In Analytics, Resolution Must Be Accompanied by Resolve

Don’t underestimate the challenges of making data analytics work — or the resolve you’ll need.

It is easy to aspire to analytical prowess, but far far more difficult to achieve — just ask anyone who applied their burgeoning analytics skills to picking March Madness basketball winners.

For organizations as well, there is certainly no shortage of hype about the potential for data and analytics. But the reality is that creating competitive advantage from data is elusive for many organizations.

Investigating this difficulty is the cornerstone of our 2016 report on data and analytics, “Beyond the Hype: The Hard Work Behind Analytics Success.” Building on a survey of more than 2,000 managers as well as more than a dozen interviews with executives at global companies, our research examines the reasons behind the struggle to create competitive advantage using analytics.

Our core finding? That, after increasing steadily for several years, the percentage of organizations who get competitive advantage from analytics has now declined. In contrast to a peak at 66% in 2012, this year just 51% of survey respondents report that analytics creates competitive advantage for their organizations.

Data and analytics can still provide considerable value for organizations. But there are two words in that statement to emphasize — can and value. “Can” implies potential — but not certainty. “Value” implies benefit but not necessarily advantage. Both ideas infuse our research findings.

Analytics is pervasive, affecting practically every business. But obtaining competitive advantage from it is more difficult. Advantage is not achieved just by starting an analytics program, or by collecting more data, or by talking about it. As analytics diffuses to an increasing number of businesses, it has become table stakes. It’s necessary if you’re to compete, but it’s not sufficient to ensure you’ll win.

With a decline in competitive advantage, it might be natural to assume that we’d see widespread disillusionment with analytics, or an anti-analytics backlash of some sort. Nope. Despite the decline in organizations reporting competitive advantage from analytics, considerable optimism remains. Most managers are still quite positive about the potential of analytics. They’ve seen increased interest in analytics over the past few years, and they expect its use to continue to grow in their organizations. In addition, use of analytics for innovation remains steady.

Instead, our research reveals insights into the unglamorous but necessary actions required to improve decision making with analytics. These insights may not come easily.

As an analogy, every New Year’s Eve fills me with hope for the changes the new year can bring. There is so much potential! But I live in Boston, where the new year also brings snow and ice. A New Year’s resolution like “get more exercise” is easy to make — but the harsh realities of subarctic conditions in Boston can quickly dissolve the best laid plans of mice and men; getting more exercise is a far greater challenge on slush-covered streets filled with potholes (and bad drivers) than setting the goal suggests. And it’s the same for organizations when it comes to data and analytics.

There is a distinction between a resolution and resolve. Analytics success requires more than a resolution — it requires resolve. It is not impossible to catch up; other organizations may not be far ahead. However, there is no panacea. Instead there are numerous, frequently difficult, details that organizations must get right in order to achieve analytics success. These details aren’t easy. They require significant hard work, investment, and leadership.

Organizations achieving success have certain things in common. They:

  • Have executives who are both users and proponents of analytics. Senior managers in more analytically mature organizations are more likely to incorporate analytical approaches into decision making than senior managers in less analytical mature organizations. This includes members of the C-suite as well.
  • Blend analytics and intuition into a combination more effective than either alone. Managers in more analytically mature organizations see through the false dichotomy of analytics versus intuition. Instead, they use both in complementary fashion.
  • Apply analytics strategically in the organization following a formal plan. The success that more analytically mature organizations realize isn’t an accident. Instead, they tend to have formal plans to incorporate strategic use of analytics.
  • Embrace initiatives that go beyond optimizing existing processes to exploring new ideas. In more analytically mature organizations, managers avoid analytical myopia. They apply analytics not only to making incremental improvements to current approaches, but also to discovering new approaches as well.

In our report, we describe in more detail how organizations that we have seen gaining success from analytics demonstrate the resolve required to change their organizations. Organizations that are more advanced in their use of analytics take a strategic, not solely operational, approach to gathering and governance of valuable data. Conversely, organizations lagging in their use of analytics must commit to the effort needed for a successful analytics strategy.