In the years that MIT Sloan Management Review has been studying the effects of data analytics in companies, we’ve noticed the reality of its value and staying power—and how best to use it—has started to come into sharp focus. In a new research study we conducted with SAS, we determined that most companies are not prepared for the strategic changes required to achieve success with analytics. In fact, the key failing among organizations that have been unable to gain competitive advantage from analytics or to use analytics to innovate is their lack of a strategy.
This is not to say companies are ready to give up on analytics just yet. Our research also revealed that, despite challenges, more than two thirds of managers remain optimistic about the possibilities with analytics. In its comprehensive analysis of analytics, our study also identified critical changes that organizations must make in order to get the most possible value out of the data at their disposal.
Perhaps the most surprising discovery we made in the study is that one of the most important elements in an organization’s ability to successfully use analytics is the human one. An organization’s underlying culture and management strategy have more of an impact than we anticipated, thus it is very important for organizations to create a formal analytics strategy that is in harmony with their overall corporate strategy.
Establishing a formal analytics strategy that lines up with your organization’s core strategy takes careful planning and some reevaluation of how your organization makes important business decisions. And that’s not always easy. It’s challenging for some organizations to build processes that enable managers to trust the data and feel secure that their reliance on data will not undermine the respect that others have for their experience.
Information management is clearly a critical component of any robust analytics strategy, but at the same time, cultural norms around decision-making, such as respect for and use of data, along with skills development, may need adjustment.
Here are four human factors companies we determined that companies may be overlooking as they aim to transition to the next phase of analytics:
1. Data awareness and responsibility. As managers rely more on data, they need to know from where and whom to get the data they need. Managers also need to realize that curating data isn’t just for the quant jocks anymore; managers need to take a large share of responsibility for the data and ensuring its accuracy and relevance.
2. Openness to new ideas. In order for organizations to achieve a competitive advantage with analytics—and to use analytics to foster and support innovation—it must be open to changing the status quo. Just because things have always been done one way does not mean that one way is always going to work, particularly in the face of the influx of new data. Equally important is a willingness to look at data in new ways, and to not be afraid to take the information the data gives you to try new things.
3. Signals about the importance of analytics. If an organization is committed to analytics as a key component of their strategy for success, the organization’s leadership needs make this commitment very clear to its employees. This can be done through consistent communication and reinforcement of priorities, as well as through the creation of organizational structures such as data councils and data labs. It’s also important that senior managers are open about their own use of analytics, thus reinforcing the importance of data and analytics to their staff.
4. Decisions that blend analytics with intuition. Organizations need to establish a culture wherein employees feel confident and secure in utilizing analytics in their decision-making. This not only requires an overall culture that supports analytics, but also the proper training and guidance for managers so that they know how best to integrate analytics into their decision-making. Managers also need help marrying what the analytics tells them with what their intuition tells them. The two do not have to be mutually exclusive, and the real competitive advantage comes when organizations have mastered how to utilize both to their full advantage.
This post is adapted from "Beyond the Hype: The Hard Work Behind Analytics Success," published March 2016 by MIT Sloan Management Review.