The world of data can be dreadfully boring or wildly fascinating, depending on
how you see it. For Thomas Davenport, distinguished professor of management and
information technology at
Babson
College
.
USA
, the right kind of numbers can open up a world of endless
possibilities, and take decision-making to whole new level.
Data and analytics-the science, or art, of slicing and dicing data
to arrive at underlying patterns and correlations
– may no be entirely new, but it’s certainly changing how the
world’s largest and most progressive companies like Wal-Mart, P&G, Amazon
and Dell, compete today. And
Davenport
is the most passionate evangelist of this route to business success.
A
widely acclaimed author and speaker on information and knowledge management,
business process reengineering and electronic business
and markets,
Davenport
contends that in a complex and dynamic world,
analytics is the
CEO’s best friend. Because numbers tell the real story,
devoid of
biases and subjectivity
that comes with decision making done “from the gut”. Yet, most companies that
use analytics aren’t able to fully leverage its benefits, relegating it
to a backroom technique that mostly validates decisions already made.
In that respect, it’s long way from becoming a
strategic
tool
in the corporate boardroom.
Companies need to realize that
competing on analytics
is , first and foremost,
about culture
and mindsets.
In this exclusive interview,
Davenport
shares a few tips on how organisations can maximize the benefit they
can derive form analytics, and how they can deal with some of challenges that
come with it.
How can a company make the transition from an intuition driven environment to
that of fact-based decision making?
There are two fundamentally different approaches. One is, you have a senior
executive, usually a CEO, who really understands
analytics,
and what it can do for the business. There are cases when a new leader came in
and started it. This is true of dotcoms like Yahoo and
Amazon. When you have that level of execution support from the beginning, it’s
very easy to build your company around it and make a major turnaround. If you
don’t have that level of support then you need to create it by demonstrating
the value of
analytics.
Pick some areas of business for a pilot
and show what the results are,
and try to spread it beyond that department with sympathetic
executives who are willing at least try it in their business areas.
What about the experience and knowledge that resides within people in
traditional organisations ?
I am not doubting the value of experience overall, but I think there are
certain problems that are way too complex for companies to deal with purely
through experience. Take banking, for example. Figuring out at what point a
customer will want a credit card is too complex to do on the basis of
experience. The other problem with the experienced-team model is that
they aren’t fast enough. In the
US
, you can have four mortgage offers in five minutes over
the internet. So you really can’t wok with human experience based models,
as humans can’t decide quickly enough.
How does one deal with resistance to change?
It’s a major change to go from a experience based approach and
intuitive decision making to an
analytical approach.
That’s one reason why you need some support because it’s hard for people to
change the way they have looked at their business for years. And if you
are one of the middle level managers, for example, and you want to
create a more
analytical approach
in your company, you have to go up and get support for value that’s
demonstrated on smaller projects, and then with that support, you can start
changing the culture of the company. You don’t really change the
decision-making culture without senior management support.
Why is this the best time for companies to invest in analytics?
From a supply standpoint, a lot of organisations have the data or they
have been trying to put in place for a number of years, either transaction data
from ERP systems, or point of sales data. In any case, companies are
better equipped with data than before, and there is a lot of software and
hardware available.
The software vendors for analytics are producing much more capable
software than what they used,
when they sourced software from a variety of vendors. Now they’re increasingly
offering an integrated package. From a demand standpoint,
companies need to compete on the basis of key business processes and
the way you optimize those processes with analytics.
Source:
The Economic Times, July 21, 2006
-
Swati