Organizations today are spending money on the latest technologies and working hard to solve problems as they arise. Yet, sad to say, this is simply not enough.
Today, to get on top of today’s fiercely competitive business environment, organizations need to take a strategic move: Develop an Innovation Mindset. What is an Innovation Mindset? What does it take to develop an Innovation Mindset? Often, this can be mindboggling as we get confused as to understanding what is an Innovation Mindset. Developing an Innovation Mindset is never the mere act or intent of investing in technology. It goes beyond spending money on the latest technology.
Developing an Innovation Mindset is to undergo the transformation from an innovation-averse to a forward-thinking organization.
Understanding an Innovation Mindset: What It Takes to Develop One
Developing an Innovation Mindset requires scaling innovations repeatedly and making it grow as fast as others. Companies need to depart from adopting technologies as point solutions to evolving future systems. This can be achieved by cultivating the mindset and methods of the top 10%.
The top 10% are the Leaders in Innovation Management that are already enjoying a considerable head start and are not standing still. The systems they have put in place are specifically designed to not only accommodate innovations but also scale them across the enterprise.
Developing an Innovation Mindset Starts with the Right Tools
These 5 principles can provide organizations the foundation on developing Innovation Mindsets. There first 2 are defined as:
- Adopt technologies that make the organization fast and flexible. Consumers now demand that companies are fast and flexible. The market is getting impatient when there are delays and so structured that it ceases to be an organization with a Customer-centric Design. Principle 1 focuses on making organizations fast and flexible. Achieving this call for efficient use of decoupling data, infrastructure, and applications to achieve greater flexibility and a faster-moving IT culture.
- Get grounded in cloud computing. This principle is focused on catalyzing innovation. Adopting this principle will enable organizations to maximize the use of the cloud to successfully utilize other technologies, including Artificial Intelligence and analytics.
There are 3 other principles that organizations must take notice of and focus on. The other 3 principles are recognizing data as being both an asset and a liability, managing technology investments well across the enterprise, and finding creative ways to nurture talent.
Integrating these principles in the organization’s journey towards Digital Transformation will promote the development of an Innovation Mindset. When this happens, we can expect our organization to keep up with the pace and catch up.
What Does It Take to Have an Innovation Mindset
Developing an Innovation Mindset has led leaders to take command and be in-charge of market demands. Leaders are adopting DevOps, automation, and continuous integration/continuous deployment at a faster rate than Laggards. Let us take a look at a Travel Industry disruptor. The company migrated its platform to microservice as part of decoupling initiatives.
As a result of taking this initiative, rapid response to change was achieved. This also enhanced its capability to add new features as the company experiences explosive growth.
Let us take a look at a more internationally recognized company: Ant Financial (formerly known as Alipay), the Alibaba Group’s financial arm. The organization embedded cloud services and AI across multiple processes and product lines. Furthermore, AI capabilities were offered to external ecosystem partners.
Today, Ant Financial can instantly assess the credit risks of underserved people who may not have bank accounts and even target them with loan offers. The overall cost was reduced by 50% and the company experienced a 10-fold increase in daily visitors.
Developing an Innovation Mindset is key.
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Post-merger Integration is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size-fits-all approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the identification and capturing of synergies will help maximize deal value.
It is inevitable that some elements of information will be withheld from a Buyer pre-deal. Further, not all the synergy benefits originally identified in the deal will prove to be achievable. The foremost challenge for management at the onset of the PMI process is to identify how value can be captured from the newly combined organization via synergies and cost savings.
Understanding Post-merger Integration
Post-merger Integration is the fundamental stage of realizing the value of an M&A deal. A highly complex process, it entails bringing together 2 companies experiencing change while ensuring that business continues as usual. A truly challenging undertaking that must never be underestimated.
When 2 companies agree to undertake a Post-merger Integration, its primary objective is to maximize synergies to ensure that the deal lives up to its predicted value. It is a phase during which the results of the Buyer’s M&A strategy and expectations for the closed deal start to materialize.
In the entire phase, Closing and Day One of change is the most critical. It is the initial starting point towards the change of ownership and where Strategy Development is at its core.
Closing and Day One
During Closing and Day One, Managers must focus on 3 important areas.
- Communications. Corporate Communications must be well planned and well implemented. This is to enable managers to lead an M&A project more effectively. Through structured communication, trust is built, motivation developed, and important information shared. In fact, it can prevent the negative impact of rumors and unify the different parts of the joint company.
- Operating Structure. New operating structures and systems are made once the joint company’s strategy and goals have been agreed upon. From Day One, it is important that new management and operational structure/reporting procedures are clearly communicated. In the development of the operating structure, it is important that a CEO has been appointed, the key personnel roles decided, and there is already an agreement on operative and statutory structures.
- Systems & Controls. A clear and detailed Systems & Controls must be established by Day One. This is essential for management to be able to gain control of the operations of the Target. If operational structures are not finalized at this point, a temporary management system and control need to be established.
The Important Role of a CEO and Key Personnel from Day One
The CEO plays a vital role in the joint business. The CEO or Managing Director is involved in the acquisition process. Hence, it is important that from Day One, a CEO or Managing Director has already been appointed.
Often the CEO comes from the Buyer or its group or corporate entity. If an existing CEO of the acquired entity continues the same role, then the Buyer must nominate a controller to ensure financial integration and smooth reporting.
The Key Personnel is also essentially important from Day One. In fact, there is a need for positions and roles of key personnel during the integration process to be planned in advance and communicated at closing.
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Today’s C-suite is making a significant investment in new technologies. Yet, it is failing to achieve full value. Technologies are being deployed in pockets or silos without a Strategy for scaling the Innovation from these technologies across the enterprise. Unable to scale their Innovation, organizations are not realizing the full benefits of their technology investments.
An Innovation Achievement Gap exists. What is the Innovation Achievement Gap? This is the difference between potential and realized value from technology investments. When new technology does not achieve its full value, the Innovation Achievement Gap exists.
What Companies are Facing Today
The enormous challenge of Innovation Management with legacy systems is facing companies today. The conventional IT stack is not built or designed for the world of tomorrow. These are our software applications, data, hardware, telecommunications, facilities, and data centers. Today’s cloud-oriented world is full of analytics. There are sensors, mobile computing, AI, the Internet of Things (IoT), and billions of devices. Digital Transformation is changing the face ob business.
True, companies have started in the cloud. But the systems have not been adopted at the pace of technological change. As a result, there are distinct Leaders and Laggards when it comes to the adoption and penetration of technologies. Leaders are seeing more than 2X the revenue growth of Laggards. Laggards, on the other hand, often adopt technologies as individual point solutions without a strategy for enabling systems than can achieve enterprise-wide, game-changing innovation. While they might have pockets of brilliance, Laggards cannot maximize the value achieved. To be a Leader is to have an Innovation Leadership Mindset.
Simply said, adopting technologies does not guarantee success. This requires a systematic and sequential strategy in line with Next-gen Enterprise Systems. This needs an Innovation Leadership Mindset.
Doing Things Differently: The Innovation Leadership Mindset
Leaders differ much from Laggards. Embedded within their whole being is the Innovation Leadership Mindset.
Having an Innovation Leadership Mindset is clicking the future into place. There are 4 core pillars of the Innovation Leadership Mindset. Let’s define the first 2:
- Invest in innovation. Leaders invest more in innovation. Organizations with Innovation Leadership Mindset direct a greater percentage of its IT budget toward innovation. They accelerate investment innovation over the next 5 years. Leaders are far advanced from Laggards when it comes to investing in innovations. Leaders invest 93% on innovation and are expected to increase this to 97% in the next 5 years. On the other hand, laggards invest only 64% on innovation with a planned investment of 74% in the next 5 years.
- Develop Innovation Systems. Leaders show a consistently higher rate of technology adoption. Organizations with Innovation Leadership Mindset adopt new technologies earlier and develop higher levels of expertise. They prioritize and sequence implementation in optimal ways. Leaders have been found to adopt a fundamental general-purpose technology at a rate of 98%. An example of this is Artificial Intelligence. Laggards, on the other hand, have faith in a fast follower approach. They take technology haphazardly leading to patchwork across the organization.
There are 2 other core pillars that are equally important. One is Scale Technology Innovation and the other is Evolve Next-gen Enterprise Systems. Leaders that set their sights on innovating at scale target 3 times more business processes with technologies. Leaders have also drummed up their resources towards building the Next-gen Enterprise Systems.
Next-gen Enterprise Systems are systems that are capable of repeatable and scalable innovations. It is Boundaryless, Adaptable, and Radically Human. Outpacing others calls for organizations to start envisioning their own version of Boundaryless, Adaptable, and Radically Human Next-gen Enterprise Systems.
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“Leadership is not about titles, positions, or flowcharts. It is about one life influencing another.” – John C. Maxwell
Many people in a position of authority struggle with their Leadership Presence. They have adopted the kind of persona that they assume a leader is supposed to have: a TED Talk cadence, authoritative body language, studied informality, and a package of carefully curated slides. Yet, in adopting this stance it showed that you are not authentic and people will assume your message is not either.
The biggest challenge of leaders and aspiring leaders is to inspire and motivate people to take the right action on behalf of themselves and the group. This is the challenge of Leadership Development today. Leadership Presence has become the face of today’s leadership. An authentic leader does not mean just “winging it” or saying whatever you feel. Being an authentic leader now requires an ability to transform impulse into insights, articulate these insights to fulfill a purpose, and to build the needed relationship. Authentic leadership must be able to build trust. And an authentic leader must have Leadership Presence.
What is Leadership Presence?
Leadership Presence is the ability to communicate what needs to be said in a way that inspires people to join their leaders.
Leaders or aspiring leaders at any level must inspire and motivate people so that they can take the right action on behalf of themselves and their group. Hence, it is important that a leader must have a strong presence and not just at conferences but in every interaction. As a leader, every aspect of your presence – your physical self, your intellect, your voice, and your emotions – is intimately bound up with your message.
Sharpening our Core: The 10 Core Principles of Leadership Presence
To have Leadership Presence, a leader needs to inculcate within themselves the 10 Core Principles of Leadership Presence. These are the principles that will enable the authentic leader to raise the bar of excellence when it comes to inspiring and motivating people to reach their greatest potential.
There are 10 Core Principles. Let us take a look at 2 of the 10 Core Principles.
- Communicate in a holistic manner. Principle 1 is focused on forming a single impression of the leader and their message. To communicate in a holistic manner, one needs to think of the intellect, emotions, and body as one. Often, people evaluate integrity and veracity together with the person’s posture, tone of voice, and mood. Never has it happened that people gauge a person only on one specific aspect; often, it is the entirety of the whole being. This is why there is a need to emphasize the importance of communicating in a holistic manner. When a leader communicates in a holistic manner, this will increase the recognition of emotions, reasoning, and actions. It will also lead to more honesty and authenticity. You can just imagine the impact it will have on your people.
- Focus on what matters most. The second principle is focusing on what matters most. It is speaking only what is important. Focusing on what is important means focusing on what needs to be accomplished and what the listeners care about. When leaders start focusing on what matters most, there will be a clearer conviction, willingness to invest time and resources, and greater aspiration for others.
Achieving Leadership Presence: Putting the Principles into Action
Achieving Leadership Presence takes a conscious effort to change and take command of what is important. Leadership Presence is achieved once we start putting the 10 Core Principles into action. Principle 1 requires recognizing connections among our emotions, reasoning, and actions. We need to work out these elements to be able to improve the overall impact. Getting a coach to help us go through the process will help a lot.
Adapting Principle 2 requires figuring out what we care about and why. We need to think about its connection to our purpose and our listeners. And once we do this, we need to commit to it wholeheartedly.
Once we learn Principles 3 to 10, this will further sharpen our leadership capability and build within us the ability to establish a unique sense of Leadership that is unique, authentic, and inspiring.
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No free lunch was ever served quickly. Traditional supply chain cannot offer both low prices and fast delivery.
Online retailing has changed. Before, we see e-commerce companies fulfilling consumer demand from a small number of large-scale warehouses that carried a similar catalog of items. Inventory for low-volume products was maintained in a few locations as possible while maintaining service levels that met customer expectations.
Today, consumers are demanding more than just low prices. Consumers are also demanding that products ordered be delivered quickly. As a result, the demand for quick day delivery is now pushing retailers to experiment with new Strategy Development and operation models. Notably, known retailers such as Amazon.com, Nordstrom, and Macy’s are redesigning their distribution networks. Retailers today have recognized that the terms of competition have changed.
The Shift from Traditional Online Retailing to Fourth Industrial Revolution: Why the Need for Agility in Supply Chain Network Design
The early days of online retailing were not as competitive as today. Inventory costs were kept low and economies of scale that large fulfillment centers provide are taken advantage of. Consumers were willing to wait for deliveries as proximity and speed were less important than cost savings.
But today, customer expectations go beyond lower prices. The Fourth Industrial Revolution has changed the terms of competition in online retailing.
Achieving same-day delivery has moved retailers to use third parties (local city-specific delivery services) and crowdsourcing (paying individuals by the task to shop for and deliver groceries). Retailers are also looking at setting up physical lockers where customers can retrieve their packages or use of physical store networks to fulfill online orders. Others are adding warehouses near major urban markets and IT solutions are now being used to access real-time sales data and inventory information.
The chain in the online retailing landscape has changed and there is now an increasing need to achieve Agility in Supply Chain Network Design.
Understanding Agility in Supply Chain Network Design
What is putting Agility in Supply Chain Network Design or Distribution Agility? It is the ability to invest in real-time sales and inventory information, coupled with advanced analytics to accommodate fluctuations and changes in the business environment quickly. This is Agility in Supply Chain Network Design.
Putting Agility in Supply Chain Network Design requires a 3-phase process. Let us take a look at one of the 3 phases: The First Phase.
The First Phase is to Reinvent Network Design Thinking. This phase has an important implication on cost performance as they relate to customers. It requires redesigning the physical distribution network and the information network for it to be able to support the Supply Chain Network Design. The first phase ensures that the real-time information system is in place that incorporates data on sales by time and location.
Once the first phase is undertaken, this will facilitate an immediate response to agile and traditional systems. This is what Amazon.com Inc. did. Amazon opened 43 small-scale delivery stations and 53 hubs to augment a distribution network of 101 fulfillment centers and 29 sorting centers. They applied real-time stock visibility across the network and intelligent product replenishment and fulfillment to mitigate the cost of trade-off. As a result, it allowed them to effectively and immediately respond to changing consumer demands. While not all online retailers can be like Amazon, yet all can have an Agile Supply Chain Network to make them competitive in today’s digital era of Business Transformation.
Putting the other 2 phases in place will complete the entire process of ensuring an Agile Supply Chain Network Design. Why is agility important? Agility in Supply Chain addresses the outmoded conflict between low prices and fast delivery. It enables organizations to build strategies that can make adjustments both at the planning and operation levels.
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In today’s digital age, organizations are faced with the changing nature of the demand curve and the element of uncertainty in the supply chain. For operations teams, the challenge and competitive advantage have become: How well do you respond and execute against ongoing uncertainty.
With the world being so unpredictable, chaos is now the new normal. Timetables and priorities have shifted. A supplier fails to deliver. Demands on supply chains are increasing exponentially. A few years ago, supply chain performance was all about batch quantities, timetables, and lead times. Today, millions of packages are shipped in a day, with many with just only a few items.
In the face of this upheaval, supply chains try to predict what will happen, then optimize performance against plan. Most often, those plans are not met. The path forward demands a bold leap in supply chain performance.
Business in the Midst of the Digital Age.
Chaos is the new normal. This is the central challenge companies have to contend with today. Demand on the Supply Chain is increasing exponentially whereas Supply Chain performance before used to be all about batch quantities, timetables, and lead times. Today, times have changed.
Business Transformation has become pertinent. Timetables and priorities have shifted and, in fact, suppliers are now finding themselves unable to deliver at the required time demanded by the market. Whereas before deliveries were in batch quantities, today millions of packages are shipped every day with many having just a few items. Customers are now encouraged to order multiple sizes and colors of the same items, choose what they like best and return the rest.
In this upheaval, Supply Chains must respond accordingly. There have been attempts to predict what will happen with performance being optimized against the plan. Companies are increasingly investing in Supply Chain capabilities. Yet, these have triggered nonproductive finger-pointing and disappointing results.
Something is missing. A Supply Chain Strategy, as part of Strategy Development, is now essential to be able to pursue a bold leap in Supply Chain performance.
The Digital Supply Chain Strategy
The Digital Supply Chain Strategy is the new approach to Supply Chain resilience. This is best undertaken using a 2-prong approach.
- Sense and Pivot. A Supply Chain Strategy, Sense and Pivot focuses on building adaptability of Supply Chains. When this is undertaken, it will allow organizations to create greater flexibility across the Supply Chains. New processes, governance, and ways of working will be developed that will leverage technological capabilities being advanced. Significantly, it will make planning, manufacturing, distribution, and logistics more adaptive toward demand volatility, customer expectations for personalization, and an increasingly unpredictable operation environment.
- Digitize and Automate. Digitize and Automate is another Digital Supply Chain Strategy that is focused on building the capability of the Supply Chain to execute against the plan. When this is undertaken and effectively executed and implemented, organizations can expect a better informed, more frictionless, more cost-efficient, and capable Supply Chain. Further, it will enable organizations to undertake more informed Strategic Planning as more accurate forecasts are achieved.
The Digital Age calls for a new approach to Supply Chain Resilience.
The Importance of Supply Chain Resilience
Why is Supply Chain Resilience important today? In today’s digital age, companies can expect to encounter potential disruptions. These potential disruptions can effectively be addressed using the best strategy. Automation and smart software are effective tools for minimizing disruptions on business operations. Embracing digital advancements will provide organizations real-time data for a more reliable supply value chain. Definitely, there will be integration challenges. But the use of Digital Age Supply Chain Strategies will guide companies to counter these potential disruptions and challenges.
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Peter Drucker, one of the first managerial thinkers, introduced MBO or Management by Objectives. This eventually paved the way for the birth of the Objectives and Key Results (OKR) management philosophy. Andy Grove, known as the “Father of OKRs”, introduced the approach to Intel during the 1970s. This was further popularized by John Doer by introducing OKRs at Google in 1999.
Today, successful organizations are now using OKRs. Objectives and Key Results is an efficient way to track company and team goals and measure their progress. It helps every organization’s success by cutting out unimportant goals and focusing on what truly is important within the organization.
Objectives and Key Results (OKR) has been seen as a way to communicate so that there is clarity of purpose. It is also a tool for motivating and aligning people to work together to achieve Operational Excellence. It increases transparency, accountability, and empowerment.
What is OKR?
OKR or Objectives and Key Results is a popular Management Strategy for goal setting within organizations. The goal of OKR is to define how to achieve objectives through concrete, specific, and measurable actions.
The OKR framework is structured with two framework components: the Objectives and Key Results. This is to connect company, team, and personal goals to measurable results and direct all towards one unified direction
- Objectives. The Objectives consist of a list of 3-5 high-level objectives. This is supported by initiatives—plans and activities focused on achieving the objective and moving forward the key results. Setting objectives requires a lot of thought as it goes beyond making money. In fact, it must follow defined characteristics and undertaken in a well-planned approach. This is to ensure that the objectives formulated are well-defined, focused, and achievable.
- Key Results. Key Results add metrics to objectives. These are measured on a 0-100% scale or 0 to 1.0. Under each objective are 3 to 5 measurable Key Results. It measures how far from the objective your team is. It will give them a clear direction on what to do and how to do it.
Developing the right OKR requires being able to properly define your Objectives and Key Results. One way of doing this is by using the SMART goal setting model.
A Look at the SMART Model
The SMART Model ensures that organizations get to effectively develop the right OKR. The SMART Model is the easiest way to set Key Results. Organizations just need to follow the SMART goal guidelines. Knowing what to do, as well as knowing not what to do, on an OKR journey to minimize problems and mistakes.
The use of OKR requires cultural change and change itself is difficult. But with the use of the SMART goal guidelines, organizations can get the hang of it and can be effective in its OKR journey.
Let us take a look at OKR examples that provides a clear application of the SMART model.
The first example is the use of Sales OKR. Set Objective is to increase Q2 recurring revenues. Key Results are increased average subscription size by $500 per month ($0-$1500). The second Key Result is to increase the share of monthly subscription vs. one-time contracts sold to 85% (50%-85%).
Another example is the Human Resource OKR. Set Objective is to improve internal employee engagement. Its first Key Result is conduct a monthly “Fun Friday” all-hands meetings with an external motivational speaker (0-3 meetings).
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The amount of time the Board of Directors spend on their work and commit to strategy is rising. Directors say they dedicate more time now to their Board duties than ever before. In fact, since 2011, the directors have cut in half the gap between the actual and ideal amount of time they spend on Board work.
In the newest McKinsey Global Survey on Corporate Boards, the results showed that strategy, on average, is the main focus of many Boards. Yet, directors still want more time for strategy when they consider their relative value to their companies. This is more than any other area of the Board work.
The Evolving Trends Influencing Board Work
In recent years, the amount of time the Board of Directors spends on Board work has increased. Compared to 2011, directors now spend five more days per year on Board work. Another trend that is happening is the increase in time. As the number of days has grown, so has the amount of time spent on strategy.
Based on the survey, a total of 772 days was spent on Board work in 2013. This has increased to 1,074 in 2015. Subsequently, 8.91% was spent on strategy in 2015 compared to 7.85% in 2013. With an increased focus on strategy, directors are dedicating more time on Strategic Planning and to discuss strategic issues.
In the next three years, directors would like to dedicate more time to Strategy Development and on organizational health and talent management. Directors want to increase the time spent on strategy due to its relative value to their companies.
The 3 Types of Boards
Performance of Boards based on overall impact, performance, and operation showed that there are 3 types of Boards.
- Ineffective. Ineffective Boards report the lowest overall impact and non-performance of tasks. They have the lowest overall impact on long-term value creation. Ineffective Boards are least effective at the 37 tasks required of the Board and they do not execute some of the tasks at all. Only a few are found to be effective at any one task.
- Complacent. Complacent Boards have a much more favorable view of their over-all contributions. Half of the directors considered their Board having a very high impact on long-term value creation. Complacent Boards have been found to be effective in the performance of tasks on management review of financial performance, setting the company’s overall strategic performance, and formally approving the management team’s strategy.
- Excellent. Excellent Boards are the most well-rounded of the 3 types of Board of Directors. Their overall impact is very high. Significantly, they project greater effectiveness in the performance of tasks than peers on every single task. Further, they are effective in strategy and performance management.
Achieving Board Excellence: What Does It Take
Those boards that reach Excellence are found to be effective at 30 of the 37 tasks undertaken by the Board. Compared to others, they stand out in the ways they operate. They have an especially strong culture and mechanism for feedback. They are more than twice as likely to conduct regular evaluations and ask for input after each meeting.
While this may sound daunting, achieving a value-creating Board is achievable. There are just fundamental principles that the Board needs to follow to achieve Board Excellence. One of these guiding principles is spending more time. Across-the-board increases are often achieved with more time spend on Board work.
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Enterprises invest in Analytics to improve Decision Making and outcomes across the business. This is from Product Strategy and Innovation to Supply Chain Management, Customer Experience, and Risk Management. Yet, many executives are not yet seeing the results of their Analytics initiatives and investments.
Every organization putting on investment in Analytics has experienced several stumbling blocks. This differentiates the leaders from the laggards. Analytics-driven Organizations have clearly established processes, practices, and organizational conditions to achieve Operational Excellence. Their commitment to Analytics is creating a major payoff from their investments and a competitive edge.
What It Takes to Be Analytics-driven
The Harvard Business Review Analytic Services conducted a survey of 744 business executives around the world and across a variety of industries. Their focus was on the performance gap between companies that have struggled to get a return on their Analytics investment and those that have effectively leveraged their investment.
The survey showed that Analytics-driven Organizations get sufficient return on investment in Analytics. In fact, they have been highly successful in gaining a return on Analytics investment. This is gainfully achieved as organizations use Analytics consistently in strategic decision making. Executives of Analytics-driven Organizations rely on Analytics insights when it contradicted their gut feel.
Essentially, Analytics-driven Organizations have reduced costs and risks, increased Productivity, Revenue, and Innovation, and have successfully executed their Strategy. Yet, in evolving the organization’s Analytics approach, there can be 4 core obstacles that can affect their drive to getting a greater return on investment in Analytics.
The Core Obstacles to Finding Return on Analytics Investment
Let’s briefly take a look at the first 2 obstacles:
- Communication and Decision-making Integration. The lack of Communication and Decision-making Integration limits the integration of Analytics into workflows and decision processes do not reach decision-makers. As a result of these core obstacles, the use of Analytics is limited in specific areas.
- Skills to Interpret and Apply Analytics. A second core obstacle is the inadequate skills of business staff to interpret and use Analytics. In fact, the survey showed that only one-quarter of frontline employees use Analytics with only 7% using Analytics regularly.
The other two core obstacles are siloed and fragmented Analytics and time delay. These are two equally important core obstacles that can hinder the use of Analytics to maximize return on investment. Further, the 4 core obstacles are barriers to analytic success.
Are You Ready to Be an Analytics Leader?
Leaders use Analytics consistently in decision making. In fact, based on the survey, 83% of executives use it in business planning and forecasting. On the other hand, laggards only use it 67% of the time. Even in various aspects of the organization such as Marketing, Operations, Strategy Development, Sales, Supply Chain, Pricing and Revenue Management, and Information Technology, laggards use Analytics only half the time compared to Analytics Leaders.
Analytics Leaders always ensure that they establish the processes and organizational conditions to allow them to successfully deploy Analytics. In fact, to increase return on Analytics, organizations must undertake the use of four interrelated initiatives that will drive greater return on investment Analytics. These are four initiatives essential to building an Analytics-driven Organization.
One is building an organizational culture around Analytics. To achieve this the organization must have clear, strategic, and operational objectives that are set for Analytics. Second is deploying Analytics throughout all core functions of the business.
Starting with an Analytics-driven Culture can greatly facilitate cross-functional deployment of Analytics.
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Human judgment can be unreliable as these are all susceptible to errors. In Strategy Development, organizations make a lot of strategic decisions. These strategic decisions share a common feature: they are evaluative judgments.
In making these tough calls, a large amount of complex information must be weighed down and evaluated. While some management decisions are made without weighing quite so much information, yet strategic decisions involve the distillation of complexity into a single path forward.
With the unreliability in judgment, particularly in decision making, there is a need for a practical, broadly applicable approach to reducing errors. This approach is called the Mediating Assessments Protocol (MAP).
Why Human Judgment Can Be Unreliable
Human judgment can be unreliable as evaluations are susceptible to errors. These errors stem from known cognitive biases. There can be a tendency to give more weight to information that comes to mind easily because it is recent or striking than other more important facts. We have the tendency to notice, believe, and recall information selectively which confirms our preexisting hypotheses and beliefs.
Making decisions can also be affected by the Mental Model we have formed. This is an impression of a complex situation that is often less nuanced and more coherent than the reality it represents. When decision making is influenced by biases, there will be errors in decision making.
The 3 Core Elements of MAP
MAP or Mediating Assessments Protocol is a structured approach to Strategic Decision Making. It consists of 3 core elements.
- Advanced Assessment Definition. The first core element requires the identification of mediating assessments. Mediating assessments are key attributes critical to the evaluation.
- Independent Assessments. The second core element is grounded on the evidence available. It uses fact-based independently made assessments.
- Final Evaluation. The third core element is undertaken when the mediating assessments are complete. The final decision is discussed only when all key attributes have been scored and a complete profile of assessments is available. However, the final evaluation may not be undertaken if a deal breaker fact has been uncovered.
Understanding the Importance of MAP
Any organization is a decision factory. Many decisions made can shape the future of organizations. At the same time, many decisions have caused organizations to fail. Decisions, unlike physical products, cannot be quality checked. However, it can be improved by working on processes by which they are made.
Mediating Assessments Protocol (MAP) is an approach that can bring quality assurance to complex decisions. One of its strategic application is in structuring one-off decisions.
Structuring one-off strategic decisions is a type of strategic decision that makes use of explicit assessment as a basis for the decision. It requires leaders to make separate, explicit assessments of each aspect.
The use of MAP in structuring one-off decisions can limit the risk that a compelling narrative will sway board discussions and affect quality decisions. When there is a rigor of formal structure in strategic decision making, it has the benefit of sequencing the process resulting in more quality decisions.
The use of MAP requires very trivial extra effort yet it can bring a lot of benefits. Board discussions are more organized and focus than the usual process, but is not necessarily longer or more contentious. Important facts are less likely to be overlooked and thoughtful, self-critical consideration of trade-offs is more likely to occur.
Most importantly, the use of the MAP can lead to producing strategic outcomes when used in structuring recurring decisions.
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