Innovating by Optimizing
In 1980 I founded Princeton Consultants based on the thesis that optimization could improve business decision making. Princeton University, from which I’d just graduated, and Bell Labs were pioneers in the academic study of optimization algorithms.
“Optimization” gets used in many contexts. I define it as, “a decision- making process and a set of related tools that employ mathematics, algorithms, and computer software not only to sort and organize data, but to use that data to make recommendations faster and better than humans can.”
Initially Princeton Consultants built software applications that included portfolio optimization for pharmaceutical and financial services clients. During this time, I recognized that it wasn’t enough to develop great solutions—we had to ensure their successful deployment, so I oriented our firm to blend IT and Management Consulting. We hired hybrid employees who combine an engineering or mathematical perspective with a deep understanding of the business. Today we develop and implement optimization solutions for many of the best-known companies across many industries.
The pace of innovation is rapidly accelerating, and optimization is an essential tool in this environment. To spot opportunities, my colleagues and I look for the cross-product of two areas: (1) emerging technologies that are moving from the “hype” to the “affordable reality” stage, and (2) industries and business process areas that are ripe for change.
I wrote a book, “The Optimization Edge: Reinventing Decision Making to Maximize All Your Company’s Assets,” to demystify and evangelize optimization to business executives. Readers have welcomed the accessible framework to think about and use optimization. Jim Goodnight, the CEO of SAS, which I visited as a user in the 1980’s, wrote, “For executives who don’t have an optimization strategy, this book is a must read.”
I have seen many different types of organizations achieve extraordinary gains in productivity, efficiency, and customer service through
optimization. Innovation-minded executives should know what optimization is and how to ensure its success. Above all, they should ask for it!