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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

Leadership / Decision Making

Technology / Big Data

Take-Aways
• Data analytics isn’t rocket science. You can do it.
• You can address 80% of your business issues using the basic analytics in Excel.
• 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.
• Start analytics projects by identifying the problem and the right questions to ask.
• Build an “analytics plan.” Obtain executive and stakeholder support.
• Identify, check, test and clean the relevant data.
• Apply a variety of analytical methods to obtain insights.
• To present your recommendations, use succinct formats tailored to specific audiences.
• Ensure that each of your analysis projects align directly to business goals.

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 Recommendation
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.

Summary

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 example, feedback might suggest that your “customer
engagement” is low. Canvass experts in the organization to get their thoughts. Test their hypotheses against
the data. Use basic data analysis to eliminate all but the best ideas and to reveal insights that fuel the
necessary actions and decisions. Implement the solution on a trial basis, test it and then roll it out.

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.

“Simple analytics can actually help you solve 80% of your business problems at a
fraction of the cost of complex analytics.”

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. Or you could analyze hurricane records
from 1715, study trade routes, and seek news stories and survivor accounts from that time. Focused data
and evidence increase your chances of success. However, don’t overcomplicate your analyses. You can
address about 80% of your business problems with the “most common analytics methodologies” carried out
using Excel. More difficult problems, a small minority, require “predictive analytics” and the 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.
2. “Correlation analysis” – This comparison shows a link between two variables. For example, you
might want to determine which advertising vehicle produces the most leads. Excel can reveal links
between lead generation and advertising outlets.
3. “Trends analysis” – This tracks correlations over time.
4. “Sizing/estimation” – Use educated guesses, such as assessing a market’s potential value according to
your experience and data. This common method can be valuable.
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.

“The BADIR Approach”

The BADIR framework is an “easy-to-follow recipe to move from data to decisions.” 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.
2 . “Analysis plan” – Set goals for the analysis. Assemble the stakeholders who are close to the problem.
Ask for their thoughts on the problem’s causes. Bring the group together a second time to rank and
prioritize the hypotheses you will test. Choose the analytical technique that best suits the problem.
Identify the data you need and in what form and detail. For example, to analyze a sales problem, do you
need weekly, monthly or annual sales data? Collect data only after you have an analysis plan. Document a
“project plan” that identifies resources, duties, timelines, risks, phases and priorities.
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 if your firm spends its marketing budget targeting young
smartphone users.
5 . “Recommendations” – Your analysis and investigation should result in insights you can use to
present concise, credible, supported recommendations. Know the details, but focus on the broad
story. Offer a one-slide “executive summary” with short points on the problem, the analytical insights

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 and recommended next steps. Added slides can offer more depth about your findings and ideas – all
supporting your main conclusion.

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 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
whether page-load time plays a role.

“Whatever you do, you will have to explain it to people who aren’t as excited or as
involved in the analytics as you are.”

Predictive analysis involves complex statistical modeling and dozens of variables. The more complicated the
model, the more difficult it is to explain and implement, but having 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 possesses the rare combination of hard, technical skills and soft presentation
and communication skills.

“Analytics is the science of applying a structured method to solve a business problem

using data and analysis to drive impact.”

Leaders and managers who aren’t analysts still should have sufficient analytical 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.

“Our tool of choice for simple analytics is, drumroll, Microsoft Excel.”

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 inaccurate data results in worse
outcomes than doing nothing. New data should integrate with other tools and databases. Provide easy access
for analysts.

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 The Three “Key Questions Framework”

Build your “analytics agenda” by focusing on three questions:

1 . “How am I doing?” – Determine your “measurement framework” and its critical 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, location, marital
status, and so on. Understand what they want and need. Study how they shop and buy, and whether they
purchase repeatedly or buy only once. Once you know your customer base, you can segment it according
to its variables to understand where your sales come from and which segments will grow.

“Predictive analytics…requires advanced skills and tools, historical data,

operationalization, live validation and constant maintenance.”

The three-questions format identifies what drives your business, and how to improve 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 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:

1 . “Assess” – In the first 30 days of your assessment, consider your organization’s analytics from the past
year. Recap which people did what, what tools they used, how they prioritized responsibilities, and their
strengths, weaknesses and levels of talent. Talk to 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 your
organization’s results. Knowing the drivers means you can choose the projects and initiatives most likely to

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 generate the right impact on your business. Determine whether your firm has a culture that values data and
holds leaders accountable for making evidence-based decisions.

“A successful analyst uses influence and soft skills to build alignment with the
stakeholders or business counterparts.”

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.

“The right analytics approach is an informed solution backed by data and insights.”

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, choose a few core indicators that relate to
top-priority goals; don’t require dashboards with dozens of metrics. Learn enough about predictive analytics
to ask the right questions; the better your questions, the better the insights you’ll get.

“Unless analytics drives business impact, it is not analytics. It is just statistics.”

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.

About the Authors

Experienced data scientists Piyanka Jain and Puneet Sharma consult with organizations worldwide on
data analysis strategy and predictive analytics.

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