Unit 1 Discussion
This Discussion is based on the article “Big Data, Analytics and the Path from Insight to Value” by LaValle, Lesser, Shockley, et al. from MIT-Sloan Management Review. Make sure to read this article before starting the Discussion. See the Syllabus for details on how to obtain the article.
This week, you will look at a survey on how leading organizations are using statistics and you will compare the findings to your experience with respect to your own organization.
- Most companies that are evolving tend to use intuition rather than analytics in their decisions. Looking at the 11 categories listed in the first chart (p. 23) titled “Analytics Trumps Intuition,” select three and comment on which side your organization is on (clearly label as “Analytics” or “Intuition”). For each of these categories, give an example in which the decision makers use intuition or analytics.
- Looking at the 11 categories listed in the chart on page 25 titled “Impediments to Becoming More Data Driven,” select three obstacles that you think are preventing a focus on analytics in your company. For each, explain the issue. For example, if you selected “concerns with data,” you would describe what those concerns are. How does this obstacle manifest itself and impact you in your work? Finally, make recommendations to overcome the obstacle you identified.
In your replies to fellow classmates, look for similarities to your organization. If you have experienced similar issues, comment on how your organization handled the situation.
Please use the template below in your answers, so everyone can easily follow your answers to all the questions (copy and paste to your post).
STUDENT #1 REPLY TO ORIGINAL QUESTION
Question 1: Analytics or intuition
Category 1: Financial management and budgeting
I am in the financial reporting group for an oil refining company. We are constantly being approached by the finance groups and executives to make sure that the information they have in their power points are correct. They can then go ahead with their analytic approach to financial management. After we verify the information they use that as a basis to make decisions. One of the recent decisions was whether or not to purchase another company. After viewing our own data about whether we could make a good deal they then reviewed the other companies financials compared to the industry. My company decided to purchase them.
As for budgeting, we take the analytical approach as well. We take the previous year’s actuals and increase them by 3%. They are then sent to segment controllers who analyze trends and are able to make adjustments based on what should be higher or lower in the next year.
Category 2: Operations and production
My company uses the analytical approach to operations and production. They are always looking at certain metrics and bringing them up in town hall meetings to tell us if we are doing well or not.
Also, many parts of the refinery cannot be shut off so they have to carefully use analytics to tell how much to produce when and where to keep the plant functioning properly.
Category 3: General management
General management seems to be more of an intuitional approach. I am sure there are some analytics used here but I cannot think of any examples. My boss knows what each of his group members are good at and is able to delegate tasks to each of us easily that way. There are other groups in the office that would be able to track an employee’s productiveness through how many documents they are able to complete but I am not sure if they do that. I think the company is more intuitional in general management.
Question 2: Obstacles to analytics
Obstacle 1: Lack of understanding of how to use analytics to improve the business
A recent project has come up where I am going to analyze our contracts to be able to recognize all the revenue streams that we have. A company whose software we already pay for has a feature that would make us not only be able to do this but also be able to make useful reports about the contracts. People do not understand how this other program will help and want me to just do it in excel to keep it simple. If we use this software we could get a lot of useful information for decision making out of it. I am trying to explain to them how much more organized and easier to understand this information will be in the software instead of in workbooks.
Obstacle 2: Ability to get data
This ties back into the contract analysis. I need to at least do the revenue recognition for these contracts to be able to complete the project I am working on. I am constantly running into problems obtaining the contracts though. I can access some but most of them I have to go through my main contact who sometimes sends me on a goose chase to talk to other people and it makes it frustrating. I have tried to get access to find them myself but I have been declined permission. The company should either allow me into these restricted folders while I need them or store the information people want in a less secure place on the network.
Obstacle 3: Lack of management bandwidth due to competing priorities
My coworkers and I stay busy and do not have time to use analytics on all of our decision making. We could use someone who has experience in this to be our analytics specialist. Even if we had a new hire to take on some of our responsibilities we would have more time to focus on using data driven decisions.
STUDENT #2 REPLY TO ORIGINAL QUESTION
I work for a benefits administration company. Companies hire us for our ability to obtain low healthcare costs for their employees because we can obtain group discounts. However, my division of the company is fairly new and has only been around for about 4 years. Because of this we have some growing pains.
· Retention and hiring– intuition
- This is a pain area for us because we are growing so fast and need the bodies, so we are just hiring almost anyone that has any type of account management background. However, with our company being in healthcare benefits, having a benefits background is a must and a lot of these employees do not have any type of benefits background. So many of them are gone within the year because they get frustrated and feel unsupported. We rely mainly on our own employees to recruit which is also difficult. They do this by sending out emails every so often about open positions and ask us to spread the word and offer a bonus for any referrals that are hired. It would be increasingly helpful if we could start screening more potential candidates prior to even interviewing them. Maybe having some type of question on the application that has them rank their benefits knowledge and how much experience they feel like they have in account management experience. Especially because people tend to only refer others to obtain the bonus. They don’t really care much for the potential employees previous experience.
· Customer Experience Management – intuition
- This one is probably one of the more frustrating ones that my company struggles with. We are a new company, so customer feedback is very important. We are actually losing the same amount of clients as we are gaining on 01/01/2017, so there is clearly some area for improvement. However, we don’t provide any type of survey, to my knowledge, to our clients at the end of the year. This would be increasingly helpful to provide to both renewing and terminating clients. That way we can continue what we do well and improve on what we don’t. This could be something like a scale survey where the clients rank us on certain areas. I feel like getting that feed back and finding the most common area where we overall rank the lowest, we can work on together as one organization. I think we would increase the retention rate in our clients and improve our overall client satisfaction.
· Work force planning and allocation – analytics
- This is something that we do well with when it comes to our call center. It is known in the benefits administration industry that 4th quarter is always busy. That is because most employers hold what is called an Open/Annual Enrollment during this time for their employees to enroll into benefits for the following year. So calls into our call center spike dramatically during the 4th quarter. Our work force management teams tracks all calls during this time every year and can even forecast how many calls each client will generate based on prior year data. They also take into account how many clients are going through their enrollment at one time, how many employees that client has that could potentially be calling and many other factors. They put this together and forecast how many call center reps are needed. We then recruit seasonal employees based on this forecast to help get us through this busy season. Because our work force management team does such a great job and does use analytics to hire this extra help, it truly has helped our call center stay on top of answer rate and decrease the wait time for our client’s employees.
2. Question 2:
Lack of skills internally in the line of business:
- One of the biggest struggles we have at my work is how much skill in benefits each person has prior to being hired. This lack of knowledge and skill in benefits makes it very hard for our employees to be successful in their jobs. I have been with this company for 2 years, again, this division has only been around for 4 years, and the training has come very far compared to where it was when I was hired. However, if we can build in analytics into our hiring process and hire more individuals that have a benefit background, our new hires would not need to spend almost a month in training and can start doing their job faster. This would save our company time and money. However, I believe that because we are growing and are a new company, they are looking to hire anyone that seems qualified and trainable, so they don’t want to worry about changing their hiring process now. This impacts my daily work because if I have a question on some thing benefits related, it is hard to find someone that may know the answer. It takes more time away from my work to try and find an answer. But one way to help with this could be by adding some type of ranking survey to application.
Lack of management bandwidth
- The biggest issue here is we have actually had a lot of leadership turnover. Because of this, every new leader is focused on other priorities and doesn’t want to worry about putting any effort into implementing any more analytics. I think they would focus on this more once our new leaders feel established and feel like they have everything else under control. One way to help with this to have our work force management do additional analysis outside of just 4th quarter to show them how much bringing analytics could help with our overall retention in clients and hiring. I think once our leadership team sees the results; they would understand how important it is to do additional research using our own data. It could even lead to additional markets and clients that we haven’t even looked at yet.
Perceived costs outweigh projected benefits:
- I think this is a large part of why we haven’t done a lot of data analysis this year. Because we are losing just as many clients as we are bringing on for 2017, we aren’t putting extra money into many other things. Travel has halted for anyone wanting to see their own clients and we are even on a hiring freeze, except for the call center. One way to offset the cost is by utilizing the current workforce management team we have. I think once our workforce management team provides results outside of the call center to our leadership team surrounding other departments, leadership will realize that investing additional money into data research and statistical analysis is actually very beneficial. It could be used more in our decision making on how we spend our money, and may even save our company money.