Building an analytics culture!

Organizations apply analytics in mostly ad-hoc manner, often to answer a query from management about business performance. But, companies with more advanced analytics capabilities apply the models to unearth value in their businesses and create competitive advantage.

Since I am working with organizations with less than robust analytics capabilities, I find answering questions as the more prevalent reason for looking into the data. However, the bigger challenge with such organizations is the lack of, what I call the “analytics culture” or, the mindset for data-driven decision making. There may be several reasons that organizations are handicapped on this front, and in my consulting experience, I have found the following three factors to be extremely helpful in alleviating the problem to a large extent.

• Management support – senior leadership needs to support investments in analytics function and insist on data-driven decision-making.
• Knowledge of relevant metrics – business unit heads should take a critical look at the metrics that drive their business and not just the ones that make them look good in weekly reviews.
• Ownership of data models – a data model owned and managed by a neutral team within the company is a priceless resource to managing business performance, finding opportunities and enabling the data-driven decision making.

 I have come to believe that analytics culture needs to be established, supported and nurtured to really benefit from the insights. Where does it sit, who runs it, who needs to be hired in, what processes need to be in place, what are the key metrics, how is the accountability defined, etc.

First answer the question – what is my organization’s goal? Do we sell widgets online? Do we engage users to drive offline sales? Do we push content based on user preferences? Etc. While revenue is the bottom-line for however you look at a business, knowing the above goals will help us qualify the right set of metrics and analysis.

If I look at the business as an outsider, I believe for any business to succeed, it needs to build the analytics function outside other functional groups, simply to ensure the neutrality and to prevent the analysts from being encumbered by business unit goals.

The larger the organization, the more imperative it is for its management to recognize the subtle impacts of not following this policy. Often, marketing and data reporting teams would be asked to provide business analysis. This may not be the best strategy – marketing has personal interest in showing that the conversions are working well, and reporting is often too technical to understand the nuances and make educated recommendations for business improvements. Either is not an ideal strategy to provide a neutral view and critique into the business performance!

Are there lessons learnt in your organizations that you would like to share? Feel free to post your views below.