Analytics – Big Data – Press Pause on the Stairmaster

I’d like to reflect with you my take on what I believe is driving the accelerating interest in analytics and Big Data.  Our lives have become hectic. We are working harder and longer. We talk about life balance, but for so many of us we continue to have life imbalance. Our jobs. Our families. Our security.

Every once in a while we need to step back, press the “pause” button on the Stairmaster exercise machine, take some deep breaths, and reflect on just what the heck is going on.

The two pyramids – (1) executive power and (2) information technology
In the middle fifteen years of my now forty year work career, I was a management consultant with Deloitte, KPMG, and Electronic Data System (EDS, now part of HP). In our slide presentations we always had two types of compulsory slide pictures: a pyramid with multiple layers and a four quadrant grid. Both slide formats provided an over-simplified but effective way of communicating ideas. My explanation for the fast emerging interest in analytics and Big Data can be explained with these two pyramids:

The Executive Power and Influence Pyramid – The savvy executives are realizing they must now delegate and distribute decision rights deeper down into their organization to empowered managers and employees. This is because with the exponentially growing mountain of data, both structured (numbers) and unstructured (text), and a speed-up and volatile world, they can no longer hoard decisions at the C-suite level. The executives are at the top of a pyramid slide labeled “types of decisions.” Their decision types are strategic ones. As examples, what is our organization’s mission? What products and services should we offer to maximize value to our shareholders and owners? Which types of customers are more attractive to retain, grow, win-back, and acquire? What altered strategic direction should we navigate our organization toward?

In contrast, at the lower levels of the pyramid are operational decisions that should be made by employees who ideally have had the strategy communicated to them by the executives (via a strategy map, balanced scorecard, and dashboards). With expanding Big Data, the base of this pyramid is widening, and executives are realizing it is futile for them to be able to explore, investigate, and comprehend this massive treasure trove of data. This why the role of analysts (think “data scientist”) is emerging as being mission-critical. Executives cannot do it all. They must now delegate decision making, and provide analytical tools and capabilities for decisioning to their workforce.

As I have previously written, in the past the best leaders and executives had the best answers. That is not true today. Now the best leaders and executives have the best questions! They can no longer rely on their past experiences or intuition that got them promoted to their C-suite roles. They need to create a culture for analytics including skills and competencies in their work force to be analytical.

The Information Technology (IT) pyramid – This pyramid is chronological from the past at the bottom to today at the top. At the bottom, say around the 1950s, are the initial IT applications of basic and once time-consuming manual efforts of payroll and purchasing. Cutting bank checks. Then in the 1960s came invoicing, bookkeeping, and financial accounting IT applications. Next came the waves of customer relationship management (CRM), enterprise resource planning (ERP), and supply chain management systems.

The next higher pyramid layers involved information management and data warehouse technologies to enable the managerial systems. Then came the evolution of business intelligence highlighted with query-and-search drill-down capabilities. Next came business analytics with its four micro-levels – descriptive, diagnostic, predictive, and prescriptive / optimization analytics.

I would argue that we have now reached the peak of this IT pyramid where executives, sitting at the top, can nimbly navigate the execution of their dynamic and constantly adjusting strategy with agility. Poor execution of a well-formulated strategy is a major frustration and source of downfall of executives. This pyramid’s peak represents a GPS-like capability for executives at the helm to use metrics, performance measures and indicators, powerful planning capabilities, and motivational methods to gain insights and drive the behavior of employees, customers, suppliers, and partners.

Where do we go from here?
Are there new yet to be constructed layers at the top of these two pyramids? I would argue no (but start perfecting that “prescriptive / optimization analytics” layer). Technology is no longer the impediment to driving improvement. It is proven. The obstacle is now people and behavioral change management. This involves increasing the skills and competencies of employees with analytics. The major barrier is overcoming resistance to change which is human nature. The two pyramids have reached their peak.

The issues now involve strengthening the layers and making them more efficient and effective. The new higher weight at the top of both of the pyramids needs a strong foundation, and this involves an organization’s culture and leadership style.