I met Eugene last night after connecting through the good people of Melb Uni Computer Engineering.
My career (I’m a 57 YO grey beard) included 10 years in Telstra where I was given a very broad brief to leverage scientific methods and analytical evidence in designing reforms of operations, and convince Execs to make changes. You’ll guess correctly I come from the operational strategy and change side of business. My disciplinary background includes a Ph.D in Management Accounting. I’m sure to stand in awe at the IT and mathematical competencies many of you will possess.
I’m looking forward to meeting many of you in your local chapter meetings. I’m in retirement number 2 – probably temporarily – and would love to use some of that time to learn from and, if I can, assist the good work of Analyst First and its individual members.
“Appropriate Empowerment” is the third and final element of the Holy Trinity, the three essential characteristics of sponsors of successful analytics practices, covered in the current series of posts. Appropriate Understanding and Appropriate Incentive were covered previously.
As before, this is an examination of the success mode and failure modes of the element in question. What does Appropriate Empowerment (or just “Empowerment” for short) look like when it succeeds, and what happens when it fails, or other elements fail to support it ? The success mode of Empowerment considers the situation where all elements of the Trinity are in place, but focuses on the role played by Empowerment.
The Failure Mode of Empowerment is the situation where the sponsor possesses Understanding and Incentive, but lacks Empowerment. We explore this situation, along with possible remedies, before concluding with the Isolation Mode, the situation where Empowerment is present, but alone, with neither Understanding nor Incentive in place beside it.
The success mode of Empowerment is simple, yet essential. Empowerment is the least visible element of the Trinity, more notable in its absence. Where the Sponsor sees the need for something to be done to the benefit of the business through analytics, and has the right Incentive to make it happen, then Appropriate Empowerment simply means : it happens. There is no one who can overrule, block, derail or otherwise unhelpfully modify any analytics initiative that has been put into motion.
Understanding ensures that the sponsor identifies the right analytics initiative for the greatest benefit to the business, and takes into account all that is required to enable it. Incentive ensures that the Sponsor actually wants this to happen. Empowerment then is simple : the Sponsor is in a position to launch the initiative, and ensure that it proceeds to the correct conclusion. He is able to support it with all the resources it requires, and protect it from unhelpful stakeholders. He is also in place to ensure that recipients of analytics recommendations act on them if the process requires them to do so. Tyrannical ? Perhaps. Far-fetched ? Certainly. But this is the ideal, however out of reach it may be for (current) real-world large organisations.
Empowerment is thus quite simple. It is the ability to make things happen.
It is also an absence of unhelpful constraints. A Sponsor with the Holy Trinity is sufficiently empowered not to worry about unreasonable or ill-defined expectations of value before the initiative or function is ready. Empowerment ensures that the function is not subject to IT-style management practices, deterministic waterfall and project management approaches. His analytics function is lean, agile and experimental : free to learn, fail repeatedly (for a time), as required to continually reach insights of massive value and exploit them.
The failure mode sets in when a sponsor has all the best intentions in terms of Incentive, and is well versed in Understanding what an analytics function can do, and what it requires to achieve it, alongside budget and a mandate to create the analytics function. Unfortunately, he may well lack the power to act as Understanding and Incentive may compel him to.
Any dilution of empowerment invites unreasonable expectations born of poorer Understanding and Incentive. A sponsor beholden to other managers, stakeholders etc is subject to constraints, expectations and pressures that may prevent an agile, experimental approach. The cargo cult of analytics, “Analytics in a Box” solutions promoted by some vendors stand in opposition to the agile approach, and enjoy attention and support from far too many senior executives. The resulting analytics cargo cult, subscribed to by much of senior management, expects great value from analytics, but does not know how to define this value, or even to measure it. This very lack of clarity may be what imposes inappropriate deterministic project management frameworks such as PRINCE2, and other inappropriate business analysis and management oversight by people who have no idea what they are managing or why. in such situations, project managers may grab the first objective metric, however irrelevant or minor and focus on it as a box ticking exercise. The analytics function is then little more than an IT production line, creating something of indeterminate value to satisfy a management fad. A sponsor beholden to such powers cannot be said to be sufficiently empowered. Worse yet, ignorant or indifferent management may relegate the sponsor under the auspices of IT. Needless to say, this is not an ideal outcome.
One large pathology crippling Empowerment is the modern corporate stakeholder model. A committee of stakeholders is not a Sponsor, especially when enough members of that committee have far from perfect Incentive or Understanding, and perhaps far too much Empowerment. A committee can be on the whole more stupid, poorly Incentivised and disempowered than any one member. A Sponsor beholden to such a Committee is hardly empowered, and the Committee as Sponsor is a far from ideal scenario. The fact that this situation is reality in so many large organisations does not diminish the fact that it is utterly pathological.
In the ideal situation the Sponsor is beholden to no one with excessive power who is inadequate in the other two key characteristics. The ideal Sponsor is therefore the CEO, and better yet a manager / owner. Again, this is perhaps unrealistic, but still needs to be identified as the ideal, and any deviation from it analysed in terms of potential failure of Empowerment. It is also the reason that the most innovative, valuable and agile analytics exist in tech startups and not large “Enterprises” (in quotes because they are usually the very opposite of that word)
Not all pathologies of Empowerment concern levels of power above the Sponsor. Other pathologies of Empowerment are lateral. The most immediate lateral power issue is one with IT : too many IT functions find it their job to block analytics access to tools, especially open source tools that are otherwise readily available, free and powerful. They may prevent access to adequate, and otherwise cheap and readily available hardware and useful online services such as cloud computing. They are also known for starving the analytics function of data. Too many analytics functions are in a situation where the main expenditure of effort is building business cases for data, tools and hardware. A sponsor who knows this to be the case but cannot fix it is clearly not sufficiently empowered.
Lateral Empowerment is also an issue with “trigger pullers”, people whose job it is to act on the recommendations of operational analytics. The most striking case of this is a pathology i have seen in a multitude of organisations making use of predictive operational risk analytics. Predictive models provide lists of targets (eg revenue leakage, non-compliance, suspicious behaviour, fraud risk indicators etc). In all cases a human being is provided a list of targets generated by the predictive model. Ideally, this human being proceeds to manually investigate the targeted cases. Unfortunately, in most situations, these individuals do not understand or trust these predictive models. In my experience, many such individuals cannot conceive the very idea of the inference of a model from data. It would appear that there are whole cultures of people who cannot imagine such a thing as statistical induction. They naturally voice their displeasure and challenge, stall and undermine the process. Much of a Sponsors job seems to be the thankless, draining and often never ending task of “winning them over”. A sufficiently empowered Sponsor would, however, be in a different situation. When asked why these people should trust these models he would be able to answer “because if you do not, I will fire you and perhaps hire someone who does what they are told. Or replace you with a smart pattern matching algorithm”. Again, this is perhaps not realistic, and perhaps suggesting something that certain Public Sector Unions would consider on par with a crime against humanity – asking that people do their jobs. The whole issue of uncooperative “trigger pullers” was only raised to make a point about Appropriate Empowerment: if a Sponsor is not able to ensure that human components of an operational analytics value chain do cooperate and act as a part of the analytics value chain, there is a failure of Empowerment. Perhaps effective analytics sponsorship, as defined in this series is impossible in most organisations where employee non-compliance and stakeholding is a given.
A lack of Empowerment is however, far from the end of the world, and the relatively dystopian situation described above matches many existing analytics functions, particularly in government and quasi-government organisations. They still manage to survive, and add some value, although arguably but a fraction of what would be possible if only sponsors were more Empowered. These organisations have in fact found themselves innovating in a number of fronts, dealing with insufficient Empowerment, and in some cases developing methods of generating more of it.
One key solution to the problem of insufficient Empowerment is Separation from IT. As far as possible, as quickly as possible, it is important to establish a “sandpit environment”, separate from the main IT network, where new hardware may be added, and software loaded outside of IT governance. This is essential if appropriate computational power and open source tools are to be leveraged quickly and effectively.
Another part of the solution, and one that is even more fundamental is Stealth Mode. It is imperative that a new analytics function has the ability to learn, experiment, and fail in its early stages. Expensive budget items such as vendor tools create massive, thought ill-defined expectations. Expectation management is yet another reason to avoid expensive vendor software early in the creation of an analytics function.
Ideally, the function has a small crew of capable, flexible people, a small budget and access to data and open source tools. Also, the function has a main focus that is a well-defined, business as usual task such as reporting. Actual analytics can be done on the side, as a side project, and not announced until it yields results. These results can then be presented as wins to formalise and Empower the nascent analytics function. There may then be sufficent leverage to acquire more staff, create a sandpit environment and acquire data reliably.
As discussed previously, the most important element of the Trinity is Incentive. With Incentive alone, the Sponsor knows that their first task is to increase their Understanding. Some of this is reading/study, some of this is consultation with experts, and much of this is experience which can be obtained in stealth mode. Empowerment is important, but as we can see it comes third in importance.
Indeed, most capable analytics professionals find themselves working for under-empower sponsors. This is not ideal, but not a career-ending situation. Indeed, the struggle for further Empowerment of the Sponsor is the defacto KPI of most analytics functions, and many professionals find it as exhilarating as they may find it frustrating.
It remains to discuss the “Isolation mode” of Empowerment. What happens when the Sponsor has all the power, but no Understanding, and,lacks the right Incentive? Here ignorance conspires with either a lack of real enthusiasm for Analytics, or an entirely different agenda, and gives them a hefty cheque book. So, what can happen ? A storm of Cargo Cults, management fads and buzzwords. “Analytics”, having something to do with “data” and software must clearly be some kind of IT, best managed and bought by the CIO and best explained by people who sell software. And that’s how the wrong kinds of Vendors happen. Long sales lunches. Exciting pre-sales presentations. Use of the words “Enterprise”, “Innovation” and “Insight” by people who don’t have anything to do with any of them. “Case studies” of previous such exchanges in other high profile corporations, presented as success. People who may not really care what they are selling, sell to people who don’t really understanding or care what they are buying. Consultants, the “best practice”, “brand recognition” kind jump in. More money gets spent. Everybody involved wins, except the (theoretical and distant) shareholders, citizens and other ultimate beneficiaries of the business. Almost always, none of the parties is an actual owner of the business in question. Most owners are far more sensible than that.
So what happens after that? Software get installed. Systems get integrated. People get hired, maybe, as an afterthought to mind the (far more important) Machines. These people are likely software developers, data base managers and project managers. Maybe even a token statistician. Gannt charts get ticked. Bonuses get paid (at least on the vendor side). Conferences benefit from new “Best practice” case studies. The Vendor-Consulting complex marches on in all its dinosauric grandeur.
So Incentive and Understanding matter, and Empowerment on its own is not a great idea, however common this situation may be.
The current series of posts deals with the “Holy Trinity”, the three characteristics that sponsors of analytics need to have in order to define, foster and support an effective and thriving analytics function. These are :
Appropriate Incentive – doing analytics for the right reasons, genuinely wanting analytics to succeed and thrive, and appreciating analytics product.
Appropriate Empowerment – having the political and financial clout to ensure that the analytics function gets the resources they need, that analytics is managed and directed appropriately and that analytics product is used appropriately by business users.
In this article we explored the success and failure modes of the second element, Appropriate Incentive. This is the most important of the three, and the one without which improvement in the other two is almost impossible. As before, the exploration will divide into three parts. The first will discuss success modes, the ideal situation where all three are in place. The focus will be on the role of Appropriate Incentive in this situation, although there will be some mention of its interaction with the other two elements.
The second part will discuss failure modes of Appropriate Incentive : those situations where the other two elements are present, but Appropriate Incentive is not. This is the situation where the sponsor of analytics has a good understanding of what analytics entails, and what is required of him to make analytics a success. He also has the budget, mandate and seniority to make this happen, but for some reason choses not to do so.
Finally, we will explore the “Isolation Mode” of Appropriate Incentive, the situation where the sponsor has all the best intentions, but neither the understanding nor the empowerment required.
Appropriate Incentive – Success Modes
Where all three elements of the Trinity are present, all things are possible.
The ideal sponsor supports, protects and nurtures their analytics function because they see it as they key determinant of enterprise success, which is the sponsor’s actual key incentive. Actual, that is, not just stated.
This ideal sponsor is also that function’s number one client : the intelligence they provide is of enormous value to the sponsor.
The sponsor with Appropriate Incentive wants to see analytics thrive, and wants to see the organisation continually transformed by it. He wants to see effective, objective and unambiguous performance management at all levels, especially the senior executive, and especially around their ability to forecast, a key indicator of good decision making. He is prepared to face the inevitable pushback from those that might be uncomfortable performance measurement, change and complexity, and thrive on a world of status and subjectivity. This pushback is inevitable, and according to much documented Agile and Lean theory, far from being a negative this is a key sign that innovation is in fact successful.
The Appropriately Incentivised sponsor wants to see constant expansion of analytics into new areas of the business, and the inclusion of analytics insights in decision making. He also wants to see objective performance measurement in place, providing feedback on the value added by analytics, as well as that of all other functions in the business.
When the sponsor of the analytics function has an incentive to see analytics succeed, and deliver real business value. What are the sources of such incentive ? Usually, this is because the sponsor has “skin in the game”. This is the best and most rational incentive. When the sponsor is to some extent an owner, and committed to the success of the enterprise for a long period, then business objectives can override any conflicting or otherwise unhelpful career agendas or politics.
The sponsor with Appropriate Incentive protects and nurtures their team, weathers any pushback from the rest of the business, and keeps unhelpful influences from IT and other stakeholders at bay.
My personal filter for the ideal sponsor : “first of all, is this sponsor an owner”? Owners almost always have their interests aligned with enterprise success, and have in the bargain the Appropriate Empowerment to make sure that the right things happen. They thus almost always have two of the three elements of the Trinity in place. An owner with Appropriate Understanding is therefore someone who almost always has the entire Holy Trinity in place, and is thus my ideal consulting client.
Much and perhaps most of the analytics we see discussed publicly is practiced by people working in large organisations, where sponsors are employees rather than owners. Indeed, most organisations one encounters on data analytics blogs, or at conferences meet this description.
There may however still be corporate and government employees, senior managers and executives with mandate and budget for analytics who also have Appropriate Incentive in these situations. These are not as common as one might like, but they do exist.
Their Empowerment is not as great as that of owners, and their incentive might not be as perfect, but both are sufficient. These are people who usually for intrinsic reasons, be it a passion for analytics, or a personal set of professional values are able to transcend bureaucracy, cultural inertia and the political friction that successful analytics can create. These people are not easy to find but great to work with. Often, any minor shortfalls in Incentive and Empowerment relative to owners is offset by their deep Understanding. While an owner with the entire Trinity is ideal, they are rare enough due to a frequent shortfall of Understanding. Corporate executives with the Trinity are good enough, and the source of their Incentive can be an additional strength. They are inevitably charismatic, intrinsically-motivated people, able to inspire their teams to do great things. Further, the political backlash such figures can create can work to the advantage of analytics teams, creating greater team cohesion and motivation as they rally around their leader.
A sponsor starting out in analytics is incentivised to get informed, and to acquire more Appropriate Understanding. They may start with just enough enough Appropriate Understanding to know what they don’t know, and to realize that they need to learn more. they also know that to learn they must experiment, to consult with thought leaders in analytics and to grow their Understanding. They thus have the Appropriate Incentive in place to first of all determine what they need to learn, and are not afraid to be seen to be seeking advice, experimenting and constructively learning through failing .
Once they start building the analytics function, good sponsors have an Appropriate Incentive to hire the people who will do the most effective job, rather than the cheapest, those that look good on paper, those that will be the most sycophantic or those they have been forced to absorb as part of byzantine corporate quid pro quo. Appropriate Incentive means that the usual egoic or career incentives do not enter consideration in the construction of an analytics team. Indeed, most of the criteria used by HR departments need to be challenged directly : good analysts are seldom what HR considers to be model employees. A sponsor with Appropriate Incentive will not knuckle down to HR, and will not allow bureaucracy and politics cripple the effectiveness of an a alive function. They will select their own staff, usually through their own networks.
Once the team is in place, the sponsor with Appropriate Incentive supports them in their work, ensuring that they get all the data and tools they need (although “want” is not the same as “need” ). The Sponsor will ensure that the team is not mismanaged or otherwise subject to unhelpful stakeholding from IT or any other part of the business whose involvement should be minimized. Indeed, the Sponsor will be the effective Director of the team, with team leaders reporting directly to him, whether formally or otherwise. He will also be the number one consumer of analytics insights. Whether the team is inherently a strategic or operational analytics team, the sponsor will be the first recipient of high-level insights, which he will communicate to peers and superiors, winning more support and demand for analytics in the business.
This Sponsor supports an exploratory, agile approach to analytics, however it might be unpopular to IT and related mainstream project management / business analysis functions. (Yes, many enterprise IT functions do seem to be “converting” to “agile”, but this in name only. Actual corporate agility is as disruptive and nonstandard as ever). They also spend money appropriately, and have no inclination to spend money on expensive vendor tools until they are 100% sure that they can’t make do with commodity and open source. No amount of vendor or senior pressure will change their minds. This is because money wasted on expensive tools is money that could have been spent more wisely on good people, good coaching/training, perhaps even good data or cloud capacity. Now that’s Appropriate Incentive for you. On the other hand, if they do see a real need for an expensive vendor tool, they would know exactly the tool they need and no amount of pressure will make them buy another, less suitable tool just because it has the right political backing or marketing.
Incentive Failure Mode
What happens when there is Appropriate Understanding and Empowerment, but no Incentive ?
The failure of Appropriate Incentive can be one of degree, or intent. A failure of intent means an active interest in preventing or undermining the creation of an analytics function. The other option is less sinister and more mundane : the sponsor simply has other priorities, and there are political pressures in place that do not allow for a perfect, or even adequate analytics function to emerge.
The failure of intent is the most interesting. What if an executive has full understanding of what analytics can do, and how to bring this about, and also has the power to make this happen, but realises that this is not in their best interest? Can this happen ? Yes. Current power structures are not supported by objective measurement and the ability to bring any number of skeletons out of electronic closets at a moments notice. Effective status affiliation, conformity, credit taking, blame shifting and fad compliance have raised many power brokers to where they are today, and possibly into a position where they could sponsor an analytics function. Some of them may realize that analytics is in fact detrimental to their gravy train by introducing objectivity, rigour and resulting ongoing change. Data analytics can make people accountable or obsolete. Worse, it can affect allies and other key connections in the same way, disrupting power support structures. The resulting complexity and ongoing change is not going to be popular with everyone, certainly not with those who have traded so successfully of their “soft skills”. Indeed, the “Dark Triad” (another trinity ?) of Narcissim, Machiavellianism and Psychopathy is over-represented at the lofty heights of many organisations and probably not helped by effective analytics.
So, armed with the knowledge of potential consequences of effective analytics, and the budget, power and mandate to grow a function, what are the options ? If one welcomes this brave new world, and wants to build a world-beating organisation, see the description of the success mode above. If not, we have a somewhat different situation. Perhaps the would-be sponsor gently ensures that the analytics function does not emerge at all. This is a risky strategy, because it could after all emerge somewhere else, this time out of the misincentivised sponsor’s control.
Better to grow it, but make sure that it does no harm, by keeping it well away from the business, filtering all its communications and limiting its growth and,more importantly, its impact.This not a problem for a misincentivised executive, they are probably in charge of far more important and lucrative things, and the analytics function can be passed to a subordinate for baby sitting. This subordinate is best one with perfect loyalty and minimal imagination. Risk : managed.
There is a more common version of this scenario, where at the beginning the sponsor has poorer Understanding but better (though still far from ideal) Incentive. As a particular kind of executive they have made a career of (pretending to) excitement about buzzwords and fads that they frankly do not understand and see analytics as yet another bandwagon to jump on. The key with all of these fads from the sponsor’s perspective is that they grow your reputation while remaining Mostly Harmless. They do not see amy impact on the business, certainly not one that impacts them personally. Unfortunately, as the analytics function develops, and causes the inevitable shockwaves of inconvenient truth, transformation and unease, the executive starts to Understand more, perhaps all too well, and this be Incentivised less. The analytics function in this situation will find itself orphaned of appropriate support, “restructured”, neutered by mismanagement and probably wound down. I have seen a number of examples of this, you may have too. Readers are encouraged to comment particularly on this point and share their experience.
A related failure mode of changed Incentive, followed by the orphaning of the function, is the situation where the Sposor sees a temporary ally in analytics, usually at the expense of some other executive. Analytics is used as a weapon to unmask the weaknesses of some other individual, to promote the sponsor’s career. Once the deal is done however, the sponsor may leave analytics where he found it, or, worse, cripple it somewhat to ensure that karma does not rebound.
The other failure mode, the one of degree, is more common. The sponsor cares, but not enough. The sponsor wants analytics to thrive, but he doesn’t want to rock the boat. The sponsor is Appropriately Empowered, but wants to stay that way, and thinks he might not if analytics really flies. He isn’t CEO, Owner or King. Sadly, The outcome here is not too different from the cases above. The only difference is that perhaps the analytics function was created to be “Mostly Harmless” from the start, no “restructuring” required. The positive here is that some sponsors start this way in stealth mode due to insufficient empowerment, but use analytics to grow their clout as well as that of analytics. This is however more a failure of Empowerment than Incentive and will be explored further in the next article.
The Isolation Mode of Appropriate Incentive is the situation where it is the only member of the Trinity present. The trouble here is that not much can happen without Empowerment, and knowing where to start without Understanding is quite tricky. Nevertheless, with Incentive alone one can learn. A would-be sponsor of analytics can ask experts, attend courses, read books, hire trainers and coaches. You can download R or Weka, and try your hand at a Kaggle competition. I meet people every week who seek Understanding and find it, because they have the right Incentive. I have also guided new analytics functions with plenty of Incentive, less than enough Empowement and no Understanding through to success and growth. It can be done.
My advice for any sponsor in the Isolation Mode : step 1 : get Educated. Step 2: keep learning. step 3: never stop, but start doing stuff too, experimentally.
Step 4: you’re still learning, right ? Now grow the team.
Once both Incentive and Understanding are in place, a sponsor with budget and mandate can grow Empowerment in “Stealth Mode”. But that is for the next section on Appropriate Empowerment, the final one in the series.
The previous article introduced the idea of the “Holy Trinity” : the three key characteristics of analytics sponsors. These go beyond having budget and mandate to perform analytics : while those two raise an individual to the title of “sponsor”, the Trinity determines whether the sponsor is a good one. The “goodness” of a sponsor is defined by their analytics function delivering actual and recognized value, and thriving on those terms.
The Trinity consists of Appropriate Understanding, Appropriate Empowerment and Appropriate Incentive. The current series of articles explores each of these. We will examine what success or failure of each element looks like. We will also explore the cases where only one element of the Trinity is present, and, the direst of all, which is total Trinity failure.
For each element, we first examine the case where the sponsor has the entire Trinity in place, but we focus our attention on the element in question. This will be referred to as the “Success Mode” of that element. It will describe why that element of the Trinity is so important, playing well with the other two. We then examine the “Failure Mode”, the situation where the element in question is missing, even as the other two are in place. We then switch to the element’s “Isolation Failure” mode, which is the case where this element is the only one present, and the other two absent. Finally, after listing these for all three elements, there will be an account of “Total Failure”, where all three elements are absent.
Trinity Element I : Appropriate Understanding
Successful understanding means that the sponsor knows what to do in order to create to create, support, protect, nurture and grow an effective analytics function. That sponsor can evaluate recommendations and pitches from consultants, vendors and internal stakeholders to the analytics function, and make effective decisions to further the growth and success of the function.
Such a sponsor understands the importance of both effective IT support and IT non-interference in the analytics function. He understands IT’s role in the provision of sandpit environments, and easy access to open source and commodity tools and all relevant data. He also understands that once data is provided and systems are in place, IT’s main role in analytics is to get the heck out of the way.
The understanding sponsor can manage their analytics team, understand issues raised and recommendations from analytics team leaders and can direct those team leaders effectively to achieve required results.
The understanding sponsor of a strategic analytics function is their number one client as well as a thoughtful, reflective and demanding consumer of their analytics product. He understands that decision support is not decision replacement, and that he has a vital value add to the process, which is to make raw information actionable. He understands that good BI makes decisions better, but not easier. Indeed, good BI is voraciously consumed by good decision makers, even as it is rejected by poor ones as “not actionable”. He actively builds growing support and demand for BI product among his peers, and drives a culture of objectivity, empiricism and accountability within the businesses.
The understanding sponsor of an operational analytics function realises that operational analytics is difficult, and that there are no shortcuts to key components, regardless of what software vendors may say as they beat at his door, and those of his superiors, as well as the CIO’s. He knows that data must be cleaned, processed, prepared and no magic tool does even 50% of that. He knows that there are human components to the operational value chain, from data collectors at the coalface, to IT/DWH as data providers / data bottlenecks, to human executors of analytics-driven operational directives. These people need to be won over or otherwise directed to operate as a smooth, flawless machine, otherwise the benefits are not realized and analytics often takes the blame. He realises the need for appropriate measurement of effectiveness, and the frequent absence of this as applied to the analytics-free status quo. He realises the need to decouple measurement of effectiveness from analytics itself in the eyes of less understanding executive peers and stakeholders.
Finally, the sponsor in the know understands the potential consequences of successful analytics. He knows that an objective performance management culture, and a strong decision support culture favours proven performers and intelligent decision makers, even as it exposes sophists, credit takers and artful persuaders. He realises the cascade effect this can have on the entire executive class, and spillover to the board, shareholders or equivalent stakeholders in government or NGOs. He also understands the expected subtle efforts to derail analytics for precisely these reasons, and knows ways to counter them.
This sponsor is a very rare beast to say the least, but they do exist, their teams thrive and their organisations reap the benefits of analytics.
This is the case where the sponsor has all the best intentions, at least as far as he understands analytics, and the power to make the function work, if only he knew what that entailed. Unfortunately, in this case, it is lack of understanding which lets analytics down.
This failure mode is more common in tech startups and small privately owned companies where the sponsor is the owner, and thus has all the best incentives and mandate to act, but nevertheless gets lost as to where analytics actually fits, how it could help, and what might be required from the sponsor to make sure that analytics delivers value .
The most common gap in understanding in small owner-managed companies is the commonly held view that analytics is part of IT and resembles it in skills, focus and practice. The fallacy that analtyics is IT also helps in throwing analytics acquisition in with the broader IT acquisition stack, with strong influence from the CIO, resulting in unhelpful IT management and practice methods applied to analytics, usually staffed by people chosen for their IT-ish skills, and spending most of their time doing IT-ish things like coding. The analytics is IT fallacy is not helped by those software vendors who are all too happy to perpetuate it, the better to get people to spend money unwisely.
Even more fundamental problems can arise when executives or business owners cannot grasp the difference between “technical” (esoteric detail best left to specialists) and “strategic” (important issues for the executives themselves that cannot and should not be outsourced or delegated). All too often, anything that is not understood, and anything that required painfully rigorous thinking as analytics does, is relegated to the “technical” bucket, even when the issue is actually of utmost strategic importance. Important questions like “what kind of decisions do you want this report to support?” or “are you really asking for a forecast, or it is more like our agreed targets ?” or “what do you want to do with customer segments?” are often met with puzzled, impatient stares and the questioner relegated to the technical bucket along with the questions.
My analogy here is cars, particularly taxis. The construction and repair of a car is clearly technical. What about driving skills ? These a higher order skills, but still, these can be outsourced to a taxi driver. Now consider the situation where the executive climbs into a taxi, and the driver asks “where do you want to go?”. Now imagine an incredulous executive saying “how would I know ? I know nothing about cars. don’t bother me with technical detail. This is something that you should be taking care of. And above all, make sure you make me look good”.
Ridiculous as this analogy sounds, it is a good picture of what happens when the sponsor of analytics suffers a catastrophic failure in understanding. In this case, they “make analytics happen”, but aren’t entirely clear why or how.They put the people and software in place, perhaps with some very vague directives, and expect the ill-defined “analytics thing” to happen, whatever that may be. The failure of understating goes beyond not knowing what the “analytics thing” is, to not realizing that that knowing this could perhaps be useful, let alone vital. Most vital knowledge that the sponsor should have is an “unknown unknown”. The only upside in his case is that the sponsor is happy, confident and unperturbed, unaware that anything should be wrong. If you count that as upside.
Another symptom of a failure in understanding is an eagerness to reach for magic solutions and “best practice”, as promised by certain software vendors and consultants. The belief that analytics is IT helps vendor business models that prey on waste and ingnorance. If an executive, unaware of what they really need, is willing to spend millions on “analytics in a box”, that is just fine with the software company. If an executive wants “analytics best practices” put on place by junior process workers, or predictive modelling offshored to Cheapworkerstan, there is always a vendor ready to collect the money. Such a vendor may be quite indifferent to any debacle of error, waste, stagnation and failure that may emerge years later. Even more likely, the vendor is mot concerned that money would have been better spent on good people, that much difficult data plumbing work is in any case unavoidable and not helped by million dollar software and that free software would have been good enough to begin with. The understanding gap is certainly helped by an incentive gap when it comes to spending money on all the wrong things.
Extending the taxi analogy, failure in understanding often reaches reflexively for “best practice”. Not many people catch taxis asking to be taken to a “best practice” destination. Doing this with analytics is usually just as inappropriate and downright surreal, although it happens much more commonly. It helps that taxi drivers don’t usually encourage this kind of behaviour. Consultants and vendors however are often less shy.
The remaining issue to consider is the opposite failure mode. This is the situation where understanding is present, while incentive and empowerment are not. What happens if the sponsor has a very good idea of how to make analytics work, but no real interest in doing so, and no real mandate even if they did ?
Often, the lack of mandate is the very thing driving the lack of incentive. Sometimes there are other agendas – understanding analytics can be precisely the reason to undermine or derail it : after all, analytics makes people accountable, possibly obsolete and forces them to operate in a complex, ever-changing world. Some might think that it is best to kill it, and most likely this is done by the one person that knows that analytics is more than some ill-defined buzzword. Often, killing or derailing something like analytics is far easier than nurturing and growing it, so all it takes is a bit of understanding of what analytics can bring to people’s careers and accountability, along with very little empowerment and all the wrong incentives, arising from being the kind of worker that would not cheer for an analytics-empowered world. It would be naive and false to say that there aren’t such people or roles within organisations, however “negative” this truth may be.
Other than that, what is most likely to happen when understanding in supply but incentive and empowerment are not ? The answer is, usually nothing at all. Lack of incentive need not mean a destructive attitude to analytics, it merely means that the are other priorities, and given no empowerment, there is little bandwidth to meet them. So analytics languishes, if it exists at all. Perhaps a single analyst or small team is hired as an afterthought, their activities uncertain and their morale low. Data acquisition has to be painfully negotiated with IT and other stakeholders on an ongoing basis. IT has a very unhelpful say in what systems, tools, process and skills are in place. The team performs at best a rudimentary ad-hoc BI function, at those rare moments when someone actually cares about what is in the data. Most such reports are generated for compliance and similar external reporting. The one upside is that usually when the is no empowerment or incentive, the team finds itself using open source tools. This is not really an upside, nor anything resembling an Analyst First operation. Such functions can sometimes be found in smaller government agencies or NGO. They are particularly common in QUANGOs. Sometimes they are surprisingly well funded too. Interestingly, these functions can survive for years. These are often the people telling me sob stories at conferences. I usually tell them to get a new job.
The greatest opportunity for analytics is in privately owned, owner-managed organisations where understanding is the one missing element of the Trinity, and great value can be realized once this gap is closed. Even better, this sector is not, as great an opportunity to those software vendors who prey on ignorance, which is just the absence of appropriate understanding.
As a final note, it pays to remember that failure in sponsor understanding is the one easiest to fix, although “easiest” is not the same as “easy”. Perhaps a better word is “feasible”, whereas failures in incentive are impossible to fix, and failures in empowerment practically so as well. A sufficiently incentivised and empowered sponsor can and should educate themselves, and make that education a key part of the creation of the new analytics function. Hopefully, they understand at least enough to prioritise improving their understanding. I have been privileged to assist a number of sponsors in precisely this activity, with very satisfying results. Indeed, the bridging of the sponsor’s understanding gap can and should be the first step of any new analytics function.
This was but the first of three essays, the next one will explore failures in Incentive, which are the most damaging and irreversible of all.
Following the recent launch of the Singapore chapter of Analyst First, another event is to be held next week in Singapore on Thursday the 15th.
All welcome, RSVP details attached.
Brett Shadbolt, head of Analyst First Singapore is hosting the inaugural meeting of Analyst First in that city. This is an open, free, catered event, with an opportunity to network after the formal proceedings.
Brett and I will present an overview of Analyst First principles, position, objectives and current activities globally and in Singapore.
11th Sept 2012
11 Keng Cheow Street
#03-11 Riverside Piazza
All in Singapore are invited to attend. The event is sponsored by Censere.
On Tuesday night I presented Getting started with Predictive Analytics in the Public Sector to a public meeting of Analyst First in Canberra.
The presentation itself is an update of one given in June to Canberra’s IBM Business Analytics User Group. For this version I added material describing how analytics supports the risk management cycle, and incorporating some insights from Jim Manzi’s excellent Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society.
Part 1 of the highly recommended Uncontrolled covers the evolution of the scientific method (from Bacon on experimentation, to Hume on induction, to Popper on falsification, to Kuhn on scientific paradigms, through to the present day). Part 2 looks at the development of randomised field trials in the latter half of the twentieth century and their applications in medicine and business (i.e. analytics). Part 3 advocates the more widespread and systematic use of randomised field trials to areas of public policy, learning from the business experiment revolution.
Our thanks to BAE Systems for providing the venue.
I am very pleased to announce the fourth Australian chapter of Analyst First (A1), the Adelaide chapter, under the leadership of Inna Kolyshkina.
Inna was the principal founder and original Chair of the Institute of Analytics Prfessionals of Australia, with a 15 year in Analytics in consulting, financial services, fast moving consumer goods, transport and health.
She is currently the director of IK consulting.
As well as being the head of A1 Adelaide, she is also the head of the South Australia chapter of the IAPA.
About usAnalyst First is a new approach to analytics, where tools take a far less important place than the people who perform, manage, request and envision analytics, while analytics is seen as a non-repetitive, exploratory and creative process where the outcome is not known at the start, and only a fraction of efforts are expected to result in success. This is in contrast with a common perception of analytics as IT and process.
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