PLAN WITH THE END IN MIND: USING ANALYTICS TO INCREASE DECISION SPEED AND ACCURACY
Executive Summary: Putting in the time upfront to create a coherent data strategy will pay big dividends by enabling high velocity decision making capabilities down the road. Take a page from Jeff Bezos and Albert Einstein on this.
Lately at Sentier we have been reflecting on our role in helping our customers create something more than just “data-driven” environments — we help them articulate the vision for their data and analytics plans. The end state of this process is to move to a place where they implicitly trust and depend on their data and analytics. With this established, decision velocity increases and confidence in committing to decisions is a foregone conclusion.
For some context, we need to look to Amazon and the management philosophy instilled by Jeff Bezos. In the company’s 2018 annual letter, the Amazon team writes about what kind of thought goes into their decision-making process:
“We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of “study hall.” Not surprisingly, the quality of these memos varies widely. Some have the clarity of angels singing. They are brilliant and thoughtful and set up the meeting for high-quality discussion. Sometimes they come in at the other end of the spectrum.
There is something to be learned from this and it seems counterintuitive: In order to make faster and better decisions, we need to slow down, understand the nuances of the situation, and contemplate the problems in depth. Then we have an idea of what to do. It echoes Albert Einstein’s quote:
“If I were given an hour in which to do a problem upon which my life depended, I would spend 40 minutes studying it, 15 minutes reviewing it and 5 minutes solving it.
At Amazon, not all decisions are the same. Jeff Bezos espouses the idea that there are Type I and Type II decisions. A Type I decision is a one-way door and the consequences are incontrovertible and irreversible. Type II decisions, however, can be reversed or the course can be adjusted after the fact. Companies and individuals get bogged down when they cannot distinguish between the two, and every decision feels like a Type I situation.
Putting the Type I decision aside, Type II decisions are made often and are facilitated by having the right data to support them. The key is to accept the fact that we will not always have all of the data we want—at Amazon, the bar is set at 70% and above. Bezos is right: if we always wait for perfect information, we will lose momentum and be resigned to stasis.
This is where an enterprise data platform and strategy is relevant. Having a well-thought out, current, and reliable analytics plan is like writing yourself a six-page narrative or solving a problem like Einstein—every day. The work has been done to contemplate the uses and consequences and high velocity decisions can be made. The investment in upfront time is worth the effort, and the risk has been mitigated because you will always be starting at 70% information.
Real world examples of companies spending the time to contemplate their business problems—and then reacting with confidence because they are derived from well-established analytic plans—abound. Market Mix Modeling decisions, for example, are replete with Type II decisions: cutting promotions, increasing spend for high potential tactics, and pivoting from face-to-face interactions to virtual visits during a pandemic. Foresight was required to gather and organize the marketing data. Predictive sales models that are built from the lowest granularity possible (i.e., claims data) don’t materialize overnight; the data and all of the inputs require a vision and an investment over time.
Spend the time now to craft your analytic plan. Organize your thoughts and intentions into a narrative that will endure beyond budget cycles and leadership changes. Then, share this narrative and preach it within your organization because....your business depends on it.
