June 22, 2010 | By Rey Villar
Virtually all corporate strategies and changes in the past few years have identified one essential ingredient to creating a durable, multi-faceted capability that outperforms others in the market: analytics. In other words, using quantitative information to augment management judgment that increases the success rate of “doing what you say you are going to do.” The information for analytics comes from many sources: market research, your manufacturing systems, your customer management systems. These are all great starting points.
Analytics are embedded in the management mix. So what is analytics? It’s the organizational capability to create and use quantified information to guide business decisions. Sometimes analytics are financial numbers, sometimes customer numbers, sometimes employee numbers. Often analytics are numbers about the past, and increasingly they are numbers predicting the future. Ideally, analytics are numbers that present a “whole view” of your customers and business. Often analytics are about using big numbers that help you understand changing trends. Sometimes, as in Thomas Davenport’s popular book Analytics at Work: Smarter Decisions, Better Results, it’s about using analytics every day.
Still, some people tell me that analytics is nothing new. They have had their operational reports, management reports, sales reports, and sales forecasts for years. Numbers cannot tell the whole story. Where’s the so what?
Here’s where the rise of agility comes into play. With today’s technologies and implementation approaches, we can finally match the business need for velocity and flexibility. Many in the industry are still holding onto the old notion that everything has to be perfect, that all information in the company has to be in one place in order to power analytics properly. Some say you have to buy big boxes and expensive software.
This has not worked and will never work. Why? Because creating an agile analytics capability will never involve a silver bullet. It’s about tailoring layers of business and technology together, layer after layer, in order to achieve the right mix. New technologies such as cloud computing, or new software technologies such as data virtualization, or portal management applications, or new implementation approaches allow you to create the world differently and on a different timescale. It allows you to tap into larger economies of scale that cannot and never will be achieved by a single company alone.
I have helped organizations grow and be successful by doing exactly this. It’s like creating an interwoven fabric of thoughtful elements to make a durable, flexible material of success. Some technology vendors talk about real-time analytics, some talk about operational BI, some talk about predictive analytics, and some talk about data warehouse appliances. These are all just specific examples of “analytical styles.” Some firms are dominated by a single style. Consumer web vendors like Amazon or Google come to mind. However, most companies need a mix of styles – and mixing styles means mixing tools and techniques that complement and fit the business need. Successful organizations start with target customer segments and industry structures, and then work backwards to configure themselves to meet market needs at an optimal profit point. Declaring that one-size-fits-all flies completely in the face of decades worth of research and business results that indicate that levels of segmentation is a better way to achieve focused outcomes.
An agile business is about identifying the optimal mix of styles to jointly weave together business and technology. Then, configuring these style layers to manage your costs and meet other constraints. There is no perfect answer, and the right mix changes over time. An agile organization can adjust. It can deliver on timescales that keep the business fresh and technology relevant. It can meet business needs with greater precision and timeliness. It allows business leaders to commit to results and hit them reliably.
The world changes daily. The agility-enabled business can help you change with it. In a future blog, we’ll talk about common traits of an analytically enabled, agile company.