One of the problems with analytics and business intelligence (BI) information is that these techniques do not always complete the task of solving a problem or moving to the next step of creating and realizing value. I refer to this as the syndrome of “What? So what? Then what?” My concern is that many organizations use analytics and BI to answer only the first question, but then they are stymied when it comes to answering the next two questions.
The power of converting raw data into information, which analytics and BI do so well, is progressing to answering the next two questions to increasingly add value for decision making with each subsequent answer. The “what? information is useful for managers and employees to more clearly observe and understand outcomes that may have never seen before. It reports the reality of what has happened. When they use predictive analytics, it reports the possibility of what will happen.
However, an obvious follow-up question should be “So what?” What do I mean by this? Answering the “so what?” question means that based on any bothersome or exciting observations from now knowing the “what?”, is there merit to making changes and interventions? How relevant to improving performance is the outcome we are seeing? But this leads to the more critical, and relatively higher value-added need to propose actions – to make decisions. This is the “Then what?” That is, what change can be made or action taken, and ultimately what then is the impact? For reasons that I do not fully understand, many organizations fall short of being creative or innovative in determining options.
There is a more thorny concern. Even when a change or solution is proposed, often the organization freezes. There is hesitancy. In the performance management framework an example is the reluctance to construct strategy maps, a balanced scorecard, or apply activity-based costing principles to calculate and report customer profitability. There is hesitancy to apply advanced forecasting methods. I refer to this as the “why not?” I have previously written that one needs to be a sociologist and psychologist to implement enterprise performance management methodologies. Just for starters it is human nature to prefer the status quo and resist change.
Until an organization gains mastery over validly answering all four questions, it will plod along and muddle through improving its performance rather than accelerate value creation.
I am on vacation. This blog is a revision of my similar blog from October, 2008.