Tuesday, September 7, 2010

Three Big Trends That Will Change the Way You Make Decisions
















I attended a seminar this week on predictive analytics, a topic some say would cure insomnia. But, I found the trends important and worth more consideration by anyone who owns a business or runs one or is employed by one – so the majority of us.

I love data, even as a totally right-brained person, because it has a story to tell. The problem is we’ve exhausted the process of using lagging indicators to produce insight about future decisions. Companies should be moving from silos of data hoarded and rarely aggregated to a point where employees collaborate and make real time, fact-based decisions based on modeling organizational data and assessing the power of one choice over others to achieve results.

A few years ago, Thomas Davenport wrote a book titled, Competing on Analytics and cited large companies such as Marriott, Harrah’s and Progressive Insurance as the analytics champions. Not much hope for the rest of us, is that what you’re thinking?

Here’s what I learned from that seminar and I believe it is important for businesses of all sizes to get really clear about the implications of these trends:

Analytics are moving downstream. What was once done by a cube farm full of PhD’s will be done by us regular people who are tasked to come up with hard evidence for what we do (market, train, deploy technology, in short, everything). Technology will make it possible to collaborate with other functions to aggregate data and perform our own statistical and predictive work. On our laptops. In real time. Maybe a lone PhD floating among us.

Analytics are moving into every function. No longer will we be able to get by with a "I -can’t- quantify- the- ROI -of –why- I –need- this- money- from- the- budget-but- trust-me- on- this". Jack Fitz-Enz said it best in his new book The New HR Analytics: if the HR department doesn’t feel up to handling human capital issues in a quantifiable, predictive way; the C-suite will give the responsibility to someone else. That holds true for every function from Marketing to Customer Service.

Predictive analytics are a competitive advantage. At a time when we all are looking for the Holy Grail of business success, if your company isn’t starting now to explore the concept, it could find itself out-maneuvered and shut out by the competition.
  • What if your competition could predict which of its customers was likely to defect in 6 months and offer them a sweetheart deal before they are out the door?
  • How much money will you spend trying to woo a customer that isn’t interested in moving her business to you because you don’t know which behaviors trigger a purchase?
  • What if you could predict which employees had the greatest power to impact customer loyalty and could increase the likelihood of retaining them by customizing their rewards and recognition?

Am I going to turn away from my intuition or sense of what feels right in favor of analytics alone? Heck no, but using both is the right equation: Intuition+ Experience + Analytics = Insight + Results.

How about you?

4 comments:

  1. I am personally excited about the direction that we are headed in terms of predictive analytics. I am especially exited about what that means to the HR profession. Good news, we will have the tools to really add value to the business. Not so good news...we are going to have to put our analytical hat on and/or hire some quant jocks!!

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  2. I agree, Cathy, it has huge implications for the HR profession. Analytics is a skill that can be learned, especially with today's tools that do so much of the heavy lifting. And, your RT of @steveboese blog today was so timely because, again, technology is making it easier to present data in a totally engaging and meaningful way.
    DePaul University is the first to offer a Master's in Predictive Analytics; where will HR professionals be able to learn this skill?

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  3. Barbara, this is a WOW post. One of your best. I would like to find out more about predictive analytics. What do you recommend I read? What should I be paying attention to? How can I tie this to a passion of mine which is futurism?

    Good stuff, thanks!

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  4. Thanks for the feedback, Mike, I always appreciate a note from you.
    Two authors I quoted in the blog, Thomas Davenport and Jac Fitz-Enz are scholarly but very business oriented and therefore readable. Davenport just put out a new book on analytics that picks up where his first left off. If you haven't read Dr. Jac's book, run to buy it but don't expect to see all of the how-to's; he and his collaborators give the reader a lot of what and why. And our friend, Dr. Scott Mondore wrote a book aimed at the HR profession that has a process model that is very useful. You can Google him.
    IBM and SAS web sites have a lot of good information and frequently hold webinars on the topic. Of course, they have a vested interest as they both sell software that supports predictive analytics but they are worth a look.
    If you are engaged by futurism, you'll be hooked on analytics.

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