10 Data Points: Information and Analytics at Work


http://sloanreview.mit.edu/the-magazine/articles/2010/fall/521150/10-data-points-information-and-analytics-at-work/

By Nina Kruschwitz and Rebecca Shockley

Early returns are in from the first annual New Intelligent Enterprise Survey. Here are major highlights of what executives and managers said about how they are — or are not — capitalizing on information.


The New Intelligent Enterprise inquiry is all about the intensifying wave of data that organizations are facing, and its implications for managers. Companies are becoming data driven in ways that are new, raw and — in many cases — untested. And now so are we: We’re trying something new by letting the data come first, without a lot of editing or parsing. Here is a slice of the raw goods, a kind of behind-the-scenes look at the data we gathered from our survey of nearly 3,000 managers and executives from every major industry and all regions of the globe. (Also see “10 Insights: A First Look at The New Intelligent Enterprise Survey.”)

We chose these 10 charts to share because they captured our attention. Some are provocative, some are telling, and some raise questions we haven’t even tried to answer yet. They’re by no means comprehensive, and our final report will cover many more points accompanied by rigorous analysis. But we do think you’ll find these graphics worth a look if for no other reason than that they allow you to do some immediate benchmarking. How does your organization compare with others? What are your peers doing, and how might that influence decisions you’re considering right now?

The survey respondents answered two questions that allowed us to group them and their answers in some interesting ways. One question asked them to assess where their organization is along the journey to an ideal state: an organization that has been “transformed by better ways to collect, analyze and be prescriptively guided by information.” Those that were farthest along that path we deemed Sophisticates; those who were midway became Intermediates; while those that were just beginning to look at data and analytics we called Starters.

We also asked them to describe their organization’s competitive position. Those that rated themselves as substantially outperforming their industry peers we named Top Performers. Those that were underperforming we labeled Lower Performers. You’ll note both groups called out in the accompanying charts.

1. Innovation is the Top Business Challenge

More than 60% of all respondents chose innovation for competitive differentiation as their main business challenge over the next two years. In a recessionary business climate, doing more with the resources and talent you already have is always a favored strategy. When we parsed the data, we found that Starters (new users of analytics) were entrenched in “survival mode,” focused on cuttings costs and creating efficiencies as their main challenge. Intermediates (moderate users of analytics) were in “growth mode,” focused on growing revenues. Sophisticates (advanced users of analytics) were in an “expansion mode,” focused on growing revenues and expanding their customer base through acquisition or retention strategies, perhaps because their use of analytics had already helped them optimize their operations and general growth approaches.

2. The Data Deluge is Real

Organizations are overwhelmed by the amount of data they have, and struggle to understand how to use it to achieve business results. When we analyzed these responses, the nuances were striking. Almost two-thirds of non-Sophisticate organizations believed this to be true, while two-thirds of Sophisticates did not. It may be that as organizations become more adept at processing and using information, they are less likely to feel overwhelmed by its volume.

3. Top Performers Use Analytics

Top performers have a much greater ability to manage and act upon the data they capture. Fifty-three percent use insights they glean from analyzing data to guide strategic decision making. Nearly half use it to guide day-to-day operations — which is even more challenging. Lower Performers are not very skilled at managing the data they capture, or at using analytics to help them perform better.

4. Analytic Sophisticates are Top Performers

Organizations that identify themselves as substantially outperforming their competitors, or Top Performers, in their industries are three times more likely to be sophisticated in their use of analytics than Lower Performers. In fact, only 9% of Sophisticates considered themselves as underperforming their peers.

5. Sophisticates Know They Need To be Even Better

Analytically sophisticated organizations were twice as likely to feel intense or significant pressure to adopt new analytic techniques than those just starting on the analytic journey. That may be because organizations that are just starting to use analytics don’t know what is possible, what data they really need or how far behind they are. Sophisticates have already experienced the challenges and the benefits, and expect continued use of analytics to increase their competitive advantage.

6. What are the Obstacles to Adopting Analytics?

Organizations are struggling to understand how analytics can help them improve business results — and managers don’t even feel they have the time to figure it out. There are also cultural impediments around the organizational ownership and sharing of data. One interesting data point here is the perceived lack of skills. Our initial findings suggest that many organizations may have unrecognized talents within their midst — employees who consider themselves at least proficient in the use of analytics, but who are only occasionally asked to use them — especially in low-performing organizations.

7. What Matters Is Changing

Organizations expect that the ability to visualize data differently, and to use it for simulations and scenarios that will help strategies and decision making, will be most valuable in two years. Other techniques and activities — such as standardized reporting and trend analysis — that are delivering the most value today will still be done, but will be passé tomorrow.

8. Is Analytics a Competitive Differentiator?

Top-performing organizations are significantly more likely to say that their use of analytics differentiates them from competitors.

9. Sophisticates Welcome Challenges to the Status Quo

Analytically sophisticated organizations were significantly more likely to have a flexible culture than Starters. About two-thirds of Sophisticates believe they can challenge the status quo, while only two-fifths of Starters do. It may be that organizations with more developed capabilities also possess more confidence, are less easily threatened and recognize employees as a source of innovation. Analytics may also provide a way out of an entrenched “that’s-the-way-we-have-always-done-it” mentality in organizations.

10. Top Performers Tend Toward Analytics Over Instincts

This chart compares the likelihood that an organization will apply a lot of
analytics vs. a little analytics within a given function. Overall, top-performing organizations are almost three times more likely to use analytics in their business activities than Lower Performers. One implication is that organizations that don’t rely on analytics are relying more heavily on instinct to make decisions — and thus performing more poorly.

View chart

(Reprint # 521150)

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