Tim O'Bryan 270001NMX7 TIM_OBRYAN@yahoo.com | | Tags:  provenpractices timobryan businessanalyticstoday businessanalytics | 0 Comments | 940 Visits
Imagine entering the cockpit of a modern jet airplane and seeing only a single instrument there. How would you feel about boarding the plane after the following conversation with the pilot?
Q: I’m surprised to see you operating a plane with only a single instrument. What does it measure?
Q: That’s good. Airspeed certainly seems important. But what about altitude. Wouldn’t an altimeter be helpful?
We suspect you wouldn’t board the plane after this discussion. Even if the pilot did an exceptional job on air speed, you would be worried about colliding with tall mountains or running low on fuel. Clearly, such a conversation is a fantasy since no pilot would dream of guiding a complex vehicle like a jet airplane through crowded airspace.
This is an often cited story by many business strategists and other management prognosticators which I will attribute to Drs. David Norton and Robert Kaplan, pioneers of the Balanced Scorecard. It’s intended to reflect how critical the actual indicators are that we setup for not only pilots but also the indicators by which you establish for your entire workforce because these indicators will serve as the guiding force behind their decision-making.
Why is this so important? Well, many reasons starting with the business environment has substantially changed where no longer can a company operate rudderless without a core set of metrics to steer each of its employees individually and as a collective unit in the right direction. That right direction is the enterprise strategy. The speed at which these decisions are being made seem to have increased exponentially in just in the past 5 years. The days of top-down, command-and-control authority over decision-making are far from over in deference to a more nimble, decentralized execution hierarchy intended on keeping pace with the velocity of the related competition and customer expectations. The need for getting relevant and actionable information to the business users has never been more pronounced than we’re seeing today. If you can’t react fast enough to the market realities your customers will go elsewhere. We live in a world where product or brand loyalties are becoming more and more a thing of the past. It’s about execution. Good execution is about making smarter, more informed decisions that support the organization’s goals.
These decisions being made are happening across all levels, geographies, and functional areas of the business everyday. For this post I want to zero in on the first question asked which falls under measuring and monitoring the business. This question is, how are we doing?
Sure, the executive suite is constantly measuring and monitoring overall business performance to ensure the company is on track to meet its strategic targets. In addition, the function leads in marketing, sales, finance, HR, and development all the way down to the individual contributor levels of the organization are measuring and monitoring the performance of their area of the business too. But how does everyone know they’re doing the right things at all times? What are their real priorities helping the organization achieve its goals? Is it guesswork? Is it trust-based that the entire workforce is going to naturally make the right decisions supporting top-line goals? How can we be so sure?
This fictional story referenced at the beginning of this post is
really about measuring and monitoring – not an aircraft – but your
business thru a tool called a scorecard.
There are personal, departmental, and enterprise scorecards. A
scorecard includes the key performance indicators, or KPIs, for which,
in the case of a personal scorecard, an employee is responsible which,
if these KPIs are correctly defined, would include measurements that,
when looked at in aggregate, support the enterprise’s top-line strategic
goals and objectives. Inevitably, there will be shared targets for some
of the KPIs in a personal scorecard either within a specific functional
area of the business (Think Marketing Director/Marketing Associate
having similar campaign targets) or as shared KPIs across functional
groups like marketing, sales, procurement, and deve
The actual KPIs – typically there’s about 6-10 for each individual – are critical because they will define the actions taken by the individual for which they’re responsible. The ultimate alignment via scorecards composed of KPIs across these business groups, departments, divisions, business units, etc. is the embodiment of what we call a company’s strategy execution framework.
Harvard Business School having done a study on this framework found that, “a 35% increase in Strategy Execution leads to 30% gain in shareholder value”. That’s a pretty strong argument for at least taking a harder look at it.
How do you deploy such a framework, you ask? Well, in theory it’s very simple. You just translate the business strategy and its related goals into a set of performance indicators that outline the targets for which each department and employee within each department are responsible and away you go, right? Yes, I know. It sounds easy in theory. But, in practice it’s a little more work.
The key is working top-down with each business and support unit area to translate their contribution towards meeting these higher level targets so that these lower-level, cascaded measurements, or KPIs, will, when rolled up in total, directly tie to the top-level enterprise’s strategic goals. This ensures proper alignment of the organization while providing an ongoing set of metrics by which the workforce can measure themselves.
Even more important in defining the right KPIs is the understanding that whatever the indicators are, this will determine the individual’s behavior so take care as you define these. Something else that makes this framework so effective is that it makes it that much easier to reset the workforce when those top-level strategies change. the infrastructure is in place to restructure the scorecards. This allows the company to adapt more quickly.
Think about deploying such a framework for your organization. The best incentive I can give you for taking on this effort is that going through the KPI definition process for each set of scorecards it forces discussions across functions, within departments and at the executive level that will expose how achievable these targets really are with the current resources in place today and who is ultimately responsible for what. This is just about the most important exercise I think a company can go through to make sure it’s not setting itself up for failure because its strategy isn’t attainable given the resources currently in place. Once this KPI definition process is complete and everyone knows who’s doing what and where the synergies lye it’s all about execution. This framework sets companies up to execute well because they’ve already identified their needs and resources at their disposal and now it’s a matter of delivering. It’s go time.
If done right this will be the outcome for your organization:
More coming on this subject. Stay tuned. In my next post I’ll tell you some of the best practices in defining the right KPIs for personal scorecards.
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Tracy Harris 2700026WJ9 firstname.lastname@example.org | | Tags:  cognos intelligence business iod11 baforum ba-strategy ibmaq analytics | 0 Comments | 1,298 Visits
Have you created your BI Strategy? If not, you can get started with lessons learned in a podcast from the team that brought you the book “BI Strategy: A Practical Guide to Achieving BI Excellence”. In a three-part series over the next few weeks, you can hear about the experiences of:
- John Boyer, Manager, BI Center of Excellence, at The Nielsen Company
- Bill Frank, Technology Manager, BI Practice, at Johnson & Johnson
- Brian Green, Manager of BI and Performance Management at Blue Cross Blue Shield of Tennessee
- Kay Van De Vanter, Enterprise BI Architect and BICC Lead at The Boeing Company
And myself (the fifth author) as we share practical advice on how to get more strategic in the use of analytics to help your organization outperform.
In this series, you’ll hear about how organizations can design a strategy that promotes business alignment, get practical advice on organizational design and culture as well as benefit from their pooled knowledge on technology strategy.
In this first episode, the team deep dives on the “Business Alignment Strategy” which sets the stage for how you define your stakeholders, map to the business needs of the organization and prioritize the many different projects that come to light when success is realized.
Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  ibmbao iod11 | 0 Comments | 562 Visits
IOD started with kids playing with jigsaw puzzles and ended with naked baseball players.
I dare you to say that analytics isn't fun.
And transformative. And an absolute priority should you want to survive in these uncertain times. Over the past three days we've all seen and learned so much that it's sometimes difficult to recall the key themes. So I've presented them for you here, built as we've gone along learning to turn insight into action:
1. Mind the gap: The competitive and performance gap between analytics leaders and laggards is getting wider. The time to act is now. If you're just starting, start where it hurts the most. If you're on your way, take new steps to keep your momentum. Our business value assessment or Analytics Quotient Quiz will help you find your way.
2. Big data is a big deal. There's more of it every day. How much more? Exponentially more. In all forms, from every conceivable source. Learn to master the 3 'Vs' - Volume, Variety and Velocity - and use them to your advantage, or risk being buried by them, perhaps for good.
3. Commit to change, embrace the new: Last year's assumptions and last month's targets are history; focus on what will take you forward. Commitment to change has helped IBM survive for a full 100 years. Billy Beane overturned an entrenched century-old culture to redefine value and change the way his game was played. Your presence at IOD attests to your desire to change, too.
4. Paging Dr. Watson: Hospital readmissions are punitive for the provider and counterproductive for the patient. Incomplete data drives incorrect diagnoses. Medical errors cost real human lives. With our health care partners we've put Watson to work with real-world solutions to reverse these trends and eliminate these errors. With Watson's help doctors can better understand each patient in startling new detail and treat each patient in effective new ways.
5. Don't mess with Billy Beane's mom. If you're writing a book about a baseball GM who swears a lot, be prepared for her withering glare. Her son just doesn't talk like that.
6. No industry is immune from disruption. Urbanization. Changing citizen and customer expectations. Economic uncertainty. Increased regulations. Lots and lots of data. All are interconnected; all are hitting you on every side, all the time. Your task is to quantify the impact, assess the risk and harness opportunities in new and productive ways. On a planet that is instrumented, interconnected and intelligent there is no domain that is untouched by these forces. There is no domain where analytics - and IBM - cannot help. At IOD you've seen how we're doing precisely this.
7. Jeff Jonas is evil. Just look at the guy. Look at the way he dresses. Luckily, he's the charismatic, smart kind of evil you can't help but listen to, because you can feel yourself getting smarter the longer – and faster - he talks. Frankly, I'm glad he's on our side.
8. Got social? It's time to get serious about social media analytics. There's enough data out there and enough computational power to build predictive customer loyalty models based on blogs and tweets alone. That's along, long way from zip codes. Need the tools to get started? We have them, too.
9 .Congratulation, Ginni. Our soon-to-be President and CEO will take charge with IBM operating from a solid foundation and 'at the top of its game.' She's successful, she's thoughtful. She gets things done.
10. It's business, and it's personal. This is the age of the empowered consumer. They're demanding, they're patient and they're in control of your brand. If you want to win their business – and keep them coming back – you'll need to know more about them than their zip code. The data to do this is out there and so are the tools. The choice of how and when to use them is entirely up to you.
11. Kudos to the Mandalay Bay staff for keeping us fed and caffeinated. Greeting 11,000 bleary-eyed conference goers with a friendly smile before 9 AM is no easy task; yet to a person you outdo yourselves every single year.
Well, that's it from my end for this year's edition of Information On Demand 2011. As of right now, I'm taking what I believe to be a very necessary vacation. I'll return refreshed and recharged in two weeks. Safe travels, and see you next year.
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Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  ibmbao iod11 | 0 Comments | 677 Visits
Moneyball author Michael Lewis and Moneyball pioneer Billy Beane closed out Information On Demand 2011 in a rollicking conversation with event host Katty Kay. Among the topics were challenging a century-old business culture with business analytics, the risks of standing still and why it's never a good idea to mess with Billy Beane's mom. Turbo's already done a great summary, so I've distilled their conversation into a few key quotes.
On the meaning of Moneyball: 'This was riveting to me. The number crunching was less interesting than what it exposed about the markets people operate in. The people running baseball considered themselves player experts because they'd been doing things the same way for 150 years. And here was Beane recruiting people the market perceived as defective. He was building a juggernaut out of defective parts.'
On bias: 'People tend to overvalue things that are flashy and easy to see. And they tend to undervalue things that are more difficult to see. You need to understand the forces that are clouding your judgement.'
On Beane and his players: 'He had tremendous credibility with the players because he was a great athlete. Being bigger than them also helped. The players were physically intimidated. It was kind of the law of the jungle in the clubhouse – reason imposed by violence.'
On offending Beane's mother because he left in Beane's profanity: 'She said, 'My son doesn't talk like that.' After the book signing I invited her to a two-hour dinner. It was the most awkward conversation I've ever had. I laid on as much charm as I could and got nowhere. She was just as angry with me at the end as at the beginning.'
On the need for change: 'For us it was out of necessity. Where were we going to get the best return on our dollar? We weren't in a position to trust emotion to run our business. We couldn't invest in the romance of the players. We had to be disciplined card counters.'
On taking risks: 'We didn't think it was risky because the math told us we'd be successful. Over enough games we knew we'd weed out the randomness. There was certainly resistance, but there was more risk in not doing it. Going with our gut would have been the most irrational thing to do.'
On Lewis revealing the secret: 'You could see the market was going move. It was just a matter of time. There was already momentum – you could feel the rumblings. You couldn't ignore the fact that the data was everywhere. The secret now is to keep your expertise in-house.'
On outcomes: 'I believe the best teams make it to the playoffs, but the best team doesn't always win the World Series. Small events in a short series can have a bigger impact; we never try to make decisions based on short-term results.'
On being played by Brad Pitt: 'You tend to hold your breath while they're casting the film. When you hear it's Brat Pitt, you exhale.'
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Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  ibmsoftware baforum | 0 Comments | 727 Visits
T-minus eight hours before I'm off to the Mandalay Bay, so I'll make this one short and sweet.
One thing to watch
We've just released a great new video called 'From Information to Analytics: The IBM Story.' It outlines our history in helping you wrangle and make sense of your increasingly messy landscape of data and features most of the IBM Software Executives you'll see on-stage next week.
Two things to read
Believe it or not, I always need to remind myself of these every time I go somewhere:
I'll be spending a lot of time between sessions in our 'Share' and 'Connect' social spaces and would love to meet you if you have the time. If you're heading down, safe travels to all, and I'll see you in the twitter stream (remember to use #iod11 or #ibmsoftware).
Images courtesy of Wikimedia Commons
Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  baforum | 0 Comments | 464 Visits
There's a fascinating article in the latest McKinsey Quarterly - one I'd deem essential reading before you head down to Vegas for Information On Demand 2011.
You have registered, right?
It's called The Second Economy and it's written by W. Brian Arthur, an economist, author, a visiting researcher with the Intelligent System Lab at the Palo Alto Research Center (PARC) and an external professor at the Santa Fe Institute.
The full article (including PDF download) is available here, and I've provided some excerpts below.
"Vast, automatic, invisible"
Arthur makes the argument that digitization is creating a "second" economy that's vast, automatic and invisible. In turn, this economy is driving the biggest change to our world since the Industrial Revolution:
In 1850, a decade before the Civil War, the United States’ economy was small—it wasn’t much bigger than Italy’s. Forty years later, it was the largest economy in the world. What happened in-between was the railroads. They linked the east of the country to the west, and the interior to both. They gave access to the east’s industrial goods; they made possible economies of scale; they stimulated steel and manufacturing—and the economy was never the same.
A Second Economy on a Smarter Planet?
As I read through the piece I was struck by how closely Arthur's Second Economy mirrors the attributes of a Smarter Planet - that is, one that's increasingly instrumented, interconnected and intelligent. Take, for example, the dramatic transformations we've seen in air travel:
Twenty years ago, if you went into an airport you would walk up to a counter and present paper tickets to a human being. That person would register you on a computer, notify the flight you’d arrived, and check your luggage in. All this was done by humans. Today, you walk into an airport and look for a machine. You put in a frequent-flier card or credit card, and it takes just three or four seconds to get back a boarding pass, receipt, and luggage tag. What interests me is what happens in those three or four seconds. The moment the card goes in, you are starting a huge conversation conducted entirely among machines. Once your name is recognized, computers are checking your flight status with the airlines, your past travel history, your name with the TSA1 (and possibly also with the National Security Agency). They are checking your seat choice, your frequent-flier status, and your access to lounges. This unseen, underground conversation is happening among multiple servers talking to other servers, talking to satellites that are talking to computers (possibly in London, where you’re going), and checking with passport control, with foreign immigration, with ongoing connecting flights. And to make sure the aircraft’s weight distribution is fine, the machines are also starting to adjust the passenger count and seating according to whether the fuselage is loaded more heavily at the front or back. Is this the biggest change since the Industrial Revolution? Well, without sticking my neck out too much, I believe so. In fact, I think it may well be the biggest change ever in the economy. It is a deep qualitative change that is bringing intelligent, automatic response to the economy. There’s no upper limit to this, no place where it has to end. [...] I think that for the rest of this century, barring wars and pestilence, a lot of the story will be the building out of this second economy, an unseen underground economy that basically is giving us intelligent reactions to what we do above the ground.Who benefits?
An economist and "pioneer in the science of complexity," Arthur also posits on the impact of this Second Economy on the nature of work:
The second economy will certainly be the engine of growth and the provider of prosperity for the rest of this century and beyond, but it may not provide jobs, so there may be prosperity without full access for many. This suggests to me that the main challenge of the economy is shifting from producing prosperity to distributing prosperity. [...] For centuries, wealth has traditionally been apportioned in the West through jobs, and jobs have always been forthcoming. When farm jobs disappeared, we still had manufacturing jobs, and when these disappeared we migrated to service jobs. With this digital transformation, this last repository of jobs is shrinking—fewer of us in the future may have white-collar business process jobs—and we face a problem.What's your role?
As the architects of your organization's own information networks, I'd argue that you have a direct hand in building this Second Economy. As the largest conference in the IBM Software universe, I'd also argue that Information On Demand is the ideal forum to discover these ideas and discuss the ways you can harness them to drive better outcomes on all fronts.
What do you think?
Leave a comment below, tweet using #IOD11 or visit the IOD Social Media Aggregator to join the discussion.