Analytics Competency Center

28 09 2009

We spend a lot of time on Business Intelligence, Master Data Management, Data Governance, Standardization, off-shoring, etc., yet I rarely hear organizations spending time and energy on analyzing the data.  We have cubes, we can do all sorts of things with reports and dashboards, yet I still hear people say “I need more information!”

It is impossible that we are short on data!

  • How then are we not getting enough information out to the organization?
  • Is it possible that we are spending all of our time and energy on data preparation and data movement?
  • Are we creating value, or just planning to create value?
  • What about creating a center of excellence around the business user?
  • Or something around the levers of the business?




Survival and Adaptability – Hot Arple Pie

20 09 2009

I noticed an ad today absolutely worth noting…it simply and succinctly said:  “Does your marketing suck?”

At first I was shocked and appalled, but the more I looked at it I found myself compelled to click on the ad.  Who in there right mind would start an ad that way – probably someone willing to try something different.

It also jostled an old memory from one of marketing professors about a similar incident.  As he was driving to a client one day he passed a sign that said “Hot Arple Pie.”  He knew it was an apple pie, and was not really all that interested in apple pie, yet the sign got him thinking enough that he turned around to actually see if it was “apple” or “arple.”  And as you guessed it, 30 miles and one sale later and it was confirmed “Hot Apple Pie.”  And 20 years later, I am still thinking about “Arple Pie”

So back to “Does your marketing suck?”  It was catchy, adversarial, and in the end it moved me from unknowing to slightly informed. Perhaps in this case, the ends certainly justified the means.

Take a look at your marketing material:

  • Does it intrigue?
  • Does it invite action?
  • Is it any different than your competition’s?
  • When was the last time you changed up your marketing campaings, slogans, taglines, etc?
  • Can you afford for your programs to perform at the rate they are performing?
  • Would you consider your company competitive in terms of adaptability?

Interestingly enough, once I clicked on the ad I was taken to the company’s home page where I found a great quote:

“It is not the strongest species that survives,

nor the most intelligent;

but rather the most adaptable to change.”

Charles Darwin





The Spandex Rule

8 09 2009

“Because you can doesn’t mean you should” (unknown source)

While this is a little entertaining, it actually makes a great deal of business sense.  All too often we do things we should not do – and sometimes we did it just because we could or we wanted to.  Hope is not an effective strategy, and willingness should not be misplaced for must.

What we need to do is understand strategic gaps, and build out solid plans to close them.  We need to create a process to identify performance issues early in the cycle and put initiatives in place to fix them.  We also need to understand the core processes in our organization that create customer value and work tirelessly to improve them.





Perceived Value

2 09 2009

As leaders and managers we are trained to think of employees in terms of financial value.  We give financial rewards based ideally on merit and performance.  Unfortunately, we don’t use often enough other types of rewards for motivation and morale.

I have two young children who do not yet demonstrate much grasp of financial matters.  We offered them an allowance in an attempt to motivate routine and good behavior. While we understand the value, neither kid  asked for their allowance in the last year since it was initiated.  Clearly, it is not a motivational tool for our children right now.

Both kids, however, love hockey. My youngest often lets me know she does not have as many hockey cards as her “brudder” and her brother often defaults to creating quiet games with those same cards.  It seems only natural to use the cards as a motivational device.  We will have to see how it plays out, but a couple of days in I can already see a marked difference.  What are the financial tradeoffs – the hockey card budget is about 50% of what I would spend on allowance.

  • When was the last time you created a “pat on the back” program?
  • Could you do something different to motivate project completion?
  • When was the last time you walked around the organization with $100 bills and randomly rewarded people doing the right thing?




Survival of Innovation

31 08 2009

In 1988 Pinnacle Brands broke into the baseball card market.  The market had long been dominated by a couple of players (Topps,  Donruss, and Fleer) and the market was doing fairly well.  It catapulted onto the scene by throwing in new features to the market, more colorful cards, full edge bleeds, more information, etc with their Score brand.  Over time they added in brand variations that were targeted at very specific markets:

  • Score:  Lower price point, more kid friendly
  • Select:  Mid price point, geared for the beginning collector
  • Pinnacle:  Higher price point for the more serious collector

If you followed the baseball card market at that time you will remember it as a rather unique time.  It was perfect example for economists.  The value of each card, pack, box was independently valued by third parties.  Card shops popped up in nearly every neighborhood to trade cards, and serious collectors were following the distribution trucks buying entire cases at a time before they even hit the shelves.  The catch was that you could not make all the cards you wanted.  The more you made the less you sold, and vice versa.

One of the main things that happened was the wrong sales mentality.  What made them successful, new  innovation, also hurt them.  They tried to stack the cards to the ceiling and create a consumer good mentality, not realizing the principal that the card would really only sell if they kept product very limited.

Hindsight being perfect (still a good lesson none the less) they should have kept production runs low, elevating the brand and looked for other ways to extend the brand.  As a last change, they started to get into other types of cards.  I think in the beginning they had the brains to come up with demand creation card games like today’s Pokeman genre.

Upper Deck came along in the same year and appears to be the leader in the field today.  Usually someone is going to survive, are you doing everything you can to make sure it is you?





Baseball is life…

13 08 2009

A while back I wrote a blog about the similarities of a little league baseball team and how we conduct meetings.   In that blog I talked about meeting effectiveness and preparedness.  A similar story can be told about projects…

One of my favorite kids on my team loves to be involved.  In fact, too much so.  No matter where he is or what the situation, he will call for the ball.  If he is in left field, with nobody on base, he will call for the ball as soon as someone picks it up.  While at this age it invokes a smile from most (except the kid who responds, only to be embarrassed they made the wrong play).  It is impossible not to love the kid, he is always smiling and truly loves playing baseball.

This also is not unlike how we choose projects/initiatives, or who leads them.  We typically choose the most spirited person in the room, people we like, or people who will do what is in our personal best interest.

  • How often do we choose the best person for the role?
  • What happens to the dissenting opinion?
  • What happens to the person with the dissenting opinion?
  • How often do your projects provide concrete value within a desired timeframe?
  • Do you put differing opinions on the team specifically to see what happens?
  • How often do you throw a ball to left field because someone yelled for you?




People, Process, and Technology

12 08 2009

In every BI vendor’s marketing material is the traditional People, Process, Technology venn diagram.  The promise is that leveraging the combination of the three will unlock enhanced results.

Traditional Venn

In order to use this for performance management, we need to rethink the original deisgn.  First we need a vision on how to bring these together and communicate what matters and how it will be done.  We also need to bring a focus on getting only the right things done and specifically not doing the wrong things.  Words (and diagrams) do little in terms of actions.  For us to achieve sustained performance, we need to understand and communicate which processes can create value (and which do not), what technology it will require, and a focused management process to ensure they get done in a timely manner.

Venn New

As you design your game plans, you need to make sure you are developing not only a plan but how success will be defined:

  • What is the desired outcome?
  • Who gets to define it?
  • How will it be managed?
  • What happens if it goes wrong?
  • Who would provide the best rational for the disenting opinion?




Perfection to Value

16 07 2009

One of the areas where performance takes a giant hit is in the area of project initiaition or closure.  And this is further complicated by personal preferences, politicing, and portfolio management.

In the diagram below there are three lines.  Line A is Corporate or Organization expectation of the trade off between speed and perfection.  Projects or tasks with little value (lower left corner) should require lower expectations of research, analytical thought, and discussion.  While projects that are higher in value (farther up to the right) should have higher expectations on quality of thought and preparation.

Perfection to Value Trends2

What happens all too often is we see line C where people don’t have the capacity or time to do the right job and throw something together.  We see that in the end we deliver far less than desired while wasting resources.  The small blue box is the value received, the red box is the wasted resources, and the green box was the original expected value of the project.  The arc is the value frontier, which demonstrates the trade off value between speed and quantity – or what we expect in terms value created from a combination of speed and quality.

Quality vs Speed - Speed

Or we have line B where we basically have a failure to launch because we spend all of our time debating how to be perfect.  Very similar to the situation with line C where we deliver far less than originally desired while wasting similar resources.

Quality vs Speed - Quality

Portfolio Management

Is this an individual issue, or a management issue?  If we were to plot out the results of the individual projects how would your organization look?

Perfection to Value Management2

If we were to see trends like the circles above, this would indicate a management problem.  As management either did not get the individual(s) to move back to the expected line, or management places to high a premium on either speed or perfection thus artificially altering expecations.

What I have witnessed is that line B is more often the norm.  Line C typically causes painful exposure, which causes people to be more fearful, thus needing more inputs and more support.  This creates more meetings, more approvals, more time, more people, which again causes more information, more analysis, more debate.  It is a vicious circle.

Failure to Act is a companion blog.





Pretty Words

15 07 2009

Listening to Sonia Sotomayor retrack her “wise Latina” comments made me think about an old Vince Gill song – Pretty Words.  “They’re just pretty words” seemed about right.  This is often the role of the politician, to say things that make people feel better.  We have limited manner in which to hold them to their words, so we often judge the words based on if we believed what they were saying.  Think of how we now perceive Roger Clemens, Alex “A-Rod” Rodriguez, and the steroid gang.

One of the problems we have as leaders is an overuse of pretty words.  We are often asked questions that can not be answered at that time, thus forcing us to spin a response:

  • Are we having layoffs?
  • Are we selling the company?

While these hurt credibility with the front line, they are necessary to keep some level of sanity and productivity.  Yet, what happens when executive communication seems to be only about spin and pretty words.  If the rank and file feel “pretty words is all he is giving you” then we have a problem with communication and trust.  If these are broken, you can bet productivity is no where near optimal levels.

As executives and leaders we can know, or we can think we know if people are listening.  What I have often seen is that the good ones assume they don’t know and find out – thus reinforcing positive communication.

  • When was the last time you had an outside, independent team assess “trust” in the organization?
  • What would be the value to the organization?
  • What if you hear something you don’t like?




Practice

10 06 2009

On of my favorite hobbies is coaching little league baseball.  During a game last year it hit me that many meetings are run in a similar manner.  Pardon me for the comparision, but the similarities can provide a little humor at a process that all too often needs improvement.

As I watched, I noticed I had three outfielders playing in the dirt, my third baseman had one foot in foul territory, and my second baseman was standing on second base.  I also had a few players that were ready, on their toes, and prepared.

  • How often at your meetings do you have the back of their room paying sporadic attention while most of their focus is either on their laptop or blackberry?
  • How many people do you have playing by their own rules?
  • What percent of the room is prepared and actively participating in the meeting?

As a coach, we know we need a game plan.  Yet often we “wing it” because of experience and love for the game.   Sometimes this works, and sometimes not-so-much.

During practice, we can move people into groups of like needs and work at different speeds to excel learning (or at least repetition).  We can redo things as many times as necessary.  We can freely move people into different positions.

We have the luxury of a practice schedule – organizations and managers do not.  They have to learn while doing.  They do not get trophies for participation.  We need our people to be prepared and active in a meeting or else we are not maximizing our use of time.

If the meeting is to understand a performance issue, then we need to have someone write up the issue and send a brief summary to the team.  We need the rest of the team to have read the brief, done their relevant research, and prepared a list of potential recommendations to discuss.  The meeting should not be about discussing what research needs to be done – it should be about looking at the research and agreeing upon a course of action.





Why, Ask Why

1 06 2009

I recently watched the 2005 documentary Enron: The smartest guy in the room.  What struck me more this time was the tagline “Ask Why”, yet it appeared more like “Why, Ask Why” in the animation.  

Most organizations promote “yes” men and women.  They want people to just agree and move on.  Part of this is that we lack a mechanism to challenge conventional wisdom or leadership opinion.  While this is dangerous on a few levels, it also stiffles innovation and ultimately performance potential.

  • When was the last time you found a new way to value a customer?
  • When was the last time you found a way to measure process improvement on a key process?
  • When was the last time you specifically assigned a trusted advisor to attack business assumptions?
  • What happened to the last really good change agent in the organization?

All to often we answer requests with “yes, we can do that” when we should on occasion ask “why do you want to do that.” We need to break old molds and challenge ourselves to create a culture of action, a culture of 5% better everyday.





Focus on Operational Performance Management

26 05 2009

When was the last time you discussed how your customers were performing?  Do you have a formula to determine their lifetime revenue potential?  And what it costs to serve them?  Does this determine how you segment and market to your customers?  Do your sales people use this value as a tool in the negotiation of price?

Basically how do you manage customer performance?

One of my clients was a credit card processing shop and what we found was that they were spending $4 for every $1 they were collecting from bad debts.  While it was not the whole story, it was evident that we needed to better understand the customer lifecycle.  This client did have specific marketing programs and processes, but they had not been challenged in quite some time and were common industry practices.  

What we find out when we look at commonly held beliefs is that their assumptions are no longer (if they ever were) valid.  We get into a groove of momentum that we find difficult to change our beliefs and behaviors.  We also lack a mechanism and the focus to understand which processes to look at.  One of the most critical to me is around customer performance.  

Ask yourself if you know which customers are driving profits and which are destroying them?  If not, this might be the best place to start thinking about improving insight and process improvement.





Manage vs. Monitor

21 05 2009

It has always struck me as a little odd that a great deal of marketing literature in the Business Intelligence and Performance Management space talks about “monitoring” performance.  Isn’t the entire goal of this space to help companies actively “manage” their business.  My concern is that “monitoring” assumes that all is well unless some alarm is triggered.  

While it is fine for the thermastat to monitor temperature, perhaps business is a tad more complex.  Instead of waiting for things to get to a threshhold, we need to understand a number of things that all work more or less together to explain a more complex concept.  

Instead of just showing up for a meeting, what if we focus on creating a culture of being prepared for a meeting.  We can then use Business Intelligence as a organized and focused set of tools to help with our prep work.





Relevance and Context

20 05 2009

With times a little tight these days, BI projects need to be more focused.  While there are a number of ways to do this, starting with very specific briefing books targeted at a management process or a departmental data mart, think about using relevance and context.  Don’t just recreate the hundreds and thousands of reports that have been created before, use new money to rethink old ways.

For example, compare a Google search versus the WolframAlpha search engine.  Reporting environments can often look like a Google search list – while there is some relationship, there may not be much relevance.   I may have to search around quite a bit to find what I need.  Enter the WolframAlpha search, it requires the user to provide appropriate context.  With the right context, Walfram works wonderfully, without it, not so much.  It only does what it was designed to do.

Like BI tools, each search engine is designed to do different things.   By training the users to use the right tool with the right context you have a greater chance to provide people with the information they need to make decisions.  You would not ask the same business questions to cubes, reports, dashboards, scorecards, etc.

 

And yes, perhaps I did force the argument so I could say “WolframAlpha.”  And with that said I should probably give a shout out to the folks at Cuil.  





Business Math – Drivers and Levers

28 04 2009

I once listened to the VP of a services business unit describe the levers available to him to drive the business.  Here is his formula.  While I agree with him about the formula, it was clear that we need to understand the difference between levers and drivers.  

old-formula

If these were all just levers, would we not be justified in pulling the levers as quickly and as hard as we can?  If we make a small adjustment to the formula, we can take the argument another step farther.

revised-formula

If we breakdown Average Deal Size into its components of hours and rate, we identify the one item that can probably be used as a short term lever – Rate.  We can lower or raise our rates much easier than the other items.  The other items require longer term programs.  We need to train our sales force on new ways to improve winning percentages and shorten sales cycles.  We need to create marketing programs to find new opportunities.

It is one thing to understand the drivers of the business, but we usually need to build programs around the levers to understand how they impact the business and how/when they should be used.  If we are not actively managing the levers, they are really just mathmatical drivers.





Is a failed action the same as a failure to act?

27 04 2009

Over the weekend, Seth Godin blogged about making timely decisions.  It brought to mind a number of items worth additional discussion.  One of my favorite sayings is “we should do something” when managers are shown a potential issue.  It is usually followed up with a flurry of meetings, too much information, and less than a clear path forward.  While frustrating, it became clear over time that we often lack a process to consider, debate, and ultimately put ad-hoc course corrrections into action.  It was also appearant that we suffer from a culture that uses information overload to decline action based on the need for additional information.

To make a little more sense of it, here is a two by two grid that shows the risk and rewards of whether action was created and whether it was correct or not.  The goal of this was to highlight perhaps the personal motivations behind action or lack thereof.

the-risk-of-action2

Creating action is more likely to cause the extremes in risk versus reward, while delaying or taking no action is often the safer route.  While companies need to take risks to lead within the market, employees may not have the same motivations.  Is the potential for a promotion, worth the risk of falling out of favor?  Do we, as company policy, reward action financially?  Is a failed action the same as a failure to act?





Complexity

21 04 2009

Think of all the complexity we have created as organizations. Whether data, process, people, and of course politics. We time stamp everything we can, we empire build, we work in silos, we do things to do things. Or even worse, we do the things that are easy, or that we like to do. And because of all this complexity there is no way to identify that those activities aren’t helping.

As a company or organization grows, this continues to add to the complexity. We get further and further away from understanding what creates value.

  • What would happen if we started to unravel the organizations complexity?
  • What if we created a new type of organizational hierarchy focused on value creation?
  • What would happen if we just focused our efforts on the stuff that matters?




Business Intelligence vs Business Analytics

14 04 2009

There is a growing debate over Business Intelligence vs. Business Analytics and what the future holds.  Clearly the Business Intelligence world has been shaken with Hyperion, Business Objects, and Cognos all now smaller parts of bigger companies.  This has created a number of marketing opportunities for the likes of Microstrategy and SAS.  The obvious marketing play was independence.  Now it is clear that SAS is taking a slightly different tact by claiming that Business Intelligence is dead and the future is Analytics.

Marketing messages aside, what we need to be focusing upon how we use information and the management process.  Call it data, information, intelligence, analytics, or whatever we come up with next, it is all irrelevant if we don’t understand how to use it.  A basement full of great tools doesn’t mean the house remains maintained.  
  • Do you have rules on when to use the specific tools in the BI suite?
  • Do your people have the analytical skills required?
  • Do you have a process where the information can be discussed and actions agreed upon?
We all agree that organizations need to make fact based decisions.  The other thing we should all be working upon is creating a common vernacular for each of the tools.  As analysts, consultants, pundits, bloggers, we do little good if we don’t teach the value of how to use each of the tools.  You don’t need predictive analytics for an exemption report.  You don’t need a sexy looking reports that do little to explain the goal.  Organizations don’t need real time scorecards.  

What organizations do need are ways to make people comfortable to take decisive action.  We also need these actions to align to company goals and strategy.  The tools we use need to be consistent enough for us to trust them, and the minds that analyze them need to be able to use the tools well enough to communicate only what matters in a digestible presentation.





Because you can…doesn’t mean you should

14 04 2009

We do a number of things in the name of business intelligence.  We say we have to have real time information.  We have to have hundreds of reports.  We have to be able to look at everything in every direction.

Business Intelligence software promises us this and make this seem like an achievable goal.  And yes it would be great to know everything about everything and get a perfect 360 degree view of the organization.

Yet it is not really achievable, actually not even close.  Instead ask what are the goals & objectives of the organization, and how does this support that end.  We are very quick to say “we can do that” but we need to temper that with “why should we do that?”  Think of the goal of a dashboard – to providereal-time information on a specific subject.  I have known many managers that constantly stare at the screen to see if anything moved.  

What we really need is to understand how to use the function of time and integrate that into a analytical management process.  What would you get more out of, a tactical dial that shows us one KPI, or a meeting at the end of the day to review a number of KPIs?





Rewards – The “R” in Continuous Improvement

24 03 2009

In continuing to explore a framework for driving sustainable continuous improvement in operational performance management, I’m taking this opportunity to outline the most critical, and often most difficult element of the Expectations-Capabilities-Rewards “ECR” model discussed in a previous entry.

There has been no shortage of press coverage recently about executive compensation. Even before the AIG bonus debacle of late, terms such as “performance pay’ and ‘retention bonuses’ have become a regular part of the business press vernacular. While we can all debate the ethical, moral and logical merits of these compensation practices, when an organization is implementing a performance management system to drive sustainable continuous improvement, the total reward system, not just compensation, is the most critical lever of change.

However, unlike these currently accepted pay practices, particularly in the financial services industry, reward elements within an effective performance management system don’t just translate to paying people more. The crux of an effective reward system is the alignment of rewards, recognition and compensation to the strategic goals of the organization – paying employees for the desired behaviors.

As example of a misalignment of rewards with corporate strategy; a personal experience. In a past role, I joined a $300mm public software company to launch a value-added services business unit. The CEO’s strategy was to transform the company from a hardware & software seller to a services-led solution provider; eventually generating +60% of revenue from services. The CEO was making significant investment throughout the organization in this transformation. However, there was institutional resistance to changing the sales compensation plan in order to drive sales people to focus more on selling these services. While corporate leadership was investing in service capacity, training sales people how to sell services and promoting this new value proposition in the press and to the investment community, sales people had no quota for selling services, received no quota relief and had no bonus kickers for including services in their software deals. The result? The strategy failed. Officially, the executive committee decided to refocus on software licenses, acquiring two other software firms two years later. But it was clear that the refusal to change the incentive comp plan contributed to this failure.

While traditionally the most difficult element to evolve, in order for any change to sustain within an organization, the rewards and recognition system must align with the expectations and strategy in order to drive the desired behavior that results in improvement in the new KPIs.