The following is adapted from Guaranteed Analytics.
If your business’s analytics program isn’t working for you, it could be that you’re making a common mistake when approaching analytics: staying stuck in a tactical mindset, when what you need is to be strategic in your thinking.
In most businesses, there are two types of operations: tactical and strategic. One is not inherently better than the other, and both are necessary, but understanding the difference between the two is essential to success, especially when it comes to analytics.
Think of the tactical side of operations like firefighters for your business. These functions deal with urgent issues that have to be solved now, usually with only short-term sequelae, like managing security at the door, dealing with irate customers, or fixing a downed server. Strategic operations, on the other hand, are those functions that affect your business’s long-term health. The CEO role is a strategic one, for example.
Learn the difference between seeing analytics as a strategic operation versus a tactical one, and help your business develop a strategic mindset with three vital rules.
Analytics as a Strategic Component of Business
The difference between tactical and strategic operations seems pretty straightforward. However, many companies burn up time and money focusing on tactical issues only, ignoring the strategic.
Imagine your security guard fails to show up for work one day. There’s no one to check badges, accept packages, or screen visitors at the door. Your business goes nuts because having someone in the security position is essential to the day-to-day running of the company.
Now, imagine your CEO quits out of the blue. For a few days, maybe even a few weeks, their absence might not even be noticeable. People are still able to come and go from work, mail gets delivered, payroll gets processed, and meetings are held.
But after a couple of weeks, the CEO’s absence will start to be felt. There’s no one directing the next stages of projects in development. Your business is a rudderless ship at sea, vulnerable to sinking.
Analytics often winds up in the tactical basket in many businesses, even though it should be a strategic endeavor. Why do so many companies make this mistake?
It’s our natural inclination to focus on the fires we have to fight now, not those in the future. It’s not an intentional error; we just get caught up in triaging each day’s emergencies, often confusing things that can wait (emails, unproductive meetings, etc.) for tasks that must be done now.
Think of investing in analytics the way you invest in a 401(k). If you don’t put money into it in your twenties, thirties, or forties, nothing happens. You’re perfectly fine in the short term (though your long-term outlook is another story). The strategic need of saving up for retirement has little to no effect on your everyday experience.
However, on the tactical side, if you don’t set money aside for lunch today, then you’re going to be very grouchy—and you’re going to drop everything else you’re doing to figure out how you’re going to get fed.
The firefight of eating lunch today is always going to win out over-investing in your retirement for tomorrow. Similarly, the firefight of a crashed website or a faulty employee time-tracking system is always going to win out over the strategic needs of filing a key analytics report. Heads won’t roll if that report isn’t updated, but heads will roll when your site crashes or your time-tracking system goes offline.
The short-term urgency of our tactical needs will always win out over your long-term analytics needs in a firefight. The solution? Avoid the firefight.
Developing the Strategic Mindset
To make analytics the priority it should be and ensure it succeeds in helping your business achieve its goals, you’ve got to develop a strategic mindset about it.
First, stop viewing analytics as a black and white transactional function. It’s not simply automating tasks you were doing manually or collecting massive amounts of raw data. Data collection is part of analytics, but that’s the tip of the iceberg.
Successful analytics requires getting comfortable with grey areas in your business. You can acquire all the data in the world, but until you start finding patterns in it and using it to drive insight into questions you want answered, it’s meaningless. Collecting sales figures via receipts is transactional; using them to find hidden opportunities to place merchandise is analytics in action.
Second, you need to tie your analytics program to company values and goals. This means not placing an IT person or business intelligence specialist in charge of it. Instead, put someone with profit and loss responsibility, typically an executive, at the stern. This will help tie analytics efforts to specific business goals - long-term ones that affect your company’s future down the road.
Third, you need to manage information bias. When the story in your data tells you something you don’t want to hear, you have to take the uncomfortable step of listening anyway. This might mean making unpleasant decisions in the short term that are better for you down the road. Be open to a new interpretation of information or to doing things differently than you have by rote in the past.
Your business can make analytics a strategic priority, but you have to avoid the firefight. Start with the strategic mentality as defined above, and you’ll find that soon your analytics system has become the important long-term catalyst for change and growth that it was meant to be.
For more advice on making analytics a strategic component of your business, you can find Guaranteed Analytics on Amazon.
Jim Rushton began his career in analytics working with some of the biggest consulting companies in the world, including Accenture, Deloitte Consulting, and IBM Global Services. Jim then moved to an executive position with Verizon, where he oversaw the company’s customer and marketing information. Leveraging his experience across corporate America, he helped found Armeta Analytics, and in the past decade, his team has helped dozens of Fortune 1000 companies learn how to monetize their data.