On Wednesday the 23rd June, Tom Davenport, best-selling co-author of Competing on Analytics and Analytics at Work and President's Distinguished Professor at Babson College, led a masterclass of 20 business leaders in examining how organisations go from being analytically impaired to analytical competitors.
In Tom’s view, most companies have massive amounts of data at their disposal, yet fail to utilise it in any meaningful way. But analytics is enabling firms to aggressively use their data in key business decisions and processes, with impressive results.
In his recent book Analytics at Work: Smarter Decisions, Better Results Tom points out how there are more than enough examples of catastrophically bad decision-making. We see them all around us, but often the implications of a bad decision are less immediately visible. Not only do many organisations fail to measure the impact of their decisions, fewer still apply any kind of analytical science to the business of how they make decisions. And without measurement, there are few opportunities to correct or improve the decision-making process or hold anyone accountable for when bad decisions are made.
Tom showed how there is a strong correlation between the use of analytics and better business performance. That said, even with the right information it is still possible to make bad decisions, but with poor or no information, you are relying on intuition and luck and the chances of making a bad decision go up significantly.
The good news from the masterclass? There are now plenty of opportunities to improve decision-making, opportunities that have been made available as a result of significant advances in business analytics. Tom even provides a model for making better decisions, The DELTA model, which includes
- Data – the foundation of any analytical enterprise
- Enterprise – the ability to think and act in a coordinated way.
- Leadership – because no change program can succeed without committed leaders who understand and values analytics (Tom believes this is the rarest commodity).
- Targets – clearly defined milestones and goals for analysts.
- Analysts – not forgetting the people – those that can do the work: posing the questions and finding the answers that support decision-making.
As the group explored examples from their own organisations and discussed case-studies with Tom, some key advice emerged:
- Analytical technologies are very powerful but not the whole answer by themselves; you need to pay attention to the people and culture as well.
- When making any kind of decision, pay attention to alternatives. Analytics can help give you an unbiased list of alternatives to consider.
- Also consider the way that you frame the question; asking a dumb question is likely to get you a dumb answer.
- If you are not sure what kind of questions you need to ask, think about what you are worrying about, then decide what information you would need to make a decision confidently.
- Even the best analyst in the world will have a limited impact if they don’t know how to communicate their insights in a way that makes sense to the decision-makers; seek out analytical leaders who inspire trust and are good communicators (can talk about the math and the business).
- Avoid "paralysis by analysis" by fixing a timescale on a decision. For example, We need to make this decision within the next month.
- Balance strategic and tactical decisions or short-term and long-term decisions. Have a small number of ‘big’ decisions and a slightly higher number of ‘smaller’ decisions. This will help balance workload on the analysts and the business.
- Think enterprise. Be cross-functional with your analysts and techniques and not just the data or the technology.
- Leadership is critical. Spend time on getting committed leadership for your program.
- Set your aspirations in line with your budget and resources. If you are a smaller organisation, prepare for evolution rather than revolution.
- Learn from other industries. Ask yourself: What are they doing today that we could be doing tomorrow?
- You need to train and retain your analysts – they are a valuable asset; one way to do this is to develop their business skills as well as their analytical ones
- Once you start making better decisions, set yourself the target of then improving those decisions
- Data, data, data! It is the foundation of all analysis, with bad data it is very difficult to make good decisions, so fix your data
- Finally, everything you do with analytics, of any kind, should relate to decisions that your organisation needs to make. Don’t do analysis for its own sake.