What does high performance analytics mean to CEOs?

CEOs are confronted with all sorts of issues day-in and day-out.  They must deal with an ever-increasing: 1) pace of change, 2) volume of data, 3) degree of complexity, 4) technological advances, 5) globalization, 6) regulations, 7) competition, and frequent shifts in: 1) market and economic forces, 2) customer preferences, 3) board and shareholder risk appetites,  and 4) brand sentiment evidenced through social media.  CEOs typically have a corporate mission defined and corporate values instilled in the workforce that serve to unify the corporate team and reinforce living the vision behaviors.  Examples of values would be: put the customer first, treat fellow employees with courtesy and respect, be inclusive, provide clear performance signals, exhibit a can-do attitude, trust the process, and so on.

CEOs leverage annual planning and strategy sessions to refine their vision, and set direction and quantify corporate goals. CEOs answer to their board for the enterprise's performance relative to goal that they and their management team are expected to deliver.  Analytics comes into play, and is operationalized, in the decision-making, execution, and analysis of results as depicted below.

Typical business learning context

Which do you trust, science or your gut?!

Instincts are great, but sometimes they can steer us wrong (literally) like when you skid on ice and the rear of your car is fishtailing and instincts tell you to turn away from the direction that the rear wheels are moving.   Science and models can lead us in the wrong direction in situation where data and formulas alone are insufficient to capture the realities, uncertainties and dynamics of important assumptions.  Data capture past experience and other important variables, but may lack sufficient consistency, reliability, completeness, or availability to provide solid ground for a decision.  Effective decision-making draws from three primary sources, namely data, science, and judgment.  You need all three, because science leverages observed behavior and givens (data) and business rules (judgment) to enumerate all relevant possibilities in order to predict what will happen and to determine what is best. 

Further, we recognize that data may be unstructured and hence not readily usable without some good science (e.g. text mining) to extract nuggets of information.  Furthermore, judgment can point to the best approach for a modeler to use when attempting to solve a problem and judgment can also play into determining the proper transformations to use on input data or even the level of granularity required.  I have highlighted these examples for you in the graphic below that illustrates the inter-connectedness theme.

Interconnectedness of data, science and judgment in decision-making

It is generally accepted that the more experienced CEO is in their role and industry, the greater is the likelihood that they will be successful.  Those who have been around a long time have either made plenty of mistakes, or witnessed their fair share of crises brought about by a combination of unfavorable circumstances, flawed processes, inadequate controls and bad decisions or behavior.  The greatest asset a leader can have is knowledge.  In the final analysis, sustainable winning is a function of the power to know plus the ability to act.  So, let's consider two different models for acquiring knowledge.   

Which way would you prefer to learn?!

On the right-hand side, we have learning by experience. An alternative means of acquiring knowledge is learning through high performance analytics (HPA).  As noted in my last post that pointed to the value of HPA for modelers, CEOs are entering an era where it will be possible for them to embed high performance analytics into their decision-making process.  This will pay huge dividends, both in good times and in bad times. 

When in crisis mode, time-to-decision can spell the difference between minimal loss and staggering loss scenarios.  Just imagine what the value of HPA amounts to in the extreme case!  What about HPA's value in good times?  Consider those quiet moments when a CEO contemplates the cascading consequences of taking certain actions, such as restructuring their business, or embarking on a new venture, or making an acquisition. 

 In the world of HPA, the CEO can imagine what a solution could look like and that vision can merge with the business problem-solving reality to map out how the desired result might be achieved. 

In summary, high performance analytics can provide leaders with:

  • more information
  • more options
  • better solutions
High performance analytics can position leaders (CEOs) for success by enabling them to learn faster, and more safely, through modeling rather than by experience.
tags: HPA

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