What can we say about the future of analytics?
Let’s start with what we know:
- Moving our activities online has caused us to produce mountains of data to analyze. Too much data many would say.
- Much of this data is imperfect. Many online activities cannot be measured directly, so we settle for indirect measurements and infer results as best we can.
- We are constrained by the cost of understanding this information.
- Most of our investment should be made in people and their intelligence, not tools.
- Our competitors are working furiously to gain an edge using their data. Their efforts are reshaping the way they work and do business.
What will companies look like who embrace the future of analytics? How will they accomodate these opportunities and constraints?
Kishore S. Swaminathan, Chief Scientist at Accenture, characterized these companies of the future in his 2011 article “What the C-Suite should know about analytics”.
The long-term impact of analytics will be in instilling a culture of data-driven decision making at all levels of an enterprise. Or, put more bluntly, business proposals and decisions — big or small — will have to provide satisfactory answers to this question: “Do we think this is true or do we know?”
He laid out five dimensions across which these companies will be proficient.
High analytical literacy
When people have access to lots of data, they can use it to make wise, informed decisions. Or they can make poor decisions with overly high confidence. Organizations with high analytics literacy will not be tempted to over-optimize their processes, making them fragile and allowing little room for error. They will not permit too much data to lead them to oversteering, or “making decisions when none is needed.”
Traditionally, businesses have thrived on “stability and repeatability.” Stable and repeatable processes make it possible to invest in large capital projects and organizational expansions. They reduce the number of people who have to think about what they are doing because processes are well-defined.
But what if you face a multitude of volatile opportunities that come and go within the long time frame it takes to make and implement large decisions?
Make lots of small decisions, quickly.
Organizations of the future will thrive on this volatility. Their fine-grained visibility into customers and competitors will enable them to make fine-grained decisions. The time-frame of their decision-making will align with the time-frame of the opportunity.
Information in many companies is siloed by organization, by the technology used to collect and organize it, and by ownership of the data. Future organizations will tie information across organizations. They will expose data so that others can use it.
This does not mean that all data will be collected into a large warehouse. Most warehouse projects are doomed to fail.
The future of analytics will be in a world where managers will be able to quickly pull data together from different locations, design experiments, and act on the results.
The end of analysis paralysis
Managers in the future will make their move only after collecting and analyzing the relevant data that enables them to make an empirical decision. They will collect only just enough information to make a decision and no more. They will know how to design experiments to produce the data they need. Their organizations will tolerate more risk; they will encourage mangers to experiment rapidly, they will recognize that failed action is better than inaction.
Intuition’s new pulpit
But what about admired traits like intuition and gut feel? Will they go by the wayside?
Of course not.
The future of analytics will rely on creative managers who, like creative scientists, know “when there is enough data to warrant a theory, when there isn’t, what new data to gather and how to design and experiment to gather the right data.”
You could characterize Swaminathan’s ideas as mere speculation. You would be justified in asking him, “do we think this is true or do we know?”
On the one hand, he has no proof. He is making educated guesses about the future. On the other, his proof is the present. Many companies are already learning, preparing, and living this future. For the rest of us, it’s time to get started.