Making the Most of Analytics: Building a Corporate Culture for Analytic Impact (Part 1)
Part One: Analytic Corporate Culture
Business growth is dependent on timely decision-making. In today’s data-heavy business environment, the role of business analytics in the decision-making process has become increasingly important, but some organizations struggle with implementing business change through analysis. In this two-part article, we highlight elements of corporate culture that derive impact from business analytics, and provide tips for building that corporate culture in your organization.
The Danger of the Extremes
Take a step back and assess your company culture today as it relates to decision-making and data-driven insights. We have witnessed a wide spectrum of business norms, ranging from companies that make most of their business decisions based on experience, anecdotal evidence, and gut-instinct to companies that require definitive analytical evidence to make even minor business changes. Just like Goldilocks, neither extreme is “just right”.
When companies make big decisions based solely on gut-instinct and experience, costly mistakes can arise from not accounting for market or competitive changes, misunderstanding the cause for business outcomes, or continuing to believe long-standing corporate myths. We often witness this type of culture in established businesses with highly tenured leadership. In these traditional corporate environments, it is not uncommon to see leaders who have risen through the ranks to achieve success, and assume that the truths of the past remain consistent today. It can be very difficult to gain support for analytics if a corporate sentiment of “I already know the answer” prevails.
On the other extreme, businesses that are dependent on data analytics for all decisions, big and small, are paralyzed to make swift business adjustments required to stay competitive in a quickly-changing consumer environment. These companies tend to be slow to innovate and fall behind competition. In industries with fast-moving products or customers with shifting priorities, this stagnation can lead to business decline. Organizations that wait for all analytic evidence to come in before making any decisions suffer a handicap; the definitive evidence required to make change comes too late to act.
Balancing Analytic Needs with Business Outcomes
A compromise across these cultural extremes results in the appropriate business case for analytics. The key is to strike a balance between the level of analytics required and the ultimate business implementation and/or risk that will result. Business decisions requiring large investments should rely heavily on analytic support to ensure successful use of resources. These decisions should be supported by cutting-edge, sophisticated approaches that will provide robust predictions of outcomes. Smaller decisions with less risk can leverage business insights that incorporate less data with existing knowledge and experience. We would always encourage some level of data support when available, but this should not be a requirement for taking action when little risk is at stake. Not only will this approach speed up decision making, but it will free up your analytic resources to work on the big-impact priorities.
Summary
By striking a balance of analytic need and business outcomes you can gain support for data-driven analytics in your organization. Understanding when analytics should drive business decisions and when analytics shouldsupport business decisions will help your organization prioritize appropriately and ensure successful implementation. In the next week's article, we will highlight specific actions you can use to build a corporate culture for analytic impact in your organization.
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