At organizations in every industry, in every part of the world, business leaders wonder whether they are getting full value from the massive amounts of information they already have within their organizations. New technologies are collecting more data than ever before, yet many organizations are still looking for better ways to obtain value from their data and compete in the marketplace.
Are competitors obtaining sharper, more timely insights? Are they able to regain market advantage neglected while focusing on expenses during the past two years? Are they correctly interpreting new signals from the global economy – and adequately assessing the impact on their customers and partners?
Knowing what happened and why it happened are no longer adequate. Organizations need to know what is happening now, what is likely to happen next and, what actions should be taken to get the optimal results.
A new study conducted by IBM and MIT Sloan Management Review of over 3,000 companies from 108 countries and 30 industries tells us about their top management goals, their uses (and misuses) of information and analytics, as they look for ways to find new growth opportunities. The study was released in conjunction with IBM’s Smarter Industries Symposium in Barcelona last week.
The study clearly connects the use of analytics to competitive differentiation and performance. Top performers are five times more likely to apply analytics rather than intuition across the widest possible range of decisions. And they are two times more likely to shape future business strategies and guide day to day operations based on analytics.
The fact is that 1 in 3 business leaders make critical decisions without the information they need. 53 percent don’t have access to the information across their organization needed to do their jobs.
Gut decision-making just isn’t going to cut it anymore.
The study also found that businesses are actually less concerned about data deluge issues than they are about business culture issues. Respondents cited the top three obstacles to widespread analytics adoption in their organizations as:
- Lack of understanding about how to apply analytics to improve their business,
- Lack of bandwidth due to competing priorities, and
- Lack of skills in the line of business.
As a result, many organizations are facing a similar challenge. They are getting better at generating insights from information and analytics, but they face real difficulties in driving those insights to action. Organizations must take a series of steps to improve their use of analytics, including:
Tackle biggest challenges first: Organizations too often wait for complete data or perfect skills before they take on the opportunity to apply analytics to high-value opportunities. Consequently, they stay stalled in investment mode. Talent, however, flocks to big challenges, which command attention and incite action – increasing the odds of success.
Flip the equation in the approach to data and insights: Many organizations start new initiatives by gathering all of the available data on a topic and then extracting whatever insights they can get. Instead, the first step should be to identify what specific insights are needed, and then identify those pieces of data needed for answers.
Adopt techniques and tools best suited to business leaders: Respondents identified a strong shift in the types of analytic tools and techniques that would provide the greatest value in the next few years. Data visualization, simulation tools and techniques that help them anticipate the consequences of their decisions, explore alternative approaches and tradeoffs came out on top. Techniques like these do not require superior skills to use and can be applied by business leaders at any point in the organization.
There is a growing conviction among global business leaders, as our 2010 Global CEO study highlighted, that operating in a more complex environment will require very advanced, technology-based approaches. In a world that is operating in fundamentally different ways — faster, more interconnected, less predictable — issues, problems and opportunities are going to require much more sophisticated answers than in the past.
Organizations that use a “selective” approach to analytics are able to focus resources and efforts narrowly – generating insights critical to immediate needs and overcoming the business challenges currently holding them back from driving insights to action.
The ability to speed business decisions, understand consequences and predict outcomes has never been more important than it is now; and it is foundational to how industry leaders plan to operate in the future.