In our practice I’m often asked by clients, a seemingly aspirational question regarding the development of analytics capabilities. The question usually goes something like; “…we have all of this data and I know we could be getting more value from it; but how? Or, “…what kind of data science capability do I need to build; who do I need to hire; what tools should I get and how much will it cost me”.
Questions like these stem from the very valid premise that data holds the key to greater leverage in the profit-making machinery of an enterprise.
My 30+ years in the “data business”, in many cases working alongside some very forward-thinking data scientists in the application of analytical strategies to commerce, has helped me develop a business-first approach to building and managing the internal capabilities needed to support such an endeavor. Whether you’re challenged with how to profitably acquire new customers, improve customer satisfaction or more fundamentally grow profits, data analytics IS a vital advantage that many growing enterprises fail to fully exploit, if at all.
But here’s the twist; you likely don’t need to build an analytics superstructure or outsource analytics capabilities at a high price tag…at least, not yet. Instead a fundamental, perhaps rather mundane, investment in strategic thinking with a focus on operational processes and a little guidance from a strategic analytics professional may provide a more immediate return at a relatively low investment.
For the growing enterprise, we typically see a common roadmap that successfully lays the groundwork and subsequently yields results that often produce game-changing value, namely:
- Clarify enterprise objectives. This may seem like a no-brainer; but, are you sure that the stake-holders in the organization are aligned as to what you are trying to achieve? Profit? Market share? Growth? Customer satisfaction? Or some combination? In the pursuit of the power of data and analytics, false-starts that result from poorly formed objectives are costly and frequently undermine the success of the effort.
- Brainstorm and identify the operational levers that are critical to the enterprise’s objectives. While it is imperative to maintain objectivity (what you think are key drivers to the business may be different from what the data will tell us); nevertheless, it is crucial to surface the insights locked away in the domain knowledge possessed by your team. Ask basic questions like: “How do we make money? “. While answering, consider the “transaction chain” from the initial investment in product development and/or marketing expenditure through the acquisition of customers, re-purchasing, product shipments, service delivery, payments and so forth.
- Do not underestimate the importance of data hygiene. Be prepared to invest time in evaluating the credibility of your existing data. This is often an effort that requires rolling up one’s sleeves and diving in. I recall working with an $800 million direct-to-consumer business that found itself stuck in a rat’s nest of untrusted data that was otherwise the key to its survival. With transactional and demographic data for some 10 million customers, understanding the trustworthiness of the data would not be an easy task. The effort required several weeks of sampling, manually scrutinizing and testing assumptions before repeating the process over and over again until we were confident that we understood where the data was reliable and perhaps where it needed fixing.
- While you’re at, shore up data handling practices. As you wrap up your data hygiene effort, it’s a good time to establish data handling practices for your front-line teams that protect the integrity of your data going forward.
- Explore your data, look for patterns, form your own hypotheses and test them. There are certainly tools and expertise that can help with this; but, this need not be a grand and expensive undertaking. The key is to stay focused on pragmatic solutions that address your stated objectives and to not be seduced by the allure of seemingly sophisticated and esoteric concepts.
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