Predictive Analytics, Business Intelligence, and Strategy Management

9 12 2009

I was having a discussion with one of my clients this week and I thought he did a nice job summing up Predicative Analytics.

So in the World According to Reed (WOTR) – “queries answer questions, analytics creates questions.” My response was “and Strategy Management helps us to focus on which questions to answer.”

Reed Blalock is exactly right, traditional BI is about answering the questions we know. Analytics is really what we create with data mining – we look for nuances, things that might give us new insight into old problems. We use human intellect to explore and test. And yes, there is a little overlap. But what is really happening is that we have a different level of human interaction with the data.

BI is about history, analytics attempts to get us to think, to change, and idealistically to act.

The danger with both of these is that they can be resource intensive. Neither tool, or mindset should be left to their own devices. What is needed is a filter to identify the priority and purpose. This is where strategy management and scorecarding comes into play. We have built out massive informational assets without understanding where, when, and how to use it. We have pushed out enormous reporting structures and said “it’s all there, you can find anything you need” yet we scratch our heads when we see adoptions levels are low.

What we have typically not done all that well is build out that informational asset by how it helps us be more productive along product lines, divisions, sales region, etc. We have treated all dimensionality the same. Why, because it was easy. The BI tools are tremendous in how quickly you can add any and all dimensions.

“But because you can, doesn’t mean you should”

As we built out these data assets, we did not align them to performance themes.  We have gotten better with some key themes, like supply chain management, and human resource management, but what about customer performance?  We might look at sales performance, but that is a completely different lens than customer performance.

How do we determine which assets to start with…what assets do we need to be successful 3-5 years from now, or what are our biggest gaps to close today.  Think about customer value, or employee satisfaction (and that doesn’t mean more HR assets).  Think about your gaps in Strategy.

How often do we discuss…

  • Are our customers buying more or less frequently?
  • What are our best, and better customers doing?
  • What are the costs associated with serving our least profitable customers?
  • Where are our biggest holes in understanding?




Going Green

17 06 2009

There are a number of ways companies are “greening.”

  • Some are creating green initiatives and tasks
  • Some are creating green strategic objectives
  • Some are merely applying green make up

In all likelihood, the success will be based upon the level of seriousness and commitment the organization applies.  This is a fad, and leaders will emerge.  Those leaders will reap enormous benefits, the others will be average.

Traditionally, we have talked about 3 business focuses:  Product Leadership, Customer Intimacy, and Operational Excellence.  In each of these cases, you could link “green” strategic objectives, initiatives, and policies into each of these categories.  You could also create a 4th category to trigger discussions about priority and focus of the organization.  A great example here is Patagonia.  They live their commitment to evnironmental stewardship as they understand their clients playground is the environment.

Patagonia Strategy Map

Sample Strategy Map - designed from public documents

During the 2008 Presidential race, Sarah Palin created a great amount of buzz for a number of products.  Patagonia bucked the trend in support of their beliefs:

“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.”

  • How committed are you to the success of your green programs?
  • Are you ready to forgo revenue today, for sustainable benefits?
  • Is green an executive agenda, a marketing initiative, or grass roots initiative?




Scorecarding – Getting Started

18 05 2009

Scorecarding, or Strategy Management, is a journey.  It is more important we get started and learn and adapt as we go.  One reason why scorecard projects stall is that organizations expect immediate maturity.  It takes time to understand the different stages, and the different stages are important and valuable points of learning.  

  • Start small and focused with a team that has a well defined management process.
  • Don’t make changes every month, give the concept a quarter to learn.  Then meet to make the changes.
  • Use the concept to facilitate conversations about what creates value.




Is Strategy top of Mind

10 05 2009

I recently read a few blogs from Jonathan D. Becher and it reminded me of a couple of stories.  I did a couple of webinars a year or so ago with the lead in being a question about how well do you know your corporate strategies.  What I consistently found was that 80%+ of the respondants could not cite the strategy off the top of their head.  This is clearly not new research as their are a number of people/companies that cite very similar numbers.  

I think there are a number of factors at play here:

  • Corporate Strategy has no lasting communication vehicle.  It is often discussed in conference calls and writen on walls, but we have no effective, living tool.  We need to build a communication plan around articulating strategy.  Here is a reference to an older blog of mine on Strategy Maps that touches on this subject.
  • We often lack a consistent framework for Strategy (or a single version of the truth), so we end up with a number of different frameworks for defining strategic objectives.  Corporate uses one framework, the business units another, and then each department creates something new as well.  What we end up with is too many messages and no clarity into priorities.  All of this becomes to difficult for anyone person to understand, so they just go about their day doing the things that want to do or that are easy to do.
  • We also have unstated strategic objectives, or as Oski refers to them in a comment on this blog post, “shadow strategies” where the organization says one thing, but actually does another. 
  • There is also personal politics and empire building that is probably more widely used than anyone would care to admit.  I have seen too many examples where people talk more about how big their team is than provide the value their team creates.  If this is what is top of mind, it is probably an indicator of their motivation.  
  • We don’t have a strategy management process.  Strategy is done independently from budget, or we hire some consulting firm to develop it and then the binders and reports are placed in an archive.




Strategy Maps for Strategy Development

21 04 2009

The Strategy Map is one of the more interesting tools in terms of Strategy Development.  I know most people want to describe it as a Strategy Execution tool, but I see it as a great check to the overall health of your strategy?

  • Do you cover things other than the financial outcomes in terms of your strategic objectives?
  • Do you consider the customer voice, or desire?
  • Do you know where you are in your strategy lifecycle?

Some people like to design complex strategy maps that take months and months to develop with strategic objectives to cover all contingencies.  The font becomes too small, and the word optimize shows up too much.  

What if we took a different tact?  What if we use the Strategy Map as a santiy tool, to test the strategies to make sure they are top of mind and easy to digest?  Instead of creating too many objectives, we focus on clairty of thought.  We use the tool to make sure the organization can understand what we are doing and to then use the map to define the initiatives and performance measures that align their department with the overall corporate goals?