Recently in a discussion with INSEAD students I wondered why more companies are not using analytics to make decisions. I saw the Banking world as having adopted analytics but for many other businesses analytics still was about “sexy insight” & not a “better decision”.
Making Analytics sexy doesn’t make it easier to implement! And this is where the challenge lies in Analytics. Striking headlines make for easy copy but don’t do wonders for executing analytic intent within a corporation.
I had written about this earlier here:
Analytics doesn’t need you to solve a technical problem but a “social” one. Embedding analytics into the fabric of the company is critical. How do you demystify it & how do you link it to practical stuff.
Start with a decision in mind & work backwards, not with the data in mind & working forward. Link Analytics to “the last mile”. Analytics should not be expected to deliver an “Aha moment”-instead it is a factory approach to improved decisions.
So analytics is not a planning tool as much as it is an Execution tool. So who should staff Analytical positions-a Marketing person or a statistician or a creative integrator! Many companies have opened out new positions called Data scientists. But a new breed of people is also needed, the integrators, people who understand the intersection of data, technology, business & statistics. Too ambitious, perhaps! Superwomen needed, Maybe!
What's sexy about Analytics -the insight or the decision? Different industries seem to think differently!
Who values Analytics more? Some industries seem to believe in the power of analytics & actually base decisions on it. A bank decides whether to give a loan or not basis an Application score card or a credit card company spots a fraudulent activity basis analytics & stops the card usage.
A lot of other industries use Analytics for insight generation but are they as good as the Banking & Financial services industry (BFSI) in linking the analytics to action.
But do analytics professionals care about the decision or are they happy just doing the sexy “insight” oriented stuff!
I have had experience now across sectors & I see some critical differences.
- BFSI has developed processes around analytics & has mastered the art of bringing an algorithm close to the point of decision making. Banks & NBFC’s can use data to take effective decisions about whom to lend to & what interest rate to charge.
- In comparison, for many industries Analytics is still the appetizer, it helps you think & get insights but the decisions get taken without an algorithm. That is not to say that you need an analytical algorithm to take every decision but I am sure it can help.
- Now imagine if we could pioneer this for other industries like Fast moving consumer goods(FMCG), DTH or Retail or even Auto. As a part of my work at Cequity, we have often done this. But it takes effort to build the processes around it. Imagine if an FMCG company had a Marketing mix simulator basis which they took decisions on their marketing investments basis what analytics throws up as effective!
- After all Analytics should help in “Making decisions”!! And wherever one does this, the interesting thing is how the Data & technology expertise is combined with Analytics & effective engagement vehicles (Call centres, Mobile apps, websites) to make this happen.
I read this wonderful article by Srividya Sridharan of Forrester. Here is her comment:
“Analytics and creativity are seldom used in the same sentence. The natural instinct is to delineate the two as left-brain and right-brain pursuits. Analytics and creative teams speak different languages, use different tools, and find inspiration in different places. Customer Intelligence (CI) professionals are usually closer to the world of analytics. They capture, manage, analyze, and apply heaps of customer data using advanced analytical tools and techniques. But in order for them to step out of a perceived geeky image, CI professionals should think about how to add a dash of creativity into their roles”
I do believe that creativity is critical for analytics to take shape in an organization. Here is the link to her article: http://bit.ly/pUOHkQ
I see it as critical at 3 stages:
1. Building the analysis/model/scorecard-at this stage the need is for creativity about imagining customer behavior. The more creatively one imagines behavior the more impact it will have on the analyst's hypothesis & therefore the derived variables that she creates.
2. In this stage Creativity is about how she should present & visualize her findings. For years advertising agencies have found really creative ways of presenting their "Central ideas". Analysts need to learn from that & make compelling presentations. This almost needs the equivalent of having "Phd's with a personality" in your analyst team!!
3. And finally Analytics folk need to be creative about bringing the result of their analytics closer to the decision making process. The more creatively you embed analytics into the customer path, the more you will see impact!
So creativity is critical, but in my view in multiple dimensions! Strangely here is another thought from Forrester:
This also reminds me about how radically views can change over time. I really liked this Forrester chart which almost predicted the death of creativity & the rise of Left brain rational thinking.
Maybe the “death of the right brain” was a bit exaggerated!
I would love to hear your views about this!!