The Insights Driven Organization puts data and analytics front and center in its business strategy and throughout all echelons, whereby every decision is based on insights derived from data and models. At BearingPoint we believe that this big challenge should be tackled with small steps, starting with a pragmatic value driven approach in a specific department or team and expanding outwards towards that visionary enterprise you are dreaming of. However, this process can have many pitfalls if it is not started with the end in mind.
“Data is the new gold”, “Data is the new oil”, “Data is the new <pick your favorite raw material>”. These phrases have a nice ring to them and there is certainly a bit of truth in there. Data can be extremely valuable, but before this value is unlocked, several processing steps must be taken, comparable with raw materials. What is wrong about this analogy, is that it suggests that data is the starting point of the value chain. It is not.
Let us have a look at a typical data analysis implementation process, for example to gain more insight in the current customer base (a vague goal, which can be a problem in its own right). The starting point is to collect customer data. Next this data is fed into an analysis, e.g. clustering, to get insight in the behavior of different groups of customers. Based on these insights action can be taken and hopefully value can be created (see figure 1). This linear approach from data to value feels natural and will certainly deliver value in some cases, but in fact skips over roughly half of the process. Consequently, questions that are not asked are analyzed, just because the data allows it. Or conversely, questions that do need answering, are not analyzed, because the (current) data cannot answer them.
Figure 1: The typically applied linear process from data to value
The way to guarantee that analyses match the actual business needs and thus the way to guarantee value makes so much sense that it is hard to think in terms of the linear process once you are familiar with it. The trick is to start the process at the desired result (see figure 2). “Begin with the end in mind” as Covey taught us. The starting point then is to determine what the desired outcome is in terms of business value. Next is to determine what action is required to reach the desired outcome and what insight is required for this action. This then leads to the choice for a particular analysis and the accompanying data requirements. Only then does the linear process kick in with data collection, analysis, insights gathering, action and eventually value creation.
Figure 2: The process to gain optimal value from data and analytics, starting with the end in mind
Several incomplete versions of the process in figure 2 are commonly found in organizations. The two most common are “start from the data” and “gain insights”. “Start from the data” is the option already mentioned earlier, where only steps 6 till 10 are executed and one can only hope that actual value is created. “Gain insights” is the option where the question is to gather insight, without specifying which actions can be taken based on this insight, so only steps 3 till 8. With this approach the very real possibility is that the new insight does not allow for any action rendering the insight effectively useless.
By meticulously following all ten steps of the process, it is no longer a matter of luck that an analysis or model returns value, it is guaranteed from the start. Obviously, the true value for an organization is to use this approach repeatedly and as part of the standard way of addressing business problems. As more and more value driven use cases are implemented, more and more synergies in terms of input data, intermediate analysis outcomes and actions will pop-up, thereby amplifying the effectiveness of this approach.
Although a significant step in the right direction, the value driven approach is only part of what is needed to really become an insight driven organization. Another aspect of major importance is to establish knowledge and competencies with the right people. Curious why this is essential in becoming insights driven? Keep an eye out for our next article!
BearingPoint uses its knowledge and experience as well as best practices when helping clients setting-up their Insights Driven Organization. Talk to our experts to see how we can help you becoming a visionary enterprise.
Manager People & Strategy
Service Line Leader Data & Analytics