Archive for March, 2014|Monthly archive page

Getting started with Big Data

Leveraging Big Data can help every company significantly improve competitiveness and financial results. At the same time, poorly conceived and executed initiatives can lead to wasted investment and organizational distraction. Not surprisingly, the question of how best to reap the benefits of Big Data is triggering extensive deliberations in many companies. What is ‘best practice’ in launching a Big Data strategy?

Big Data is a set of activities for collecting and analyzing various types of data located within and outside the organization. The insights derived from this analysis are used to enhance business performance such as boosting advertising efficiency, improving supply chain responsiveness or improving service levels.

Most large companies are already in the Big Data business. The amount of data collected is growing exponentially thanks to the digitization of virtually every customer and operational interaction. In a typical Fortune 500 firm, terabytes of data are being amassed through regular business activities such as point-of-sale transactions, barcode tracking, web traffic or social media communications. This data torrent – when properly mined — affords management a valuable opportunity to learn about consumer behaviour or internal operations, enabling them to optimize tactics for better performance. At the same time, realizing the Big Data vision presents significant technical and organizational challenges. These challenges can increase the chances that managers will embark on expensive or poorly designed initiatives – or become paralyzed due to complexity.

In our experience, the best way to get into Big Data is to start with a sensible roll out plan and leverage best practices. This plan should consider four key elements:

1.  Data

Any plan should begin with a review of the relevant internal and external data, according to the 4 Vs: volume (the amount of data and its location); variety (types of data, both structured and unstructured); velocity (how quickly the data changes) and veracity (the accuracy and availability of the data). In many firms, data is siloed by function or business line; is not standardized and; it comes in various stages of completeness. Getting quality data can be difficult and time-consuming. It may be desirable to outsource this data integration and clean up to specialist firms who can make it ‘analytics-ready.’

2.  Hypotheses

It is easy to get side-tracked if you dive right into analysis without any strategic guideposts. Not all insights are equally important. Like other major initiatives, it is essential the Big Data effort links to business priorities and metrics. One way to do this is to start with a limited number of pilots based on specific hypotheses that directly impact strategic goals. Successful pilots can generate early wins that justify further investment, and can produce important insights around the business, as well as test out first generation capabilities.

3.  Analytics

To effectively and efficiently mine the data, the team should carefully choose the appropriate analytical methodology or model for each business problem. The analytics will vary whether the goal is workflow optimization (e.g., minimizing inventory levels, delivery times) or predictive analytics (e.g., anticipating consumer behaviour, forecasting events). However, managers can easily over-speculate on solutions, choosing costly and complicated tools that require expensive or scarce talent. Judicious CIOs will take a “great is the enemy of good’ approach to choosing their models and depth of analysis.

4.  Capabilities

Many IT environments are not conducive to quick or easy Big Data deployments. These infrastructures can be a heterogeneous mix of new and legacy hardware & software, lacking in data standardization and centralized control. To exploit Big Data opportunities, firms will need a unique combination of data experts, software tools and management capabilities as well as supporting governance practices. This capability should be developed with practicality in mind. Initially, CIOs could outsource Big Data needs to a cloud-based analytics service limiting upfront investment and accelerating time to value. Over the long term, the organization can look to develop world-class capabilities through employing specialized talent, bespoke software tools and private cloud architectures.

As with other strategic initiatives, a prudent way of getting into Big Data would be to start small and target actionable insights. Ongoing attention should be paid to ensure the learnings are understood by the staff and implemented into existing workflows. Where necessary, new processes or practices may be needed to fully leverage the insights. Learning by doing will prompt managers to connect different analytical models together to address wider problems that span functions and business units.

Firms that are winning with Big Data are often the quickest out of the gate with a practical plan, based on a thorough understanding of their data, staff and IT environment. Big Data will be a game changer for companies who can deploy the right analytics and capabilities against their most pressing business issues.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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Building a high performance culture

When it came to defining the number one driver of organizational performance, no one hit the nail on the head quite as well as esteemed management scholar Peter Drucker who stated unequivocally, “Culture eats strategy.” Drucker understood companies that build powerful cultures tend to outperform their peers over time. However, building or revitalizing a culture is easier said than done. The challenges should not prevent leaders from embarking on what will be a long and potentially painful journey. Where do you begin, especially in mature organizations?

A culture is an organization’s norms, practices and values as defined by its senior leadership, history and market position. Culture is vital to corporate and employee performance in that it acts as a mobilizing spirit, an enterprise-wide lingua franca, and a strategic anchor. Building a vibrant culture is equal parts strong leadership, defined values, effective change management and supportive organizational tools.

Research has found that firms with high performance cultures (which include strong organizational competencies like rich communications and focused leadership) will significantly outperform their competition. For example, a 2007 McKinsey global study on organizational and cultural performance (encompassing 115,000 employees across 231 organizations) found companies scoring in the top quartile are 2.2 times more likely to generate superior profitability than likely bottom quartile companies. It is no coincidence that many market leaders such as P&G, Apple, Zappos, Google and Disney are known for their strong, enabling cultures.

Given today’s hyper-competitiveness and rapid diffusion of technology, maintaining a vibrant and distinctive culture may be one of the few areas left where managers can generate long-term competitive advantage.

Nurturing transformation is not easy. It will falter without a sustained leadership commitment and changes to management systems. According to Chris Boynton, principal at human capital consulting firm Red Chair, “Culture is the way we do things around here, so the ideal way to change the culture and make it stick is to get the leadership front and centre, and align the management systems around the desired change.”

Through consulting to a variety of sectors, I have identified six ingredients of winning cultures. The role and scope of these drivers will vary depending on the firm’s existing culture, leadership, and external circumstances.

1. A shared vision & values

Strong cultures stress the “we” over the “I” and adopt a unifying creed (i.e. purpose, sense of history)

  • We see our market and customers in the same way
  • We know where we are going
  • We subscribe to the same core values and narratives

2. Free flow communications

Powerful cultures feature high levels of communications

  • There is open and frank conversation on any topic based on a commonly understood lexicon
  • Information flows freely across silos and up and down the hierarchy
  • There are regular conversations between managers and subordinates as well as with key external stakeholders (e.g., customers, suppliers)

3. A right-size organization

Leaders strive to design the optimum management system for the business strategy.

  • There are defined roles & responsibilities and information rights
  • ‘Structure follows strategy’
  • Any organizational change is thoroughly considered and painstakingly executed

4. Commitment to employee growth

Strong cultures view employees as assets, to be nurtured and empowered.

  • Firms seek to get employees in the right roles. ”Even a motivated and trained employee in the wrong role or team, like a nurtured seed in a poor garden, will just not grow and produce,” says Boynton.
  • Workers are regularly challenged with interesting work and supported with the right amount of training and coaching
  • Organizations strive to get their recruiting, hiring, and on-boarding processes right

5. Merit-based performance management systems

Employees will only perform as well as they’re managed. For example, emphasizing the positive is the typical approach to feedback. However, according to Boynton, “Praise drives greater performance than critiques, yet we spend most performance conversations focused on shoring up their weakness.”

  • Performance management systems are transparent, objective and regularly utilized
  • Individual and supplier metrics align with corporate goals and values
  • Companies tolerate a reasonable amount failure but seek to learn from them

6. Comfort with change

Given today’s uncertain business climate, rapid change is critical for success.

  • Change is recognized as a fact of life and a strategic necessity
  • All stakeholders are regularly consulted and engaged before change occurs
  • A high level of trust underpins change initiatives, reducing fear and improving collaboration

No doubt, getting all six characteristics right will not be easy or quick. This is a people-driven exercise so there is no substitute for patient leadership, strong values & narratives, and supporting mechanisms such as collaboration tools and internal training. Fortunately, firms can significantly boost performance if they master only 2-3 of these while continuing to strive for improvement in their under-developed areas. Given the financial rewards, there is no better time to start than the present.

For more information on our services and work please visit the Quanta Consulting Inc. web site

Blockbuster innovation

Companies could learn much about innovation from the Spanish general, Hernan Cortes.  In 1518, Cortes was instructed to sail to Mexico and overthrow the Aztec empire. According to the story, he proceeded to scuttle his boats after putting down a mutiny of some of his staff. This sent a powerful message to his soldiers that there was no retreat. They would conquer Mexico or die in their efforts. History judged his decision successful (if not immoral). His small army of 500 soldiers conquered the country in a mere two years.  What management lessons can be gleaned from this historical episode?

An “all or nothing” strategy seems counter-intuitive when looking at the best way to commercialize risky innovations.  Conventional wisdom says that launching small, measurable experiments or pilots is the best, lowest risk approach to introducing new products or technologies. Though this seems like a prudent tack, it has not necessarily produced market wins. Numerous studies show that the success rate for new products has stubbornly hovered around 10-20%. Fortunately, there may be a better way to commercialize innovation.

A professor at Harvard Business School, Anita Elberse, has studied creativity-driven industries like music, sports, movies and publishing.  In her book Blockbusters, Elberse found that the companies with superior financial returns had strategically focused their efforts and capital on producing movie blockbusters, recruiting superstar athletes or signing popular authors. To use a baseball metaphor, these firms always swing for the fences instead of playing it safe trying for singles and doubles. According to her data, these industries exhibit a ‘winner take all’ dynamic; less than 10% of projects, teams or entertainers produced more than 90% of industry revenue and profit.

In “winner take all” markets, the best strategy is to singlehandedly aim for blockbuster products.  The best way to do this is to focus investment and management attention on proven entities, assets or projects, like a movie sequel, a superstar free agent athlete or a popular book franchise.  Funding a limited number of major innovations is not enough. You also need to front-load your sales and marketing effort to boost initial channel distribution and trigger word-of-mouth effects. Elberse considers a blockbuster strategy a lower risk approach because it improves the odds of success early on and enables firms to cut their losses if results do not pan out.

Applicability to other markets

While Elberse studied the creative and sporting industries, other information-driven sectors may experience similar blockbuster dynamics. Industries with high fixed costs, a low marginal cost (when producing more) and a high marginal profit (on each additional sale) can quickly evolve into “winner take all” markets, particularly when digital technologies reduce customer search costs and eliminate the need for physical proximity between the buyer and seller. There are many reasons for all CEOs to consider this approach for their business:

Rallying the troops

Big innovation bets focus employee and supplier attention, create positive urgency and prevent individual or departmental agendas from stealing resources. 

Reduces complexity

Many R&D projects, particularly small ones, can develop institutional momentum making them difficult to cancel.  Managing this portfolio can generate significant complexity, increasing organizational cost and diffusing effort.  A blockbuster strategy eliminates these wasteful costs plus allows managers to best leverage scale economies in areas like media buying and raw material purchases.

Satisfy real customer needs

Movie studios concentrate investment and time on stories, actors and directors with proven consumer appeal (e.g., a sequel).  The discipline of only targeting key customer needs in profitable segments with real innovation improves the chances of market success.

Elberse’s learnings are relevant to many other industries including education, training, professional services and software. However, not every firm is a good fit. We believe enterprises should have three characteristics:

1.  Self-awareness

Companies that are good at placing the right innovation bets tend to have a good sense of what their core competencies are and where they need to partner or bypass.

2.  Decisiveness

Though having a good innovation evaluation process is important, management still needs to make tough calls quickly in periods of uncertainty.  Moreover, following a blockbuster strategy requires firms to have a culture and performance measurement system that is tolerant of failure.

3.  Nimbleness

Rigid plans lead to risky, binary decisions. Even in the movie industry, extensive consumer research still takes place.  Producers don’t hesitate to make edits or change endings based on focus group research.

Utilizing a blockbuster approach goes against conventional wisdom.  However, there are many examples of hurting companies like AppleIBM and Xerox that followed this strategy and have re-emerged as winners.  Managers should understand their operational dynamics, consider the strong financial business case, and analyze the impact of digital tools like search bots or recommendation engines that create “winner take all” effects.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

Marketer as anthropologist

Many companies prioritize learning customer needs above any other marketing activity so that they can create better products and service experiences. Typically, marketers will use traditional qualitative techniques like focus groups, surveys and one-on-one interviews. Unfortunately, these tools often fail to generate breakthrough insights. Standard qualitative methods are good at telling firms what is happening but not the why it’s happening. To get to the root cause of a consumer’s actions, marketers need to explore the recesses of their mind to identify subconscious drivers of behaviour. Anthropology is a very effective way to do this.

Simply put, anthropology is the study of people and civilization, past and present. It incorporates teachings from a wide range of disciplines, from psychology and biology, to the humanities and sociology. Anthropology is increasingly being used by companies (Starbucks, Lego, Herman Miller and Nokia are pacesetters) to better understand latent consumer needs and as well as societal and religious influences on their behavior.

In action

The following example shows anthropology in practice. A firm in the spa industry engaged us to help redesign its customer experience and service offering for female patrons. The client wanted to address any unmet customer needs and better differentiate their customer experience. Conventional research techniques regularly produced muted feedback, which led to copycat store designs and products. We wanted to go deeper into the consumer’s subconscious to find unmet needs and drivers that triggers behaviour. To get there, we employed anthropology to probe fundamental beliefs and values around their body image and wellness as well cultural influences. For example, how do women define beauty?  What role does human touch play? And, how can a spa experience help satisfy a women’s intrinsic needs? Our findings upended conventional thinking and led to a revamping of how the facilities were designed and how the services and benefits were communicated, resulting in higher client retention, an enhanced brand image and increased rates of cross selling.

Conventional qualitative research techniques take people at their word. This can be risky for brands.  At their core, consumers are often irrational, driven by motives or external influences that are unseen even to themselves. Using anthropology as complementary research can produce a more holistic and penetrating view of the consumer in their real life condition. Likewise, anthropology’s rigorous, academic-driven methodology preempts the emergence of erroneous assumptions around a customers’ behaviour that could have been shaped by a firm’s culture, the bias of its managers, or increasingly, the large but imperfect data stream flowing in.

Anthropologist have a number of data-collection instruments at their disposal including artifact analysis, quotidian diaries, and observational studies. Importantly, practitioners approach their research without hypotheses, gather­ing large quantities of information in an open-ended way, with no preconceptions about what they will find. The collected data is raw, personal, and first­hand — not the incomplete or artificial version of reality that is generated by most market research tools.

Anthropology is particularly helpful in understanding the dynamic world of social media. “Companies are beginning to use anthropology to understand the stream of consciousness within social medial that flows with ‘here’s what I’m doing/thinking/wanting now,’” says Lynn Coles a leading marketer. “Anthropological research helps us better understand and inhabit the social communities to identify behavioral patterns as well as the emerging dialect within a particular community so we can better communicate with our target consumers.”

Basic approach

1. Frame the issue

Anthropology requires the marketer to frame the problem in human — not business — terms. Doing so gets to the core of how a customer experiences a service or product. For example, a business problem could be:  How can a wireless provider reduce churn? The corresponding anthropological issue would be: How do our customers experience our service, and why are they leaving?

2. Assemble the data

The raw data is codified in a form of carefully organized diaries, videos, photographs, field notes, and objects such as packages. Although this open-ended data collection casts a very wide net, it requires a disciplined and structured pro­cess that needs to be overseen by anthropologists skilled in research design and organization.

3. Find patterns, insights

The anthropologist then undertakes a careful analysis of the data to uncover themes or patterns. When organized in themes, a variety of insights will emerge about how a customer feels, their goals and what drives their actions.

Of course, traditional quantitative and qualitative research methods have their place and should remain part of a marketer’s analytical tool kit. However, anthropology will play an increasing role in uncovering the consumer’s subconscious needs as well as societal/religious behavioral drivers, areas that are largely impervious to standard qualitative techniques. Producing this holistic view will allow marketers to design more relevant products and services that deliver higher value.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.