Behind Every Good Decision

How Anyone Can Use Business Analytics to Turn

Data into Profitable Insight
Piyanka Jain and Puneet Sharma
Copyright © 2014 AMACOM, a division of American Management Association
240 pages
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Rating Take-Aways

8
9 Applicability • Data analytics isn’t rocket science. You can do it.
7 Innovation • You can address 80% of your business issues using the basic analytics in Excel.
8 Style
• Prioritize projects that are likely to achieve strategic business outcomes and returns.
• Use professional analysts and complex tools only when the size of the problem and the
  potential returns of a higher-level analysis justify them.
Focus • Start analytics projects by identifying the problem and the right questions to ask.
Leadership & Management • Build an “analytics plan.” Obtain executive and stakeholder support.
Strategy
Sales & Marketing
• Identify, check, test and clean the relevant data.
Finance • Apply a variety of analytical methods to obtain insights.
Human Resources
IT, Production & Logistics • To present your recommendations, use succinct formats tailored to specific audiences.
Career & Self-Development
• Ensure that each of your analysis projects align directly to business goals.
Small Business
Economics & Politics
Industries
Global Business
Concepts & Trends

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Relevance
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What You Will Learn
In this summary, you will learn:r1) How basic analytics can address 80% of your firm’s problems, 2) How to use
analytics to gain insight about your business, 3) How the BADIR framework can help you “move from data to
decisions,” 4) What three questions you need to ask to build your “analytics agenda,” and 5) When you need complex
or predictive analysis.
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Review
Experienced data scientists Piyanka Jain and Puneet Sharma offer an exceptionally clear, illustrated guide to data
analysis, including meaningful, real case studies and actionable best practices. Jain and Sharma argue that basic
analytics – which you can do in Excel – address 80% of all business problems, if you ask the right questions. They
say that non-analysts, like managers and marketers, can learn powerful analytical tools easily and conduct their own
analyses without a professional analyst or data scientist. Unless you have a particular interest, you can skip chapter
five on predictive analytics. Otherwise, getAbstract recommends this commonsense, practical approach to managers,
executives, entrepreneurs and professionals who don’t analyze for a living.
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Summary
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Not Rocket Science
Most data problems do not require professional analysts. Ordinary practitioners and
managers with minimal training can conduct powerful analyses using basic tools like
Microsoft Excel. Start by identifying the problem your business needs to solve. For
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example, feedback might suggest that your “customer engagement” is low. Canvass experts
“Simple analytics can in the organization to get their thoughts. Test their hypotheses against the data. Use basic
actually help you solve
80% of your business
data analysis to eliminate all but the best ideas and to reveal insights that fuel the necessary
problems at a fraction actions and decisions. Implement the solution on a trial basis, test it and then roll it out.
of the cost of complex
analytics.”
getabstract Keep It Simple
When Circuit City faced financial problems in 2000, it fired top talent, moved from prime
locations to cheaper suburban malls and closed its home appliance business. Its leaders
made these decisions without analysis or evidence. Each proved disastrous and Circuit
City collapsed.

Instead of acting on hunches, analyze your information. Suppose you must find a ship that
sank in the Pacific Ocean in 1715. You could set sail without planning and send your mini-
sub into places you think the wreck might be. You’d probably search for the rest of your life.
getabstract Or you could analyze hurricane records from 1715, study trade routes, and seek news stories
“Whatever you do, you
will have to explain it and survivor accounts from that time. Focused data and evidence increase your chances
to people who aren’t as of success. However, don’t overcomplicate your analyses. You can address about 80% of
excited or as involved
in the analytics as you your business problems with the “most common analytics methodologies” carried out using
are.” Excel. More difficult problems, a small minority, require “predictive analytics” and the
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skills of a data scientist.

Analytical Techniques
You can use seven analytics techniques to discover insights that address your business
concerns and to improve your decision making:

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 1. “Aggregate analysis” – For example, if you run a wedding business, an aggregate
analysis can tell you that most of your clients are women in their early 30s who live in
Oregon. Then you can select ad channels that reach this audience.
getabstract 2. “Correlation analysis” – This comparison shows a link between two variables. For
“Analytics is the example, you might want to determine which advertising vehicle produces the most
science of applying
a structured method leads. Excel can reveal links between lead generation and advertising outlets.
to solve a business 3. “Trends analysis” – This tracks correlations over time.
problem using data
and analysis to drive 4. “Sizing/estimation” – Use educated guesses, such as assessing a market’s potential
impact.” value according to your experience and data. This common method can be valuable.
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5. “Predictive analytics” – Amass new and old data to predict the future (correlate past
trends and extrapolate them to the future). For example, predictive analytics can forecast
the weather or the spread of a disease.
6. “Segmentation” – Divide your customers into groups to study specific characteristics
and behaviors to tailor your offerings. Segment products to determine what sells more
and at what profit level.
7. “Customer life cycle” (CLC) – This technique studies customer behavior at various
stages, like how long people take to upgrade from free access to a paid subscription.
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“Our tool of choice
for simple analytics “The BADIR Approach”
is, drumroll, Microsoft The BADIR framework is an “easy-to-follow recipe to move from data to decisions.”
Excel.”
getabstract It enables you to combine data analysis with your business knowledge to make
better decisions:

1. “Business question” – Pinpoint the question or questions you want your analysis to
answer. Ask the five W’s: Who wants the information and why? What is the problem
it will address? When and where is the problem occurring? When do you need the
analysis? Whom does it affect? Find the right questions. Solving the wrong ones
wastes time.
getabstract 2. “Analysis plan” – Set goals for the analysis. Assemble the stakeholders who are close
“By good data, we to the problem. Ask for their thoughts on the problem’s causes. Bring the group together
mean accurate data,
collected in a timely a second time to rank and prioritize the hypotheses you will test. Choose the analytical
way, securely stored in technique that best suits the problem. Identify the data you need and in what form and
a way that both protects
the integrity of the data
detail. For example, to analyze a sales problem, do you need weekly, monthly or annual
and ensures ready and sales data? Collect data only after you have an analysis plan. Document a “project plan”
easy access to it.” that identifies resources, duties, timelines, risks, phases and priorities.
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3. “Data collection” – Collect your data. Test small samples to make sure your data meet
your expectations. Validate your data; screen for missing and bad information.
4. “Insights” – Focus on analysis and insights. Use the seven analytics techniques,
especially the first four. Use aggregate analysis to find the components of your customer
base that account for the most sales and revenue. Once you see, for instance, that young
smartphone users buy more than older laptop users, calculate the likely revenue increase
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“Bad data – if your firm spends its marketing budget targeting young smartphone users.
incomplete, riddled 5. “Recommendations” – Your analysis and investigation should result in insights you
with errors, inconsistent
and contradictory –
can use to present concise, credible, supported recommendations. Know the details, but
can severely impair focus on the broad story. Offer a one-slide “executive summary” with short points on
an organization’s the problem, the analytical insights and recommended next steps. Added slides can offer
ability to learn about its
customers and products more depth about your findings and ideas – all supporting your main conclusion.
through data.”
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Predictive Analytics
Predictive analytics use data and trend analysis to predict the future. For instance, firms
like Netflix predict what movies you might like. Local police use predictive analytics to

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 deploy officers where crimes seem most likely. You can use predictive analytics to find
your target marketing audience. A web sales firm seeking more transactions might use
correlation analysis to determine that a “blue button” generates 2% more checkouts than a
“red button.” Other variables might include whether on-site ads affect checkout volume or
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“The greatest gaps in whether page-load time plays a role.
leadership in terms
of creating analytics
maturity are vision, Predictive analysis involves complex statistical modeling and dozens of variables. The
commitment and more complicated the model, the more difficult it is to explain and implement, but having
accountability.”
getabstract more complex models might make more accurate predictions, if that is neccessary. Keep
in mind that predictive analytics takes 10 to 20 times more time and resources than
business analytics.

“Data-Driven Leadership”
Commit to using data to support “evidence-based” decision making. Assess your
organization’s level of “analytics maturity.” For basic business analytics, train managers
and practitioners in Excel and other tools. Make sure you enhance your staff analysts’
knowledge through online and traditional training and education. An effective analyst
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“The people skills possesses the rare combination of hard, technical skills and soft presentation and
needed for bridging the communication skills.
gap between business
and math…make or
break the deal.” Leaders and managers who aren’t analysts still should have sufficient analytical
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competency to evaluate proposed projects using an evidence-based approach. Establish a
companywide approach to decision making and resource allocation. Let capable managers
use evidence to assess and choose projects and proposals that generate the greatest returns
and outcomes.

Ensure that your data are clean and accurate, and that you store information in a way that
scales up and down and adapts to new input and needs. Analyzing poor, incomplete or
getabstract inaccurate data results in worse outcomes than doing nothing. New data should integrate
“The past predicts with other tools and databases. Provide easy access for analysts.
the future. Predictive
analytics uses
statistical techniques The Three “Key Questions Framework”
to analyze current and
historical facts to make
Build your “analytics agenda” by focusing on three questions:
predictions about future
events or behavior.” 1. “How am I doing?” – Determine your “measurement framework” and its critical
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metrics and measurements. These include financial metrics and employee and customer
engagement. Know your pivotal metrics. Select the projects most likely to improve them.
2. “What drives my business?” – Examine your products and services to understand how
they compare in profit and growth. Use data to understand which offerings to expand.
Which ones yield the greatest returns? Who are the likely purchasers?
3. “Who are my customers and what are their needs?” – Know their age, gender,
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location, marital status, and so on. Understand what they want and need. Study how they
“Predictive analytics… shop and buy, and whether they purchase repeatedly or buy only once. Once you know
requires advanced
skills and tools,
your customer base, you can segment it according to its variables to understand where
historical data, your sales come from and which segments will grow.
operationalization, live
validation and constant
maintenance.” The three-questions format identifies what drives your business, and how to improve
getabstract results and returns. Knowing your drivers – across each division, team and employee –
enables better decision making across the organization. Building this framework might
take months, depending on the size of your business. Structure your analytics team
according to your organizational profile. A smaller, highly centralized business might use

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 a centralized analytics team. In most firms, attach analytics teams to each pivotal business
unit. Embedded analytics teams gain a better understanding of the business and form closer
relationships with other staff members.

Two Steps
As the “head of analytics,” take two pivotal steps:
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“A successful analyst
uses influence and soft 1. “Assess” – In the first 30 days of your assessment, consider your organization’s analytics
skills to build alignment from the past year. Recap which people did what, what tools they used, how they
with the stakeholders or
business counterparts.” prioritized responsibilities, and their strengths, weaknesses and levels of talent. Talk to
getabstract the leaders of your business, get a sense of their need for analytics professionals, and
determine if they view analysts as service providers or corporate partners.
2. “Plan and execute” – Develop a prioritized project plan for your teams, along with
goals and an overriding mission. Establish a few quick wins to create trust. You need
more than analytical and statistical skills to change your organization. Strong business
communication skills are necessary. Build a more extensive analytics plan using the
three questions and bring your stakeholders together in agreement on a plan.

The Bottom Line

Using the framework of three primary questions, you can now identify the factors that drive
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“The right analytics your organization’s results. Knowing the drivers means you can choose the projects and
approach is an initiatives most likely to generate the right impact on your business. Determine whether
informed solution
backed by data and your firm has a culture that values data and holds leaders accountable for making evidence-
insights.” based decisions.
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Canvass stakeholders so you understand the problems that need solving before diving in.
Don’t relegate your analytics operation to a support function only. Embed your analytics
teams in your business groups. Don’t outsource analytics; build internal capacity. Your
employees know your business better than any outsider. Based on the talent on your team,
determine if you need to hire a true analytics executive to head the effort; if so, give him or
her the authority to put the right people and infrastructure in place.

Managers who are not analysts should commit to data- and evidence-based decision
making. Remain honest and open to what the data tell you. When tracking daily metrics,
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“Unless analytics choose a few core indicators that relate to top-priority goals; don’t require dashboards with
drives business impact, dozens of metrics. Learn enough about predictive analytics to ask the right questions; the
it is not analytics. It is
just statistics.” better your questions, the better the insights you’ll get.
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Be aware that analytics contribute to decisions but cannot make them. Also be conscious
that while esoteric analytical problems may excite you and your team, you need to focus
on corporate goals and results. “Think big” about analytics, proactively propose significant
improvements to the business, and take your place at the senior executive table. Motivate
and inspire your teams by aligning their work to goals that fulfill the organization’s mission.
Reward and recognize good work to develop your analysts’ marketable skills.
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About the Authors
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Experienced data scientists Piyanka Jain and Puneet Sharma consult with organizations worldwide on data analysis
strategy and predictive analytics.

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