Closing the Intelligence Gap - Gary Cokins on Performance Management

If you are a retail merchandiser with many stores and consumer items, you can use predictive analytics to continuously replenish a dynamically optimal level of inventory – without too many items languishing on the shelves and with avoiding out-stock-out items.

If you are a hardware manufacturer and your suppliers are late delivering component parts , your order-handling representatives can demand-shape customer orders by offering them a slightly different product configuration, with a small discount, for the parts you have in stock.

If you are a consumer packaged goods producer, you can run short-duration marketing campaigns, targeting and predictomg the desired sales mix volume plus instantly harmonizing your production levels to optimize costs.

If you are a business-to-consumer service, like a bank or telco, you can analyze the purchase history and preferences of your customer micro-segments (and even of each customer). Combining that information with individual customer profitability data, you could tailor service offerings to up-sell and cross-sell to customers, optimizing future sales and profits.

If you are a human resources manager seeking to increase employee retention, you could analyze the characteristics and traits of employees who have left your organization. The variables might include age, frequency and amount of salary increases, length of employment, and dozens of others. You could apply these patterns to your existing workforce to predict a rank-order list of the next most likely employees to resign (plus their reasons). Then, you could take an intervention action to prevent their departure – but only for those valuable employees you wish to retain.

If you are a CEO desiring to better select and align the most influencial key performance indicators (KPIs) in your balanced scorecard’s, you could continuously test the degree of statistical correlation between the cause-and-effect leading to lagging KPIs. This way you can keep adjusting which KPIs to monitor and accordingly apply weights to influence and align your employees’ behavior with the strategic objectives.

The time has come to apply management science by leveraging business analytics. An organization should be viewed as a broad series ongoing laboratory experiments to refine its decision making. Managers at all levels should be formulating ideas and theories of what will best improve the organizations performance. Then based on them, it should constantly test the effects of its actions for validation. Scientists like biologists and astronomers live by experimentation and test analysis. An organization should too regardless if it is a commercial business or public sector government agency or ministry.