The key to good strategy is good insights which are derived from good analysis. As the concept of big data has moved from innovative to the business mainstream, analytics have become the new buzz word and seems to be every company’s favorite adjective.
The issue with this is the breadth of how the term is used.
In looking at the types of work being described we can identify four distinct stages of analytics:
Stage 1 Technical: This is the entry level of data analysis. It is simply the ability to pull data together. This is a technical level where the analyst uses their skills to collect and/or extract data to output a dataset or set of charts and graphs.
Stage 2 Sourcing: In this stage the individual works from a business question and determines the information requirements to address the question. There is a connection between needs and resources required.
Stage 3 Insights: This is the first substantial jump between analytical stages. This is the point where insights are first identified. This stage relies less on technical abilities and more on the ability to develop conclusions as to what the data means.
Stage 4 Strategic: The key to competing with analytics is not just uncovering insights but more importantly knowing what to do with them. Turning insights into actions requires an understanding of the data, conclusions and the business environment it operates in. Just as the jump from stage two to three is large; reaching the fourth stage is just as great, if not greater.
As the analytical environment evolves yesterday’s advantages becomes today’s cost of doing business. Therefore analytics must evolve from tactical to strategic. Namely, where analytics are implemented and how they are executed.
Analytics are no longer about an annual marketing mix project that arrives at a single ROI number. Thoughtful consideration must be given in identifying areas throughout the organization where better insights can drive better business results. With an expanded view of where and how to use insights to support business performance the implementation must be top down.
The concept of top down has two meanings. It refers to the need for executive sponsorship from the highest levels. Companies should refrain from thinking that analytics is a cost but rather a competitive advantage and a necessity. It is a cultural mindset and like all other elements of culture it comes from the top down.
The other aspect of top down is even more literal. It refers to the need in building analytical capabilities from the highest level of senior management downwards. The fastest way to analytical failure is to test the waters with stage one and two resources without guidance and experience of a stage four leader. This is the equivalent of hiring the sales coordinator before you have a sales manager.
The genie is out of the bottle and there is no getting it back in. For those who embrace the idea of better business through better insights they will be the genie’s master and granted three wishes. The first two wishes can be used to ask for sales and profitability growth. The third wish can be used to ask for three more wishes because, for companies that are founded on analytics and insights the possibilities are endless.
Eric Talbot is with Epiphany Insights, a marketing analytics consultancy helping companies increase sales and profitability by advancing the use of data and insights via evidence-based decision making. Prior to Epiphany Insights, he was VP of Strategy & Insights with Univision and is a healthcare industry veteran with nearly 20 years of consulting experience.