Data analytics starts with the C-SuiteWednesday, October 11, 2017
Data and analytics is very much the hot topic of the moment. Transport for London recently announced plans to generate £322m in revenue from collecting and selling data about passengers who used Wi-Fi in stations. Forbes published an article a number of months ago, which stated that successfully harnessing data and analytics will be the #1 determinant of who wins in a category. And just a few weeks ago, The Economist published an article about how facial recognition is set to revolutionise the world of business, government and society.
With numerous organisations embarking on their analytics journey, many CEOs and business leaders ask us how they and their fellow executives should be thinking about unlocking the potential of analytics within their organisations.
You will often hear about organisations being encouraged to start small and hire a few data scientists in order to test the value of analytics and scale up once the proposition has proven its worth. However, this wait-and-see approach in many cases is almost doomed to fail. These small-scale attempts at analytics typically fail to gain traction within the organisation, are often not taken seriously and are vulnerable to retention of key employees.
Every time such an initiative fails, there is a significant impact on the organisation in terms of wasted money and effort, not to mention loss of confidence in analytics as a source of competitive advantage.
Building a powerful and impactful analytics capability that can drive and shape an organisation’s strategy and future growth requires significant time and commitment. This commitment needs to come from the very top – in other words, the CEO. If analytics as a driver of change is not a CEO-level mandate, then it simply loses its value. Rarely do organisations have the discipline or energy to build any capabilities that do not have the support of the CEO. In fact, the CEO doesn’t just need to sponsor analytics, he needs to lead from the front and demonstrate full commitment to the analytics vision.
OC&C research into the determinants of analytics success
In a ground breaking research study that we recently conducted, the imperatives of successful analytics capability building became clearly evident. We surveyed more than 300 C-suite level executives in the US and the UK, conducted 40 deep dive interviews with CEOs, CMOs and Chief Analytics Officers (as consumers of analytics) and topped it up with interviews with informed parties, including software vendors and business school professors.
We gained valuable insights into how analytics as a capability is used across different businesses, and also the foundational elements, enablers and people considerations which are critical to successfully building an analytics capability within an organisation. These determinants of success came out clearly and consistently, in that they did not differ by industry, country or company size.
This first blog post on our findings focuses on the foundational elements, with future posts planned on the enablers and people considerations, which are equally important.
Foundational imperatives can broadly be described as the ‘engine’ for building a successful analytics capability. Without them the attempt to build capabilities and leverage insights within a company is likely to grind to a halt. These foundational elements were:
- Commitment – The CEO defining the vision for the capability and leading the hard yards
- Senior sponsorship – The CEO driving the change and demonstrating analytics-driven decision making
- Relentless focus on business outcomes – The CEO’s responsibility to ensure that analytics is focused on where it can have the most transformational impact
Our interviews and experience highlight many unsuccessful examples in which one or more of the three crucial ingredients were missing, yielding false starts, wasted money and squandered effort.
Commitment to the vision of the analytics capability
The survey revealed equal measures of success and frustrations. But the singular thread that ran through the data and the interviews was the importance of commitment to an analytics vision. This vision needs to be created and led by the CEO.
The obvious next question is “what does the CEO need to do to implement this vision?” The most important factor is preventing fragmentation of thinking and application. Fragmentation stifles ambition and leads to wasteful efforts. Fragmentation also erodes commitment. As one CEO told us, “big ambition provides a flag that the organisation can rally to”.
Senior sponsorship and support
So how should a CEO make sure that the analytics vision is bold and ambitious and is not crippled by fragmented, short-term thinking?
Behind every successful organisational initiative lies a successful and well-oiled team. This is no different when it comes to analytical capability building. The CEO needs a team that has the acumen and skills to create a capability that effectively translates a vision. This team not only needs to work closely with the CEO, but should also be able to challenge him or her.
Through our own experience of conducting deep organisational transformation work, we have repeatedly noticed that the success of strategic initiatives had a strong correlation with senior sponsorship and support. This is no different when building an analytics capability, but there are some important differences that a CEO needs to recognise. A powerful analytics capability needs to be more tangible in the impact it achieves. And as we will come to talk about in later blog posts, getting the other imperatives for analytics success right is absolutely critical.
Laser-like focus on business outcomes
‘Data is the new oil’ has become the new catchphrase, but data, like oil, creates a slippery mess when there is no direction around how it needs to be used. For a CEO to lead the creation of a successful analytics capability, he or she needs to have a deep understanding of where and how data can be impactful in the organisation. The CEO should look at the value chain of the business to identify the major decisions that analytics can support. Equally, do not let your analytics capability be a hammer looking for a nail. The focus should be on solving specific business problems, not simply searching for use cases for cutting-edge analytical techniques.
A CEO’s mandate to build an analytics capability needs to start with a vision of how analytics can be a long-term strategic growth driver. It is never easy to create and implement an analytics vision. This requires patience, determination and ongoing engagement. The chances of success are exponentially higher when the CEO has a deep understanding and clarity of how analytics can transform the organisation’s future.
- James Walker, Partner and Global Head of Analytics
- Jos van der Boom, Associate Consultant