Friday, November 28, 2014

How to Build Analytics as Differentiated Business Capability

Analytics needs to permeate into the very fabric of organization

Although analytics is at the top to-do agenda of any forward-thinking business today, still, most of them think analytics is one time project, not an ongoing business capability or embedded corporate culture, hence, their data are “floating on the surface”, not being filtered out and abstracted into the business insight that helps making effective decisions; so what’re the optimal level of data analytics success, and how to achieve it?

Managers need to envision favorable futures—not dwell on the past--no matter how elaborately presented, to impact corporate culture, analysts need to present managers with historical perspectives that enable estimation of favorable futures. Corporate culture can be implemented through goal, mission, performance tracking in top down/bottom up strategic decision; then analytics-supported problem solving and strategic change management can achieve sustainable profits.

Analytics needs to permeate into the very fabric of organization. When analytics becomes part of daily measurement and business action within business teams, only then it gets into the fabric of an organization. It must start with an inside-out view rather than an outside-in view. Don't do it just because there is a general buzz about things - big data, predictive modeling, digital analytics, real-time analytics etc. What measures are we willing to impact, by which teams within the company, how is it being aligned and therefore how can analytics support those business decisions is when it becomes a part of the corporate culture.

Analytics that doesn't help a business person make a decision is wasted data. Integrate big data into strategic decision analysis supporting corporate strategic decision and execution to achieve sustainable profit market shares. Nowadays, businesses are barraged with "data", but that's not equal to information. Analytics comes in stages. First data, then metrics - which are simply data combined to something meaningful, then models - which predict, then decisions - which act. Any organization needs to take a business decision through this framework step-by-step. Often, analytics providers "jump to the end" without taking the organization through the journey. That just creates complex, unusable analytics that get overridden by tribal knowledge because that's what everyone understands. 

Good analytics brings meaning to the measurements, by uncovering relationships between, inputs, effort and outputs. To be valuable, it has to do so in the context of theory about how the system should behave. Otherwise, the strongest correlations in the world are dangerous bases from which to make decisions. Like any other engineering discipline, look for something in analytics project, you could reuse before inventing from scratch; both in the need for a systemic view of a business (data science and analytics) and the difficulty in adopting new approaches (confirmation bias and experiential bias).

Take an integrated "top-down" and "bottom-up" approach: (1) Top-down: an organization needs a vision of being a data-driven organization, which means in this context: to maintain a single version of the truth, to constantly seek for better tools in order to have better and faster insights. It is more of a cultural challenge, if the technology and the implementation are good enough. And luckily, you have reached such maturity. (2) Bottom up: to successfully deploy quick (sometimes dirty) solutions in the organization and to work with agents of change, spreading the word and creating the appetite for more, and amplify the best practices & next practices.

Because businesses that invest in Analytics projects may cost a fortune in today’s competitive market, they need to see clearly tangible and intangible ROI in numbers and other key parameters such as decision-making, out-hustling the competition, how can they differentiate in the competitive landscape, Analytics should help in elevating the firms /organizations in parameters such as Branding, Sales, Marketing, Operational efficiencies, Customer Satisfaction, etc. If you want to speed it up – influence by changing the culture, encouraging the demand. It takes both leadership vision and systematic approaches in building analytics based business capability as competitive advantage and business differentiator.


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