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The use of analytics to spur business success is catching on as more organizations reap the benefits of a data-driven culture, according to a recent study commissioned by SAS.
In the survey, Harvard Business Review Analytic Services found that at least 50 percent more organizations enjoyed improved financial performance from their analytics if they had widely distributed access to those tools. More widespread use of analytics also increased productivity, reduced risks, and helped individuals make faster and better decisions.
Moreover, in data-driven companies, employees become more proactive and creative, generating a flow of new ideas; managers use analytics to test those ideas, deliver feedback, and encourage collaboration and innovation, the survey showed.
“In consumer products, you might think there isn’t much reason to invest in another new laundry detergent, but consumers respond strongly to innovation,” Filippo Passerini, group president of global business services and CIO of Procter & Gamble, said in the report. “What’s different now is the tools allow me to see what was important last year, last quarter and last week so I can understand what will happen tomorrow, next month and next year. That is a huge conceptual shift in thinking. We’ve used data analysis for 50 years, but we’re just beginning to develop predictive ability through business models to anticipate what’s coming.”
Organizations earlier in their use of analytics tools reported less agile response to changing markets and less innovation. Even while recognizing the need to step up analytical decision making, many lack processes to do so.
“As timely decision making becomes more important, analytics is improving and changing the way those decisions get made,” Angelia Herrin, research and special projects editor at Harvard Business Review, said in a statement. “This survey shows that analytics is not just a tool or a technology as much as a driver of a decision-making discipline that ushers in an era of cultural change—and improved performance.”
“The point of becoming a data-driven company is to become a wiser company by making better decisions,” Jim Bander, national manager of decision sciences in the risk management department of Toyota Financial Services, said in the report. “And that isn’t simply a matter of data but of fitting analytics into your corporate culture. For example, Toyota has a culture of continuous improvement and respect for people, including consensus building. My job is to fit analytics and data-driven decision making into that kaizen framework. An organization with a different corporate culture—whether a mass-production manufacturer or a Silicon Valley startup or a government agency—would find a very different way to integrate analytics into its decision-making processes.”
(Kaizen refers to the Japanese philosophy of continuous improvement.)
Analytics can usher in cultural change and improved performance for individuals as well as organizations. Four in 10 surveyed said using analytics improved the importance of their functional areas within their organizations.
The free October 2012 report, The Evolution of Decision Making: How Leading Organizations Are Adopting a Data-Driven Culture, is available for download with real-world examples from Macys.com, Procter & Gamble, J.P. Morgan Chase, Bosch Security Systems, The Standard, Monsanto, and Toyota Financial Services. The report presents insights from an online survey of 646 Harvard Business Review subscribers across industries and 10 in-depth subscriber interviews. About 40 percent of respondents were from the Americas; 30 percent from Europe, the Middle East and Africa; and 30 percent from Asia, SAS said.