I read a very interesting article from HBR, April 2012 issue. Shvetank Shah, Andrew Horne and Jaime Capella wrote an article about how good data won’t guarantee good decisions and most companies have too few analytics-savvy worker. If you are not able read that excellent article from HBR, here is a couple of points from it.
We have already discussed in this group about the new era of decision-making and importance of customer insight. Ability to collect, store and analyze the big data has grown explosively and companies spend a lot of money analyzing customer data. BUT. And this is a big but although you have the best BI tools ever but if your organization cannot capitalize it the investments are useless. Like Shah, Horne and Capella stated in the article: ”For all the breathless promises about the return on investment in Big Data, however, companies face a challenge. Investments in analytics can be useless, even harmful, unless employees can incorporate that data into complex decision-making. At this very moment, there’s an odds-on chance that someone in your organization is making a poor decision on the basis of the information that was enormously expensive to collect”
Shah, Horne and Canella created Insight IQ, method that asses the ability to find and analyze relevant information. They evaluate 5000 companies from 22 countries. The founding’s were interesting. Three groups were found: ”unquestioning empiricists”, visceral decision makers” and ”informed skeptics”
Companies are seeking for ”informed skeptics”. They are data-savvy workers who are able to make good decisions. They have strong analytic skills, ability to balance judgment and analysis. However, the study found that only 38% of employees and 50 % of senior managers fall into this group.
Shah, Horne and Canella identified four problems that prevent organizations from realizing better ROI in Big Data:
- Analytic skills are concentrated in too few employees
- IT needs to spend more time on the “I” and less on the “T”
- Reliable information exist, but it’s hard to find
- Business executives don’t manage information as well as they manage talent, capital and brand
Well, how to develop more informed skeptics? It demands constant competence development to increase data literacy and join information into decision-making. And of course, organizations have to give the right tools for analyzing the data. Ongoing coaching is essential and formalizing the decision-making process based on data and information. Shah, Horne and Capella stated that “many of the best data-driven cultures have formalized the decision-making process, setting up standard rules so that employees can get and correctly use the most appropriate data. Companies should make performance metrics transparent and embed the in job goals. They should also make sure that compensation systems reward dialogue and dissent. Great decisions often need diverse contributions, challenges, and second-guessing”.
Tiffany and BCBSNC are the great example of companies who have shown growing awareness of the pay-offs from Big Data and data literacy.
Is your organization underinvested in understanding the information and maximize Big Data ROI?
Source: Harvard Business Review April 2012,
Article: Good Data Won’t Guarantee Good Decisions
Writers: Shvetank Shah who leads the information technology practice at Corporate Executive Board, Andrew Horne and Jaime Capella, who anre managing directors at Corporate Executive Board