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5. Multivariable Testing (MVT)

What do the front page of the National Enquirer and phone repair have in common?
Marie Leone, CFO.com | US
October 7, 2002

Brief: MVT, a proprietary statistical methodology pioneered by Knoxville-based QualPro Inc., is the only non-technology to make the grade for "Need-to-Know Tech." The reason: MVT shrinks three big project woes — time, cost, and frustration.

What It Is: MVT is designed to help corporate managers figure out if proposed company initiatives will actually improve things. In a nutshell, MVT uses advanced mathematics to simultaneously test up to 40 ideas (or variables) related to a potential project. The methodology then sorts the variables by the type of impact each will have on the project — positive, negative, or none at all.

The distinction is important. According to research, only 25 percent of new ideas improve business processes, while 55 percent have no impact. About 22 percent of new ideas make things worse.

Skinny: In one real-world experiment, National Enquirer executives used MVT to figure out what stories to put on the paper's front page ("Hitler's Secret Pink Wardrobe" or "Ancient Astronauts Stole Missing Link"). In another, telco SBC/Ameritech reduced its installation backlog by 50 percent based on MVT results. Other companies that have signed on to conduct multivariable testing include, Staples, Toys "R" Us, Progressive Insurance, BASF, DuPont, Exxon, Lowe's, Verizon, and Saks.

MVT runs counter to traditional scientific methods that test only a single variable at a time. The methodology also takes into account internal variables (such as budgets, manpower, and tech resources) and external ones (regulation, lawsuits, market economics, and the like).

Dennis Harris, president of Network Services at SBC/Ameritech, says that the telco used MVT to test about 40 ideas for reducing service backlogs. Within four months of rolling out the ideas that the MVT testing vetted, Harris says SBC/Ameritech cut installation and repair backlogs in half. In fact, he says service backlogs remain at an unprecedented low level — despite severe weather that traditionally causes peaks in the work-order tally.

MVT can boost IT system efficiency too, says QualPro's technical director, Kieron Dey. Dey points to multivariable testing conducted by Deluxe Corp., the largest printer of checks and business forms in the U.S. Software engineers at Deluxe used MVT to assess new systems and procedures for linking banks to its printing systems. MVT also helped reduce the number of repeat callers (unsatisfied customers) ringing up the call center of a large auto dealership.

Clients are often shocked by MVT results, claims Dey, who uses a rather unusual example to illustrate the point. During a recent climb in the Bridger Wilderness region of Wyoming, Dey and a companion used MVT to test the effects of altitude on their pulse rate. They controlled for several variables, including backpacks, body weight, and fitness. The stunner: Carrying a 60-pound backpack has little effect on — or even reduces — a person's heart rate.

ETA: Three years.




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