Information Strategy By Management is Crucial To Business Analytics

Information Strategy By Management is Crucial To Business Analytics

In the Chinese military classic “The Art of War”, a lot of emphasis was given to differentiate tactics to strategy. “All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” The strategy is therefore the winning formula and tactics are merely outward manifestations of the strategy. In our world of analytics, strategy is “Information strategy” set by the management and tactics are “Operational decisions” made by middle managers.

Information, information, information

Everyone in the military knows the value of intelligence. Information is crucial to the success of a campaign. No effort is spared to gather the necessary information to ensure success in a war. However, in the business world, we are somewhat lacking in the quest for information. Many organizations do not set any information strategy at all. Without information strategy, measuring and optimizations are like deploying tactics without any strategy. One may still lose the war despite winning battles (in digital marketing, you may see increase click through rate, increase conversions but still lose market share).

But with storage cost decreasing, the amount of data that we collect is exploding. Without any data scientists with PhDs, how can organization cope? What really is information strategy?

Information strategy explained

In a nutshell, setting an information strategy is simply setting up an analytical framework for the company that measures and thereby answers the most important question about the company. The most important question is not sales. Sales figure is a lagging indicator (to understand more about leading and lagging indicators, read Measuring Conversion Before It Happens). Nokia was the undisputed leader in smart phone sales (though indicators tell us that their era as No. 1 was coming to an end). The most important question is whether the company’s strategy is going to drive future sales.

Perhaps your company is a pharmaceutical company and your strategy is to be the most trusted brand. How do we measure something so intangible as trust? We need to use proxies for the measurement of trust. A few good proxies are social media sentiments, the engagement rate of thought leadership and educational contents, product ratings, customers’ surveys etc. An executive dashboard would have the KPI that is the trustworthiness factor quantified and the company’s current trustworthiness factor. Executives can look at the movement of the gauge to know if the company is progressing (the strategy is well manifested). For more details, you can even have the sub dials that show how the trustworthiness dashboard needle is derived by showing indicators of contributing factors such as social sentiments etc. This dashboard would give the executives a quick overview of the performance of their middle managers.

What if the strategy doesn’t work? No one can predict if a strategy is going to work for the company or not. Obviously, the movement of the strategy must correlate to the actual sales (bear in mind that sales is a lagging data). If the performance in the strategy is a good predictor of future sales, then the strategy is driving results and can be adhered to. However, if the strategy is not indicative of the results or even causing the results to deteriorate, then the strategy is not working.

Illustration of executive dashboard

What about tactics?

So far we have only been talking about the strategy. What can the middle managers do so that their managers’ executive cockpit shows the dial in positive light? This is where testing, optimization and analytics come into play to help them make operational decisions. Each operational decision is like a tactic used in a battle.

To help the managers do their work, they must first have an understanding of the company’s key strategy. With that strategy, they can instruct analysts to put up tests and analyze data to help them make decision to reinforce the company’s strategy. With data, they can also assess the impact on the company’s strategy and make the right decision.

Analytics Framework

An organization’s analytics framework cannot be left to chances or be left alone to the analysts. Without a coherent strategy, the analysts would be at a lost to figure out what data to collect, analyze and report. Similarly, without properly documented business processes, it doesn’t make sense to test and analyze as the successes and failures do not become part of organizational learning and there would never be business process re-engineering and improvement.

Roles and responsibility in an organisation

To summarize, the analytics framework of the company must begin with the company’s strategy. The strategy would help the middle managers make operational decisions to optimize the business processes to be aligned with the strategy. With the strategy in mind, analysts can then collect, analyze and present data to help the operational managers optimize their processes. Similarly, well-executed business processes would inform the top management the effectiveness of their strategy.