Analytics is a hot topic. Will it stay hot? Or is it a business improvement fad, like the quality control circles in the 1980s?

My bet is this one is a keeper, for many reasons. A major one is that the obvious low-hanging fruit opportunities have already been picked. One has to be more clever about identifying chances to gain a competitive edge. Another reason is that gut feelings and intuition are no longer sufficient given the complexity involved in managing an enterprise. Fact-based information is needed. Another reason is that computing power, data, and software are now available to dig deeper.

In addition, the margin for decision errors is getting slimmer. In the past, an organization could make a few bad decisions and survive. There was usually enough buffer to get by. In 1985, Coca-Cola survived its ill-fated experiment with New Coke. Two Clairol shampoos, Look of Buttermilk and Touch of Yogurt, were decisively rejected by consumers who did not relate to putting something in their hair that might be food, but the company recovered. And Netflix will likely survive its product pricing reversal based on customer protests.

Those examples are major marketing decisions. However, there are also hundreds, perhaps thousands, of daily decisions being made at many levels within an organization. Enough poor decisions can add up. A McKinsey LLC study stated that 460 companies of the S&P 500 reported at least one annual fiscal loss between 1998 and 2007. They may not all be due to poor operating decisions, but how are we to know without the facts?

Applying analytics is here to stay. But what is needed to effectively apply analytics, aside from the obvious enablers like access to data and software technologies?

How Do Analysts Think?

There are many types of problem solvers. Some can complete crossword puzzles while on a noisy train or bus. Some clerical workers can quickly calculate a few numbers on a scratch pad and voice an answer. The analysts I will describe here are in a different situation. They are tasked with highly complex problems, like identifying which type of customer is most attractive to retain, grow, win back or acquire; they must also determine the optimal deal, offer or discount to do so.

Analysts are savvy. Their approach is that using analytics is often more confirmatory than it is exploratory. To them it is not like trying to find diamonds in a coal mine. They do not always flog the data until it confesses with the truth. They have the option to use software tools to do that, but experienced analysts are more like investigators. They suspect and hypothesize that two or more things are related or that some underlying behavior is driving results seen in their data. They then search for confirmation and understanding of the relationships.

The Value of Solitude

When analysts are engaged in this process they are deep thinkers. This is a virtue that everyone can benefit from. I was inspired about deep thinking by reading a lecture by William Deresiewicz that was delivered to the plebe class at the United States Military Academy at West Point in October 2009. His message was about leadership, but it applies to anyone, especially analysts.

Deresiewicz began his lecture by asking: “What does solitude have to do with leadership? Solitude means being alone, and leadership necessitates the presence of others – the people you’re leading. When we think about leadership in American history we are likely to think of Washington, at the head of an army, or Lincoln, at the head of a nation, or King, at the head of a movement – people with multitudes behind them, looking to them for direction. And when we think of solitude, we are apt to think of Thoreau, a man alone in the woods, keeping a journal and communing with nature in silence.”

Solitude allows one to be alone with their thoughts. Arguably solitude is crucial to carry out the task of leadership as well as analysis. Executives, managers and analysts all need some solitude. It provides them the chance to dig deeper and explore root causes and drivers of outcomes.

Solitude allows leaders to focus on determining lasting improvements and skills that their organizations will need for sustained organizational performance improvement. These include exploiting the emerging practices of business analytics and deploying and integrating enterprise performance management methodologies. These include strategy maps, scorecards, dashboards, risk management, activity-based costing, predictive analytics, rolling financial forecasts and many others.

And solitude allows analysts to think about solving a problem from different angles. They can ask questions of the data that can lead to more and better questions. Ultimately, analytics can answer their questions.

What Do Analysts Require?

The basic requirements of analysts are easy and flexible access to data and the ability to manipulate it. People in the IT department who do not recognize this and act more like gatekeepers hinder analysts from realizing their full potential in solving problems and facilitating better decisions.

Once these needs are met, all analysts really need is a work environment that provides solitude for deep thinking and managers who will create and protect such an environment. 

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