Analytics warning: what you don't know could be harming your business more than you think
A post by Timo Elliot over on the Forbes blogging community posits that we have a tendency to be overoptimistic on our abilities. For instance, 93% of Americans think they have above-average driving skills.
This notion of our egos over-inflating our perceptions of our abilities carries over into the business world: many successful executives have similarly high opinions of their decision making skills and 'hence under-invest in fact-based systems and processes that could help us correct our misperception'. The systems Timo is talking about here are business analytics and business intelligence systems.
Now if this is the case, there would be space for competitive advantage by those execs who put trust in these systems when it comes to making business decisions. And yes, in fact this is exactly the finding of a recent study conducted by IBM and MIT Sloan Management. Here is the bottom line:
Top performing companies are three times more likely to be leading users of analytics.
So the companies that are using analytics have a tendency to perform well in their segments. Michael S. Hopkins, editor-in-chief, MIT Sloan Management Review goes even further and suggests that these top performing companies are reaching to further their use of analytics:
"Interestingly, the top performers also turn out to be the organizations most focused on improving their use of analytics and data, despite the fact that they're already ahead of the adoption curve."
If you are not in this top-performing coterie, beware. These are the companies that also stand to widen that gap in their performance against that of their non-analytics-based competition.
When it comes to implementation of business analytics, Timo's post talks about sharing information and decision-making as widely as possible (garnering the 'wisdom of the crowd'). We are seeing this feature creep into the latest generation of business intelligence tools. For instance, IBM Cognos has added social networking to the latest version of the flagship product. Although, as Timo points out, there needs to be organizational as well as technological change for this to be effective.
The IBM/MIT study offers further advice on rolling out business analytics solutions, such as tackling the biggest obstacles first. For instance, in the online marketing space, you may want to concentrate on implementing analytics on your largest marketing channel, or on the part of your website that receives the most traffic.
You should also determine first what insights you are after, and then figure out which data you need to help you to get to the answers. Again, in the field of marketing (you may have guessed this is my comfort zone), questions could be 'What pages on the site normally lead to sales?' or 'What frequency of email nurturing works best?'. A good vendor should be able to help you frame the questions and get to the meaningful data - don't be afraid to ask: 'what should I be measuring'.