The emerging role of the analyst…

6 10 2011

A few days ago, I wrote about the analyst function being dead, which spurred conversations about the emergence of a new breed of analysts. Organizations, with all of their investment in data capture, data generation, and business intelligence, still struggle to use data effectively to make decisions. With the explosion of data over the last couple of decades, the analyst moved away from business and morphed into an IT role.  The role became more about writing business requirements and providing reports than understanding data and helping the organization digest meaning from it.

Now the analyst needs to move back to a business role, but with more of a mathematics and statistics background.  They have to be curious about improving the business and have the acumen to do it.  They need to know how to blend traditional data with today’s non-traditional data feeds from blogs, social media, video, etc.  The value of the analyst is back in creating business value through relevance, context, and timeliness.

To achieve this, the emerging role of the analyst requires a new skill set and must:

  • Understand how to derive information out of data and present it in business terms – this is perhaps the most important of all of the new skills.  The analyst must be able to take a tremendous amount of information and coalesce that information into business terms leading to action.
  • Integrate various types of information – as data is coming from all different places and in new forms, it is increasingly important to understand how and when to leverage potentially rich data, and decipher what is irrelevant quickly.
  • Design problems with various concepts – the analyst needs a consultative style in which different models are applied to solve ever more complex issues.
  • Use technology – with Business Intelligence, Planning, and Predictive Analytic style software becoming easier to use, the analyst needs to know not only how to use these tools, but when to use them.
  • Delegate – traditionally the analyst needed to do everything.  Now as technology, data sources, and businesses have become more diverse, the analyst needs to know how to farm out some of the analytics to specific expertise at the right time, guide the project, and integrate the results.

The analyst also needs to transform informational projects into a process where requests for information are appropriately managed. This includes breaking down information into four areas: persistent information or basic reporting of facts on a regular timeframe; performance measures that have higher level KPIs; problem analysis; and data exploration.

Gone are the days where the analyst was a report writer, spending too much time on data acquisition.  They must now know how to enhance data to get more out of it in a timely and fashion and present that back to the business in a manner that drives value creation.

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Categories : Analytics, Analytics & Business Intelligence, Customer Value

When More is much, much Less

2 08 2011

Recently I was cleaning up my Gmail inbox and it was clear to me that some people treat email like free marketing.  For example, Dick’s Sporting Goods was sending me 3-4 emails a week.  While I shop at Dick’s Sporting Goods and like the brand, it was very clear to me that they really weren’t paying attention.  My lack of response, nor opening of any emails should have been a trigger to them.  More was much, much less.  They were not alone, but one of the worst examples of over-communication.

Thoughts for email marketing:

  • Use the information effectively.  Not only have I asked them to stop emailing me all together, they have hurt their brand standing with me.
  • Test your campaigns.  Because they are free doesn’t mean everyone should get everything.  That’s just laziness.  There are too many tools out there not to be able to do some type of segmentation based upon gender, usage patterns, social, and economic demographics.
  • Learn! This is probably the most important aspect.  If a customer gives you their email address, then treat it like a valuable asset and learn from it.  It is not a resource to be used up.  Offer different things at different times, send emails in different patterns, send different offers and test the response.  And if they don’t respond to anything, pull back and wait.

I know this sounds way too obvious, but here is an example from someone with the size and clout to know better.  Chances are your marketing organization is overusing their free marketing channel and just don’t know it yet.  Go ask them for an analysis of how many emails are being sent out to each customer segment each week.  Ask them how often they clean up their contact list to trim out people who have never responded. And wait for the dreaded, “we don’t want to skip anyone in case this is the campaign that will get their attention.”  Trust me, there is a breaking point.


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Categories : Actionable Information, Analytics, Analytics & Business Intelligence, Communication, Customer Value

Strategy & Operational Performance Management Survey

21 07 2011

If you have a moment, take a few seconds to fill out a survey.  I’ll post some of the more relevant survey results here over time. Basically 7 questions and a place to fill in your answer if you want to share more.

Link to survey


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Categories : Communication, Culture of Action, Customer Value, Environmental Scan, Operational Performance Management, Performance Management, Strategy Management

Simon Sinek & the Golden Circle

11 07 2011

The RIM letter to BGR referenced a video from Simon Sinek on TED.  While I think he makes an incredibly difficult task seem a little too easy, I think he certainly raises some interesting questions.  He talks about the Gold Circle, how we market the what instead of the why.

Execution is far more difficult than transforming the marketing message from the “What we do” to the “why we do it”, it is more about leadership and a unique focus on the customer that is not easily replicated.

Anyway, here is the video….


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Obesity in the US

29 04 2011

This is again perhaps a little off topic for me, but it does pose some really interesting strategic points for consideration…

The cigarette of today’s generation is fast food, sodas, and poor eating habits in general.  Obesity in the US is projected to be about 20% of our annual health spending – or roughly $350 billion (USA Today) by 2018.  This means the number will double from 10% of the spending to 20% by 2018.  Food related deaths account for more than half of our causes of death (CDC) and we focus very little attention to it.  And for the first time in decades the US life expectancy is projected to decline by 5 years (National Institute of Health) with this generation.

So from the viewpoint of Strategy, this poses a wild number of potentials.  Depending upon your industry this either opens you to a tremendous opportunity, or a concerning level of risk.

Opportunities:

  • Food industry – being an early mover to healthier versions of your food may attract more customers
  • Education – providing content for school, churches, communities, etc may open more doors for you
  • Healthcare – with increasing costs, providers that can target care to show health gains with children, or keep their clients healthier may see improved demand for their products while at the same time controller their costs.
  • Marketing – Branding your self as a healthy alternative
  • HR – being seen as a healthier employer may improve your retainment and attraction to new employees.  You may also see a reduction in your health care costs over time.

Risks:

  • Fast food – This entire industry may be about to come under ever increasing levels of attack.  The attacks will likely be on menu, ingredients, nutritional labeling, and potentially lawsuits.
  • Sports drinks – As parents become more aware of the level of sugar in these drinks, demand is certainly at risk.  As one of their core segments is children, it is also possible that even the marketing placement will be called into question.
  • Education – As Jamie Oliver’s Food Revolution has clearly pointed out, he is certainly targeting the school system menu.  Once the parents get involved school district lunch menus will likely need to change dramatically.
  • Healthcare – spiraling costs will force most healthcare companies to make very difficult decisions to remain profitable.

Here is Jamie Oliver’s presentation on TED.

Here you can see the growing obesity problem in the us (CDC).


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Categories : Analytics, Analytics & Business Intelligence, Change Management, Communication, Customer Value, Environmental Scan, Innovation, Operational Performance Management, Process Improvement

Zombie Initiatives and Tasks

5 01 2011

Over the holidays I heard a story on Zombie Processes.  It reminded me of the number of these I have come across in business.  One of the luxuries of being a consultant is you get to ask “why do you do that” or better yet “what would happen if you didn’t do that anymore”.  As businesses grow and scale we often pick up a number of new initiatives, or increase the subtasks, and never kill off old ones.  We also inherit more and more “stuff” that people do that does not necessarily add value.

Zombies: A Zombie initiative/task is something that continues on because no one has done the favor of saying it is either over or complete.  It can also be a task that exists that no longer needs to exist.   Basically it is inefficient effort and time.

Do these exist in your organization? Absolutely and everywhere.  The key is not trying to fix them all at once – this will get you nowhere.  What makes the most sense is to identify your strategic goals and initiatives and start with the processes that support those goals.

Where do you start? Take a look at your critical initiatives across the organization.  Ask yourself which ones are going to provide the most strategic value over the next 12 months.  Pick 3 and define the value of those initiatives.  Are they about increasing/decreasing time, revenue growth, cost cutting, elevating customer value?  Figure out how improvements should be measured.  Set up serious targets and a process to manage improvements.  Roll up your sleeves and get rid of the Zombies.  And while again this is self serving, it does not make it less true – hire a consultant.  Have someone independent to the organization ask the questions.  Especially if this is a new concept inside the organization.  People don’t like change, they fear it will expose them or put them at risk.  This can lead to the wrong motivation for process improvement.

 

Stuff:  This can be projects, tasks, subtasks, processes, or simply job justification work.


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Categories : Analytics & Business Intelligence, Communication, Customer Value, Initiative Management, Innovation, Operational Performance Management, Process Improvement

Remember When…Google was the Anti-Microsoft

15 11 2010

Today, Facebook launched a new email service.  It has long been in the works as Project Titan.  While perhaps not a direct threat against Google, it is certainly an attack on Gmail.

Remember back to the good old days…when we walked uphill to school in the snow both ways, when children actually played baseball (and not the video game version), when information was delivered with ink and paper, when cell phones were the size of our heads…

…err I digress, remember when Google was the white knight against Microsoft.  We wanted to use Netscape just to make Microsoft mad, but IE was just better.  Ah, yes the good old days and the turn of the century.  Was it really just in 2000 when they signed the pact with Yahoo to make them the default search engine?  A mere decade it took them to go from White Knight to feared Big Brother.  It took Apple 26 years to go from 1984 to being mocked by Futurama with its Eyephone or from having their great anti-Microsoft ad campaign spoofed by TMobile in Piggyback.

Has Google really done this in less than 10 years?  We will soon see.  Earlier this month Google found itself in a little hot water over their StreetView cars that were driving around picking geographically based personal information.  I understand that personal privacy may be dead, but I would venture a bet that if there is a backlash it will be aimed squarely at Google (and ironically in this case Facebook).

Clearly not all markets move at breakneck speed, but it does tell a story of thinking about tomorrow in a more methodology approach.


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Analytics: Frequency Distribution & Bell Curves

8 11 2010

A statistical method we often overlook is the distribution curve.  I think most of the time it is dismissed because people get nervous about using statistics if they are uncomfortable with math.  While there are some advanced concepts around using a frequency curve, it can also be used visually as a simple tool to explain results.

A simple stats lesson….

Normal Bell Curve – roughly 68% of the population is within 1 standard deviation (measure of variation) of the average and 95% is within two standard deviations. Below is an example of IQ scores.  The average score is 100 and 68% of the data is between 85 & 115.

While this visualization doesn’t do a tremendous amount for us, this is what we assume when we think of populations, like customers and employees.  And because of our limited statistical training we make a large number of assumptions based on averages.  We love to look at average revenue: average revenue per employee, average revenue per customer, etc.  This thinking also gets us looking into the outliers (that <5% that sits way out to the left or right of the chart).  How much time do you spend on less than 5% of the business?

OK, so back to thinking of this in terms of running a business….

Let’s map out our revenue per customer.  I would be willing to bet it looks something like the following:

If this is the customer revenue distribution, if we use the average number in our analyzes we can quickly generate a number of wrong assumptions.  First and foremost, our typical customer is larger than reality.  It might lead us to think we are serving mid-sized businesses than more likely smaller market customers.  I am also willing to bet our profitability per customer has a similar curve to it.  In this case we are likely spending money on the wrong customers and aligning our better services to a lower profit generating customer (or more likely a profit destroying customer).

Do we need to use it in everything? Of course not, but it might help everyone once in a while to challenge our overuse of the mathematical average to reassess perspectives of our business.  A great place to start is map out the customer base in terms of revenue (profitability is better, but takes a lot longer to do).  It might just lead you to understand your customer (think customer segmentation) better.

Real life example…I was once part of a research project to understand discounting to one side of the outliers (<1% of the business).  The outcome was to focus on reducing discounting to that <1% of the business.  What I argued was to focus on the larger part of the business, where the same efforts would have resulted in millions more in terms of profits.  It was a clear lesson is where to apply process improvement.


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Lessons from the Vegas ecosystem

1 11 2010

There is nothing like Las Vegas. Suits and sweats sitting beside each other sharing risk. Long confusing mazes of machines that clank and spin and take more than they give.

We can point to a number of great brands in this age, yet in many ways Vegas might be the strongest brand of all. Its current tagline “what happens in Vegas stays in Vegas” may also be one of greatest slogans.  It is the perfect pitch that both captures the spirit of the place as well as tap our primal instincts.

Perhaps we can’t create the same type of offering as Vegas, and it may not be our cup of tea, but we should admire it and learn from it for what it has created. What was once a desert, an airport, and a couple casinos is now one of the most interesting consumer ecosystems. Now there are limitless entertainment options at all price points for all audiences.

Above all things, Vegas is all about innovation. They are focused on the customer with unrivaled focus. They test, they listen, and they learn. Vegas is a 24×7 incredibly well lit human lab.

What can we learn:

  • Test, move, learn. Most companies are stuck in ruts.  They do the same things over and over again.  New ideas are forced into ill fitting old marketing programs.  Customers are hit with the same message in various mediums. We fail to hypothesize and test any more.
  • Create and/or leverage communities. Vegas is all about mustering resources around the customer.  Bring more and unique services to your customers so they never have to leave.
  • Fill in gaps. Vegas is always looking at ways to fill in the seams around the business.  How often do you look for ways to not only increase the product offering, but look to enhance the ecosystem around you?  How well do you use the partners whose products depend upon you?
  • Be unique. Where else can you find a castle, a pyramid, a two story lion, and a replica of New York city all on the same street corner.   What is interesting here is that this is where I think the casinos are starting to fail a bit.  Clearly, Vegas is unique but I think the experience is starting to become too similar.  Every casino has a hip dance club, a comedy routine, high end shopping, and now there own Cirque-du-Soleil shows.  Needless to say, the unique stuff is what helps us differentiate ourselves from the pack.  Without it, we start to compete on who is cheaper.  That is a game only a few can win.

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Breaking down Profitability

12 10 2010

One of my favorite bloggers / writers, Seth Godin, writes about “When the long tail is underwater” on his Oct 10th blog.  He actually touches on a couple of interesting points, how much time and energy is created that generates no value, and how do we filter out all of this information to understand what is relevant.

Take for example the Droid/iPhone app market…Apps are everywhere, and try to do everything.  Apple and Droid both claim wildly unusable numbers of apps.  With all of these potential apps, ask your friends what Apps that they can’t live without and people get strangely quiet.  I had a few people respond Urban Spoon and one guy mentioned Wolfram Alpha.

Seriously, hundreds of thousands of apps out there and we can’t create a list of “gotta have” apps? Yes, I know there are hundreds of those lists.  Read one of those lists and ask yourself which one will you be using a month from now.

Sorry back to the point…Compare this to your company’s information:

  • How much data do you have?
  • How many reports do you have?
  • How much of it is relevant?
  • How much old stuff is out there that no one has any idea of its worth?
  • How often do you clean up the environment?
  • How quick do people respond?

AND how often do you hear people say… I don’t have the data?  OR I am not sure where I can find the information I need?

 

 


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Apple & AT&T – Picking the right partners!

19 07 2010

OK, so I upgraded to iPhone 4.  I had to do it…it was like an addiction.  For some reason, the iPhone has a tremendous amount of cache to it.  How do we create brands with this much power?  And how do we use this for our own advantage for the longest time?

From a Strategy standpoint, we can discuss and debate a great deal about their relationship with AT&T….

AT&T Exclusive….

From the very beginning the AT&T thing has been called out and questioned.  Apple has always been about propriety…and while somethings work it is clear that others do not.  I think in the Cell Phone market, this tactic is about to hurt them.  By creating the exclusive arrangement with AT&T Apple created motivated competition.  Verizon, whom most feel is the superior cellular network, was extremely motivated to come up with a competitive plan as was Google who was just entering the mobile market.  It created a substantially sized hole for Google Droid to take advantage of.

What Apple felt was a compelling advantage with the App Store, is now just a “me too”.  The Android market is coming on fast, and momentum (prior to the iPhone4) was clearly leaning to the Droid.  It is also being argued that the pressure from the Droid momentum had pushed Apple to rush the iPhone 4 to market, thus causing it to make some well known missteps and product issues.

By making a conscious choice to go with the weaker carrier, it created a vacuum….and in the business world vacuums don’t last long.  Verizon and Google have created a very viable competitive piece to the iPhone legacy.

Data Hog

With the iPhone 4 and its video functionality, it is going to need a much better network than AT&T can offer.

AT&T has already leveraged the iPhone platform to change its terms and conditions which the user community is less than thrilled with at this time.  The first change was the cloaked ‘Smart Phone Cancellation Policy.’  To cancel a smart phone account, the penalty fee has now doubled.

The second main item was dropping the unlimited data plan.  Users are now going to be hit with overage penalties, though AT%T claims the fees are not going to be excessive.  While AT&T is offering two levels of data plans, one which allows minimal usage (200 MB per month) for $15 and the other which offers 2GBs per month for $25.  The third option is for tethering but is still limited to 2GBs per month.

While I have been told the fees were primarily geared to get people to be smarter with when they were downloading, this is really a ploy to offload the supply and demand issues that AT&T is having with their cellular network.  This tells me that AT&T expects their dropped call issue to either continue or perhaps get worse.  When you combine this with the unprecedented demand for the data hungry iPhone 4s, I think AT&T is going to have some issues.

So how does AT&T deal with this mess, they are arguably a year behind in launching their 4G cellular network compared to Verizon.

I am sure in the end that Apple has to be less than thrilled that their cellular carrier is the weakest link in its product.  It was embarrassed during the iPhone 4 launch when the demo could not find a connection (arguably not an AT&T issue), when a member of the audience responded to Steve Job’s delay in what to do with “try Verizon”.

So in the end by choosing the weaker of the cellular carriers…

1.  They created a vaccum which Google Android has exploited extremely well.  Apple iPhone may struggle over the next few years as the Android market continues to expand.

2.  It created a faulty product due to poor service, and in some ways product and marketing snafus due to the increased competitive pressure around the iPhone 4 launch.

3.  Strangely they have become what they once fought against – they are the machine (see video below).

4.  If they Apple iPhone market is over taken by the Droid market in the next couple of years, it is perhaps fair to blame the relationship with AT&T.  If they would have worked with all markets the Droid market would have materialized much slower.

And for even more entertainment….


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Clients are Impatient

3 01 2010
  • How much time do we spend making the customer experience simple?
  • Is the customer on-boarding process painful, or straight forward?
  • Do customers get lost in our beauracracy, our legal needs?
  • How many customers do we lose in those final steps?

We spend tremendous time developing technology – whether externally for paying customers, or internally for process improvement.  Yet, we often spend very little time planning for the adoption phase.

What do our customers want – stuff just to work the first time, to be easy to use and provide the value they paid for.   If we are spending millions, if not billions on product development, why do we not start with the end in mind (see Jonathan Becher’s – Manage by Walking Around blog)?  Especially in the age of the internet, people need to be able to sign up and get started without complexity, nor mind-numbing data entry.  There is a time and a place for each of those, and it is not necessarily right after “hello”.

One great shiny example is Apple.  Most of their products are far more simple to operate than their competitors.  Think of how easy to use each of their products are, then think about using them as part of a network of parts and it gets even more simple to use.


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Telling a Story

28 12 2009

“What we’ve got here is a failure to communicate” Luke in Cool Hand Luke (played by Paul Newman)

A friend of mine sent this video along to a number of friends in the Business Intelligence space, saying we need to be better story tellers (Thanks Katie McCray).  We do spend an enormous amount of time talking about data structures, common data dictionaries, ease of use, speed, consistency, etc.  What we typically fail to do is tell our clients how to create information, to tell the story in a convincing enough manner to create attention, and more importantly, enable action.

As analysts we typically spend more time talking about data discovery, and the calculations we used than starting off by making our point.  We try to create 50 charts to explain everything, and not the one chart that most simply illustrates our point.  This not only wastes time, but we lose our audience.

Watch the next couple of presentations you sit through and watch the number of slides that build up to the point trying to be made.  What happens is that with each slide our listeners pay less and less attention as they have lost the point trying to be made.  As learners, we need the point to be made first.  We need to see how it all comes together, then have it explained how to get there.  It provides the context for the point to be made.  People now understand what to listen for and why they are listening.

On a slightly different note, last week I wrote about the housing market and the Dangers of Leading Indicators.  I had to update the post due to a new story with a different viewpoint that ran in the Globe on the 23rd.  Amazing how story tellers can tell such dramatically different things.


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Categories : Analytics & Business Intelligence, Communication, Culture of Action, Customer Value, Process Improvement, Visualization

People will…

25 11 2009

People will do what they like, or what is easy if they do not understand priority or value.  The hard stuff is messy.  There is too much risk in the hard stuff…


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Defining the Customer – Brandwagon

9 11 2009

One of my favorite strategy quotes is Michael Porter’s – “The essence of strategy is choosing what not to do.”

It is easy to jump on what we perceive as good deals, or trends.  Take for example my old story about Patagonia after Sarah Palin stated Patagonia as one of her favorite brands.  Instead of jumping on the bandwagon of seemingly a guaranteed increase in sales, they choose to distance themselves from Sarah Palin with the following quote:

“Patagonia’s environmental mission greatly differs from Sarah Palin’s,” Patagonia rep Jen Rapp told the WSJ. “Just wearing the clothing of an environmental company does not necessarily make someone an environmentalist.”

Or when Pepsi comes knocking with a “great deal”…

  • How well do we know our customers?
  • Can we use this to our advantage and draw more people in by being selective in what we offer?
  • When Wal~Mart moves into town…do you change what you do, or let them eat up your profits?
  • How unique are you and what value does that create?

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Product Complexity

19 10 2009

Jonathan Becher of the Manage by Walking Around Blog last week wrote about “Less is More.”  While he starts out with an attack on PowerPoint presentations, he then broadens his commentary to software.   His point is spot on and while I can not think about specific example in software, there have been a couple of interesting technology gadgets that could answer his question.

The most obvious to me is the Flip video camera.  They started with the premise that you don’t need all the special effects, and gadgetry that bloats R&D, wastes battery life, and ultimately increases the cost.  They provided just a video camera with a USB connection to download the film.  No more, no less.  And surprisingly (and telling) in the age of endless features that are rarely used it was an immediate hit.

  • In your space, are there customers that are over-served by the functionality of the competitive product suites?  If so, could you use this as a little Blue Ocean styled opportunity to address a new market?
  • How much of your product’s features are truly used?
  • Are the core functions of your product complicated by the rarely used features?
  • Do you run the risk of over complicating your product to its own demise?

I think it will be interesting to watch Flip grow over the next few years.  Will it attempt to morph the product to compete with the more complex video cameras?  Will it lose it’s identity as it does?  Is accessorizing the Flip a step in complexity, or merely a nice personalized touch?

Too Much

If we take Jonathan’s initial question a step in the opposite direction, can you think of a company that got too complex for its own good?

Here I think we can come up with a great many examples.  A clear example is Social Networking.  The initial idea behind LinkedIn was fantastic and it was easy to see why everyone bought in.  Lost former co-workers were easily found, and we could maintain a single repository for our network.  No matter when they changed jobs, everyone updated their profile.  Now, in an attempt to do more, LinkedIn is at risk of losing their audience.  Groups were a great idea, but their were no controls, no rules on how to use them (or not use them).  Now there are groups in every direction and people are using LinkedIn as a database marketing tool for pushing spam.  Facebook is perhaps beginning to fail under a similar complexity.  We all have friends that put their entire lives into Facebook (which may create its own problem) and send out virtual drinks, winks, pokes, games, flair, etc.   I would love to periodically hear what my friends are up to, but I can no longer find that out unless I spend a tremendous amount of time to design and manage the environment.


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Wii or not to Wii

22 09 2009

One of the most interesting brand developments in a long time is the Nintendo Wii.  The video game market has been hot for some time now, but the story was the same.  Better graphics, better visuals, better reality and gore filled titles.  How do you break out of the crowd?

Look no further than the Nintendo Wii for a great story.

How about finding a different tact all together?  By starters, let’s take away a barrier to purchase – parents that don’t want their kids just sitting in front of their TV.  Let’s add an element of physical activity into the game.  Then let’s market family styled competition.  This is nothing less than brilliance.

  • What can you do to change the market parameters?
  • When was the last time you had a meeting of your best minds to challenge status quo?
  • Are you playing leap frog with your competition?
  • What would happen if you did something radically different?
  • When was the last time you came up with a brilliant idea and pushed it forward?

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Predictive Analytics Gets Closer

17 09 2009

I am always a little shocked by a company’s resistance to using predictive analytics.  My guess is that is a combination of not really understanding the value, fearful that they won’t get it right, or not having the right talent to use it.  It has long been labeled as “white lab coat stuff” and perhaps that is a bit accurate.  But software is making this easier, and MBAs are studying it so this label should be diminishing.

The Value:  Reducing costs, increasing returns, quicker identification of issues – these are all critical wants of every organization.  If we can only chase five opportunities with roughly the same make up, a little predictive analytics should be able to tell you who is more likely to have a higher customer lifecycle value.  If you only can cover 10% of the market with a marketing campaign, predictive analytics can help you determine which 10% is likely to have the greatest yield.

The Fear:  I understand this, but it is a little irrational as all decisions involve some level of risk.  All predictive analytics do is make decisions based on an elevated likelihood of being right.  If I told you I could make you 10% smarter, wouldn’t you listen?

The Talent:  This is perhaps a realistic barrier, but one simply corrected.  Predictive Analytics, while getting easier every day, is still about advanced computations.  Not only do you need to understand how to do them, you need to understand when and where to use them. And more importantly, you need to understand how to transform the information into values an executive team can put into action.

Where do you begin:

  1. Find someone in the organization with a good statistical and business mind (or hire one).  This may not be the technical team – it often takes a little different skill set.  Or find a small team.
  2. Find a business process where there is pretty good data and that will add value at the end of the day – customer attraction, attrition, fraud detection, scrap reduction, etc.
  3. Put a small project in place to try it.
  4. Enter my favorite stats words – Parsimony:  Find the most simple answer.  This is easier to explain and digest of how to put the project into action.  (Why is a word that strange about the simplest answer).  It is easy to end up tweaking a project to death.  Don’t do it on the first pass.  You get lost in data and often find it far more difficult to explain and complete the project.
  5. Try it and accept the results.  The is tremendous learning in failing (and chances are likely you won’t fail if you didn’t bite off that much).

Examples:

  • Let’s say you can identify customers who are likely to abandon you and then work to make sure those customers are treated better.  If your abandonment rate drops by 10%, what is the value to the bottom line?
  • If you can identify customer segments that are less price sensitive, what is the value of a 1% increase in average deal size (note that the entire amount really should drop to the bottom line as well)?
  • What if you can reduce fraud by 5%?

The numbers show that predictive analytics are very real.  It is not about guessing, it is about reducing the risk of guessing.  And if you follow many blogs, all of a sudden there is a lot more information on predictive analytics.  IBM is finally putting together some wood behind the arrow of its SPSS purchase which may also begin to influence more decision makers in the space.

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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.


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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?


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