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Analytics and data science


HOW WELL DOES YOUR COMPANY USE ANALYTICS?

A framework to identify your strengths and weaknesses.
by
 * Preethika Sainam,
 * Seigyoung Auh,
 * Richard Ettenson,
   and
 * Yeon Sung Jung

by
 * Preethika Sainam,
 * Seigyoung Auh,
 * Richard Ettenson,
   and
 * Yeon Sung Jung

July 27, 2022
Vitezslav Vylicil/Getty Images
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Summary.    Almost every company is trying to capitalize on the promise of data
and analytics, but a large majority of senior leaders don’t feel like their
organizations are hitting the mark. What separates leaders from these lagging
companies, and how can firms struggling...more
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Every company is trying to capitalize on the promise of data and analytics.
While a few leading firms like Amazon and Alibaba seem to have cracked the code,
most are still finding their way and many remain unsure even where to start. A
2021 study by NewVantage found only 39% of executives believe their
organizations manage data as an asset, and even fewer (24%) view their companies
as being data-driven. Likewise VentureBeat found, in their 2021 survey, that
just 13% of executives believe their organizations are delivering on their data
strategy. These underwhelming findings are consistent with earlier studies by
McKinsey, Deloitte, and BCG that revealed a large majority of senior leaders are
not satisfied with the outcomes delivered through analytics.

What separates leaders from these lagging companies, and how can firms
struggling with the analytics mandate catch up with — and even surpass — their
competitors? To find out, we surveyed more than 300 senior executives across B2B
industries about data-driven decision-making in their organizations and their
performance on seven dimensions of analytics capability:

 * Culture: The degree of consensus on the value of data and analytics as a
   strategic asset
 * Leadership commitment: The extent to which senior leaders “walk the talk”
   when it comes to data and analytics
 * Operations and structure: The level of development of structures and policies
   that support access to data for those who need it
 * Skills and competencies: The ability to hire the right people and provide
   adequate training and support for them
 * Analytics-strategy alignment: How effectively analytics complements both
   short- and long-term strategy
 * Proactive market orientation: The degree to which data and analytics allow
   the organization to keep pace with and anticipate evolving customer needs
 * Employee empowerment: The extent to which people throughout the organization
   are encouraged to pursue creative data capture and analytical methodologies

Based on these findings, we identified three tiers of companies: data and
analytics laggards, strivers, and leaders. We then created a tool — available
below — that helps leaders identify where their firm falls on this spectrum and
the organizational characteristics and capabilities they may need to develop to
further advance on their analytics journey.

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The results can reveal a company’s analytics strengths or weaknesses, help it
prioritize investments and allocate resources, provide benchmarks for gauging
progress, and ultimately help it become more data driven and competitive. It can
also help create a common language and mindset across the organization which
will help create alignment and traction across the organization — and reveal
differing perceptions of the firm’s capabilities. Further, it can help
illuminate the views of those on the front lines or otherwise outside of the
leadership circle whose customer-facing responsibilities will play a vital role
in the transformation effort’s progress and success.


ASSESS YOUR CAPABILITIES

Not every organization begins its journey from the same place. Some companies’
capabilities are well developed while others are rudimentary. Regardless, each
company needs to answer three questions as it works to enhance its capabilities:
What is our current level of proficiency? In what areas do we need to improve?
And what do we need to do to optimize our data and analytics performance?

To assess your company’s data and analytics proficiency, assemble a set of core
employees and other internal stakeholders representing a range of management
levels and business functions. Be sure to engage a diverse sample of staff who
will lead and manage teams in the transformation effort (e.g., executives in IT,
marketing, and even HR), as well as front-line employees who will be affected by
its implementation, such as those in sales, marketing, and customer service.
Think of this exercise as a small group workshop with representation that will
provide leadership with insights from informed discussion among participants
leading to an “enterprise-wide reality check” of the company’s current
capabilities.

Have each workshop participant individually answer the diagnostic-tool questions
below using the one (strongly disagree) to five (strongly agree) scale for each
item. Next, aggregate and average respondents’ scores on each of the seven
analytics capabilities dimensions (culture, leadership commitment, and so on).
This will provide a single, overall score on each dimension, revealing broad
areas where the company may be performing well, or not.

See more HBR charts in Data & Visuals

If the findings reveal areas of notable weakness, leaders may want to focus
first on these to create a stable analytics foundation. In other cases, the
priority may be to continue building and enhance areas where the tool reveals
moderate levels of performance. Conversely, high scores can reveal areas where
continued (even modest) investments can help ensure no decline in performance in
those areas essential to maintain business success. Top performing companies
also can double down on strengths that already confer competitive advantage to
put them even further ahead of the analytics strivers and laggards.

While looking at the scores for individual questions can help leaders know where
to focus, it can also be valuable to periodically calculate a single, broader
company metric by averaging all scores on the seven analytics dimensions. This
aggregate measure can allow leadership to track the company’s overall progress
over time or compare progress across subsidiaries.


GAUGE EMPLOYEES’ CONSENSUS

If a company is to move ahead on its analytics journey it must also strive to
build consensus among key players and work out where differences in perceptions
of capabilities may exist. As the workshop participants represent different
functions, levels of management, and lines of business, their individual scores
can expose hidden areas of disagreement. If representatives from, say, IT and
marketing, or the C-suite and HR) have dramatically different perspectives on
the firm’s data and analytics capabilities, it’s worth investigating and
addressing it. This can be done with further informal workshop discussions that
focus specifically on areas of disagreement to surface a more accurate picture
and strategies for shoring up any revealed weakness. Such revealed differences
may potentially signal a red flag on firm performance such as sales or profit.

Gaining consensus among employees also enables an additional benefit — an
aligned mindset and use of common language among workshop participants.
Ultimately, this shared perspective will be socialized across the organization
as insights and action steps from the workshop are disseminated through the
ranks. For example, when diverging perspectives emerge in the workshops,
understanding why there is disagreement — for instance, one function is aware of
capabilities or initiatives that another isn’t — can help leadership design
targeted communications that inform and align employee perceptions
organization-wide. In other cases, gaps in perceptions among workshop members
may accurately reveal fundamental shortcomings in analytics capabilities that
require long-term cultural interventions or the need to immediately hire for
critical skills that are lacking.

READ MORE ABOUT

4 Analytics Concepts Every Manager Should Understand


FIX WEAKNESSES AND ENHANCE STRENGTHS

Firms that complete our diagnostic typically find that they have a mix of
strengths and weaknesses. Depending on their industry sector and competitive
content, company leaders should focus their attention on those dimensions that
are essential to providing superior and sustainable business performance and
address key areas where they are performing least well. For lagging companies,
this will mean fixing fundamental areas of weakness; for leading companies it
will mean optimizing performance on dimensions where they still have room to
grow. Drawing on our analysis of leading companies, we created the playbook
below that leadership can use to improve the company’s performance on each
dimension.


TO ENHANCE CULTURE:

 * Integrate data analytics and insights into daily workflows
 * Communicate to the entire workforce how effective use of data is a
   competitive business advantage, not a byproduct of doing business
 * Help employees become comfortable with making decisions based on data rather
   than instinct or experience
 * Emphasize the importance and value of “data citizenship” to all employees and
   stakeholders


TO STRENGTHEN LEADERSHIP COMMITMENT:

 * Demonstrate that senior leaders take ownership of analytics and are committed
   to making it central to the company’s success
 * Demystify the topic of data and analytics through “use cases” that are
   visible and relatable throughout the organization
 * Highlight key investments in analytics technology and human capital
 * Underscore the value of analytics as an asset by linking data-driven
   decision-making to compensation, rewards, and recognition


TO OPTIMIZE OPERATIONS AND STRUCTURE:

 * Stress the importance of “harmonizing systems use” across departments and
   levels when it comes to data and analytics
 * Create performance management incentives to encourage cross-functional
   collaboration and partnerships in the use of data and analytics
 * Democratize data access across departments without losing sight of privacy,
   security, and compliance considerations
 * Demonstrate how front-line and other non-technical employees can have easier
   access to data


TO HONE SKILLS AND COMPETENCIES:

 * Train employees who are in non-analytics roles to embrace data and analytics
   as a new way of conducting business
 * Help employees in analytics roles to translate technical language into
   business language
 * Create and nurture career paths that enable non-technical employees to
   embrace data and leverage its value
 * Recruit talent with proven skills in analytics


TO INCREASE STRATEGY AND ANALYTICS ALIGNMENT:

 * Demonstrate how the organization’s business strategy is supported by its data
   strategy (“best practices use cases” can be powerful here)
 * Ensure that analytics strategy complements, rather than substitutes for, the
   overall business strategy
 * Use insights and knowledge from analytics to drive and guide the overall
   business strategy
 * Prevent analytics strategy from overtaking business strategy (i.e., don’t
   lose sight of analytics as a means to an end)


TO INCREASE PROACTIVE MARKET ORIENTATION:

 * Use analytics to predict future customer preferences that may not be obvious
   now
 * Use analytics to accelerate innovation, even if it means making your own
   products and services obsolete
 * Use analytics to create breakthrough innovations that offer novel solutions
   for customers
 * Apply analytics proactively to sense and drive the market


TO ENHANCE EMPLOYEE EMPOWERMENT:

 * Help employees learn about the use and benefits of analytics to achieve
   business goals
 * Help them feel empowered by showing them how analytics fit it into their
   daily activities
 * Ensure that employees do not feel trapped (or held hostage) by a constant
   stream of data
 * Remove bureaucratic obstacles that interfere with data capture or executing
   an analytics strategy

Every company is somewhere along an open-ended journey to achieve data and
analytics superiority. While there is no final destination — there will always
be more to do — there is a roadmap for efficiently and strategically progressing
on the journey. By using our diagnostic tool, companies can create a unique
profile of their data and analytics capabilities; and, with our playbook, they
can then address areas of weaknesses and enhance their strengths, driving an
ongoing data and analytics transformation that can deliver real sustained
competitive advantage.

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Read more on Analytics and data science or related topic Data management
 * PS
   Preethika Sainam is an Assistant Professor of Global Marketing at Thunderbird
   School of Global Management, Arizona State University.
 * SA
   Seigyoung Auh is Professor of Global Marketing at Thunderbird School of
   Global Management, Arizona State University, and Research Faculty at the
   Center for Services Leadership at the WP Carey School of Business, Arizona
   State University.
 * RE
   Richard Ettenson is Professor and Keickhefer Fellow in Global Marketing and
   Brand Strategy, The Thunderbird School of Global Management, Arizona State
   University.
 * YJ
   Yeon Sung Jung is Professor of Marketing at Dankook University in South
   Korea.

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