some of the design of such
systems has almost become synonymous with operations research or management science.
Enthusiasm for such systems is understandable: it involves the researchers in a romantic
relationship with the most glamorous instrument of our time, the computer. Such enthusiasm is
understandable but, nevertheless, some of the excesses to which it has led are not excusable.
Contrary to the impression produced by the growing literature, few computerized management
information systems have been put into operation. Of those I’ve seen that have been implemented,
most have not matched expectations and some have been outright failures. I believe that these
near- and far-misses could have been avoided if certain false (and usually implicit) assumptions on
which many such systems have been erected had not been made.
There seem to be five common and erroneous assumptions underlying the design of most
MIS’s, each of which I will consider. After doing so I will outline an MIS design procedure
which avoids these assumptions.
Give Them More
Most MIS’s are designed on the assumption that the critical deficiency under which most
managers operate is the lack of relevant informaiton. I do not denyy that most managers lack a
good deal of information that they should have, but I do deny that this is the most important
informational deficiency from which they suffer. It seems to me that they suffer more from an
over abundance of irrelevant information.
Received June 1967.
This is not a play on words. The consequences of changing the emphasis of an MIS
from supplying relevant information to eliminating irrelevant information is
considerable. If one is preoccupied with supplying relevant information, attention is
almost exclusively given to the generation, storage, and retrieval of information: hence
emphasis is placed on constructing data banks, coding indexing, updating files, access
languages, and so on. The ideal which has emerged from this orientation is an infinite
pool of data into which a manager can reach to pull out any information he wants. If,
on the other hand, one sees the manager’s information problem primarily, but not
exclusively, as one that arises out of an overabundance of irrelevant information, most
of which was not asked for, then the two most important functions of an information
system become filtration (or evaluation) and condensation. The literature on MIS’s
seldom refers to these functions let alone considers how to carry them out.
My expertise indicates that most managers receive much more data (if not
information) than they can possibly absorb even if they spend all of their time trying to
do so. Hence they already suffer from an information overload. They must spend a
great deal of time separating the relevant from the irrelevant and searching for the
kernels in the relevant documents. For example, I have found that I receive an average
of forty-three hours of unsolicited reading material each week. The solicited material
is usually half again this amount.
I have seen a daily stock status report that consists of approximately six hundred
pages of computer print-out. The report is circulated daily across managers’ desks.
I’ve also seen requests for major capital expenditures that come in book size, several of
which are distributed to managers each week. It is not uncommon for many managers
to receive an average of one journal a day or more. One could go on and on.
Unless the information overload to which managers are subjected is reduced, any
additional information made available by an MIS cannot be expected to be used
Even relevant documents have too much redundancy. Most documents can be
considerably condensed without loss of content. My point here is best made, perhaps,
by describing briefly an experiment that a few of my colleagues and I conducted on the
OR literature several years ago. By using a panel of well-known experts we identified
four OR articles that all members of the panel considered to be “above average,” and
four articles that were considered to be “below average.” The authors of the eight
articles were asked to prepare “objective” examinations (duration thirty minutes) plus
answers for graduate students who were to be assigned the articles for reading. (The
authors were not informed about the experiment.) Then several experienced writers
were asked to reduce each article to 2/3 and 1/3 of its original length only by
eliminating words. They also prepared a brief abstract of each article. Those who did
the condensing did not see the examinations to be given to the students.
A group of graduate students who had not previously read the articles were then
selected. Each one was given four articles randomly selected, each of which was in
one of its four versions: 100%, 67%, 33%, or abstract. Each version of each article
RUSSELL L. ACKOFF
MANAGEMENT MISINFORMATION SYSTEMS
was read by two students. All were given the same examinations. The average scores
on the examinations were then compared.
For the above-average articles there was no significant difference between average
test scores for the 100%, 67%, and 33% versions, but there was a significant decrease
in average test scores for those who had read only the abstract. For the below-average
articles there was no difference in average test scores among those who had read the
100%, 67%, and 33% versions, but there was a significant increase in average test
scores of those who had read only the abstract.
The sample used was obviously too small for general conclusions but the results
strongly indicate the extent to which even good writing can be condensed without loss
of information. I refrain from drawing the obvious conclusion about bad writing.
It seems clear that condensation as well as filtration, performed mechanically or
otherwise, should be an essential part of an MIS, and that such a system should be
capable of handling much, if not all, of the unsolicited as well as solicited information
that a manager receives.
The Manager Needs The Information That He Wants
Most MIS designers “determine” what information is needed by asking managers
what information they would like to have. This is based on the assumption that
managers know what information they need and want it.
For a manager to know what information he needs he must be aware of each type of
decision he should make (as well as does) and he must have an adequate model of
each. These conditions are seldom satisfied. Most managers have some conception of
at least some of the types of decisions they must make. Their conceptions, however,
are likely to be deficient in a very critical way, a way that follows from an important
principle of scientific economy: the less we understand a phenomenon, the more
variables we require to explain it. Hence, the manager who does not understand the
phenomenon he controls plays it “safe” and, with respect to information, wants
“everything.” The MIS designer, who has even less understanding of the relevant
phenomenon than the manager, tries to provide even more than everything. He thereby
increases what is already an overload of irrelevant information.
For example, market researchers in a major oil company once asked their marketing
managers what variables they thought were relevant in estimating the sales volume of
future service stations. Almost seventy variables were identified. The market
researchers added about half again this many variables and performed a large multiple
linear regression analysis of sales of existing stations against these variables and found
about thirty-five to be statistically significant. A forecasting equation was based on
this analysis. An OR team subsequently constructed a model based on only one of
these variable, traffic flow, which predicted sales better than the thirty-five variable
regression equation. The team went on to explain sales at service stations in terms of
the customers’ perception of the amount of time lost by stopping for service. The
relevance of all but a few of the variables used by the market researchers could be
explained by their effect on such perception.
The moral is simple: one cannot specify what information is required for decision making
until an explanatory model of the decision process and the system involved has been
constructed and tested. Information systems are subsystems of control systems. They cannot
be designed adequately without taking control in account.. Furthermore, whatever else
regression analyses can yield, they cannot yield understanding and explanation of phenomena.
They describe and, at best, predict.
Give a Manager the Information He Needs and His Decision
Making Will Improve
It is frequently assumed that if a manager is provided with the information he needs, he will
then have no problem in using it effectively. The history of OR stands to the contrary. For
example, give most managers an initial tableau of a typical “real” mathematical programming,
sequencing, or network problem and see how close they come to an optimal solution. If their
experience and judgement have any value they may not do badly, but they will seldom do very
well. In most management problems there are too many possibilities to expect experience,
judgement, or intuition to provide good guesses, even with perfect information.
Furthermore, when several probabilities are involved in a problem the unguided mind of
even a manager has difficulty in aggregating them in a valid way. We all know many simple
problems in probability in which untutored intuition usually does very badly (e.g., What are the
correct odds that 2 of 25 people select at random will have their birthdays on the same day of
the year?). For example, very few of the results obtained by queuing theory, when arrivals and
service are probabilistic, are obvious to managers; nor are the results of risk analysis where the
managers; own subjective estimates of probabilities are used.
The moral: it is necessary to determine how well managers can use needed information.
When, because of the complexity of the decision process, they can’t use it well, they should be
provided with either decision rules or performance feed-back so that they can identify and
learn from their mistakes. More on this point later.
More communication Means Better Performance
One characteristic of most MIS’s which I have seen is that they provide managers with
better current information about what other managers and their departments and divisions are
doing. Underlying this provision is the belief that better interdepartmental communication
enables managers to coordinate their decisions more effectively and hence improves the
organization’s overall performance. Not only is this not necessarily so, but it seldom is so.
One would hardly expect two competing companies to become more cooperative because the
information each acquires about the other is improved. This analogy is not as far fetched as
one might first suppose. For example, consider the following very much simplified version of
a situation I once ran into. The simplification of the case does not affect any of its essential
RUSSELL L. ACKOFF
A department store has two “line” operations: buying and selling. Each function is
performed by a separate department. The Purchasing Department primarily controls one
variable: how much of each item is bought. The Merchandising Department controls the price
at which it is sold. Typically, the measure of performance applied to the Purchasing
Department was the turnover rate of inventory. The measure applied to the Merchandising
Department was gross sales; this department sought to maximize the number of items sold
times their price.
Now by examining a single item let us consider what happens in this system. The
merchandising manager, using his knowledge of competition and consumption, set a price
which he judged would maximize gross sales. In doing so he utilized price-demand curves for
each type of item. For each price the curves show the expected sales and values on an upper
and lower confidence band as well. (See Figure 1.) When instructing the Purchasing
Department how many items to make available, the merchandising manager quite naturally
used the value on the upper confidence curve. This minimized the chances of his running short
which, if it occurred, would hurt his performance. It also maximized the chances of being
over-stocked but this was not his concern, only the purchasing manager’s. Say, therefore, that
the merchandising manager initially selected price P1 and requested that amount Q1 be made
available by the Purchasing Department.
In this company the purchasing manager also had access to the price-demand curves. He
knew the merchandising manager always ordered optimistically.
MANAGEMENT MISINFORMATION SYSTEMS
Therefore, using the same curve he read over from Q1 to the upper limit and down to the expected
value from which he obtained Q2, the quantity he actually intended to make available. He did not
intend to pay for the merchandising manager’s optimism. If merchandising ran out of stock, it
was not his worry. Now the merchandising manager was informed about what the purchasing
manager had done so he adjusted his price to P2. The purchasing manager in turn was told that the
merchandising manager had made this readjustment so he planned to make only Q2 available. If
this process – made possible only by perfect communication between departments – had been
allowed to continue, nothing would have been bought and nothing would have been sold. This
outcome was avoided by prohibiting communication between the two departments and forcing
each to guess what the other was doing.
I have obviously caricatured the situation in order to make the point clear: when organizational
units have inappropriate measures of performance which put them in conflict with each other, as is
often the case, communication between them may hurt organizational performance, not help it.
Organizational structure and performance measurement must be taken into account before opening
the flood gates and permitting the free flow of information between parts of the organization. (A
more rigorous discussion of organizational structure and the relationship of communication to it
can be found in. .)
A Manager Does Not Have to Understand How an Information System
Works, Only How to Use It
Most MIS designers seek to make their systems as innocuous and unobtrusive as possible to
managers lest they become frightened. The designers try to provide managers with very easy
access to the system and assure them that they need to know nothing more about it. The designers
usually succeed in keeping managers ignorant in this regard. This leaves managers unable to
evaluate the MIS as a whole. It often makes them afraid to even try to do so lest they display their