The Optimization Edge

For the INFORMS oral histories initiative that spotlights giants of operations research, I recently had the great pleasure to interview Egon Balas, who has led two lives, both of which are extraordinary success stories. In the first, he came of age in Romania prior to World War II and joined the underground communist movement to resist the growth of Nazism. This led to a “terrible obstacle course,” to use his phrase, consisting of humiliation, torture, and prison. He pursued a career in economics and wrote a book suggesting that some Keynesian ideas could be applied to a Socialist economy. The book branded him as a heretic and caused him to lose his job at a Romanian research institute. By reading on his own, he taught himself linear programming and became adept.

QuadGraphics, www.qg.com, an NYSE company, is the second largest print and integrated media solutions provider in North America. The firm’s leaders have consistently emphasized improving performance through innovation and, as evidence of that commitment, they invited us several years ago to look for optimization opportunities at their organization.

First, they showed us the printing presses, their most valuable asset. When our team looked at the presses, we literally could find nothing to help them with—mainly because all the jobs were designed to fit exactly on those presses, to not waste paper, to be efficient as possible.

However, we were happy to find was there was another area where we could help: the binding lines.

I’ve often heard stories from my operations research colleagues about fantastic results obtained from advanced analytics models they have built, but the models were never used in the business. Typically, the lack of acceptance of their models was due to a lack of understanding of what would be required for successful integration of those models into normal business operations.

What they missed was the need for applying organizational change management principles in order to gain broader acceptance of advanced analytics techniques that are used for decision support. I collaborated with longtime colleagues Zahir Balaporia of Schneider (now at FICO), Karl Kempf of Intel, John Milne of Clarkson University (formerly at IBM), and Rahul Saxena of Cobot Systems (formerly of Cisco)—who have decades of experience in the development and deployment of analytic methods for improved decision making—on a paper about this topic. Following is an adaptation of our paper and the related presentation I have given at INFORMS events. 

If you are an executive exploring whether or not optimization will help your company raise its level of competitive play, I don’t advise running out to sign up for a crash course in advanced mathematics. There’s no need for you to become a quant, but it would help to think a bit like one. Begin by asking a few optimization questions, such as:

1. What are my company’s underutilized assets? For example, for a newspaper, it might be ad space; for a pharmaceutical company it might be the “face time” that sales reps spend with doctors; for an agricultural company, arable land or available seeds might be the undervalued asset; for a railroad, train capacity might qualify. Which of your assets, if tapped for optimal value, have the potential to take your organization to a significant new level?