Saturday, September 14, 2013

Putting McKinsey Analytics in Perspective

Big Data and Advanced Analytics is a key theme for McKinsey & Company, and its first call to top leaders is Big data:  What's your plan?  

Not so fast.

I suggest that if you're a CEO, for example, you're very first step has little to do with planning and perhaps even little to do with Big Data and Advanced Analytics.  That first step is to begin with the end in mind:  What are you trying to accomplish, and what purpose - business, organizational or leadership - are you working to serve?  

The second step is to walk backwards to map the pathways, that is, from the end in mind, back to where you are now.  We often get so caught up in elegant processes, so-called proven methods, or best-practice solutions, that we lose track of what it will really take to accomplish our task and fulfill our purpose.  Therefore, I suggest this walk-backward process, because it points you to those factors and actions that will have the most direct, most immediate impact on your task and purpose.

The second step, in other words, is about creating the roadmap between where you want to be and where you are now.  

The planning that McKinsey elaborates on is, I posit, the third step.  Put simply:  Walk those pathways.  Do what you need to do to accomplish your task and fulfill your purpose.  

Depending on how complex and unfamiliar your endeavor is, this third step can be quite a challenging indeed.  But to the extent you've carefully and thoughtfully navigated the first and second steps, the efforts to create and action your plan ought to be easier.  Not easy, but easier.  After all, you've just created a workable roadmap, haven't you?

Big Data is so phenomenal, given what new media and internet technology have gathered, that it's virtually an imperative for a CEO to look and tap into; that is, if he or she wants to retain competitive edge.  So, by and large, we can expect that Big Data will emerge as a key component of the roadmap from the second step.

In this video, Tim McGuire says as much:
By now, most industries recognize that "big data" and analytics can boost productivity, make processes more visible, and improve predictions of behavior. "Analytics will define the difference between the losers and winners going forward," says McKinsey Director Tim McGuire.
In this video, he explains how to start thinking about analyzing data, and how to address the key strategic and organizational challenges of implementation by focusing on "the right data, the right modeling capability, and the right transformational methods to have your people act differently and make decisions differently."
Note that only in the second half of this video does McGuire talk about where you ought to start.  What he relates and emphasizes are spot-on, but to speak of the problem as if it were an after-thought is a trap many organizations fall into.  

For example, one colleague of mine talked with me about a client organization that hired consultants to look into a bonus system.  Apparently the work wasn't going well, so they engaged a second consultancy.  They, too, weren't working out, and this is the situation where my colleague and his company were called into.  The organization was no longer clear on the specifics of what they were trying to accomplish to begin with.  

So while we cannot edit this video, you simply shift in your mind that second half to the first half, as I've emphasized so far in this article.  

"Big data: What's your plan?" sets out the imperative task: to develop a plan that brings together data, analytics, frontline tools, and people to create business value. Only by spending the time to craft a plan can executives establish a common language to focus on goals and on ways of getting started.

As a part of our special package on advanced analytics, Matt Ariker, of McKinsey's Consumer Marketing Analytics Center, focuses on the human element: the skills needed; how to organize and integrate new capabilities, people, and roles; and the mind-set and behavioral changes organizations must make to become data driven.
 What Ariker relates in this video is how much Big Data and Advanced Analytics are a human endeavor.  It isn't just an element of the process, I argue, but rather the whole process is quintessentially a people one.  This reframed point, then, is the context on which we can better appreciate Ariker's fine walk-through of the different capabilities needed to run with Big Data and Advanced Analytics.  To distill what he pinpointed:  You need knowledgeable executives, technical experts, and change agents who can modify the process and persuade clients accordingly.

One caveat:  I caution against re-fashioning the organization as a data-driven one.  Yes, undoubtedly, Big Data will have a enormous play in your efforts.  But I suggest framing the organization, if it isn't already, as a goal-, target-, or purpose-driven one.

"It's essential to have a business case for your data transformation. Many organizations somehow slip into a transformation state where they have basically several IT projects being run," say McKinsey expert Matthias Roggendorf. "You need to be very clear on what kind of business value you want to create with your data transformation." 
In this video, a part of our big data and advanced analytics series, we explore the essentials of a business case for implementing a data transformation, including managing the life cycle of data.
That business value Roggendorf speaks to is a crucial one.  In my suggested framework, value is determined by how well a process, methodology and solution actually helps you to accomplish tasks or fulfill purpose.  Moreover, while "target picture" has a structural, process and technical reference, I suggest expanding it to mean organizational challenges, business purpose, and financial goals.

In closing, then, Big Data and Advanced Analytics is servant to a larger purpose and a bigger picture, and you as the CEO, who has weighty decisions to make and diverse responsibilities to uphold, are the master.

This article is one of a series I am writing on Big Data and Analytics.  Please click on My folders on the right hand column to see what I've written so far.

Thank you for reading, and let me know what you think!

Ron Villejo, PhD

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