Magazine article Strategic Finance

Better Decisions through Analytics

Magazine article Strategic Finance

Better Decisions through Analytics

Article excerpt

If you want to make better decisions and take the right actions, the use of analytics is essential for improving business performance. For too long, managers have relied on the intuition, experience, and unaided judgment of the decision maker. In Analytics at Work, authors Thomas Davenport, Jeanne Harris, and Robert Morison discuss the global secular trend toward more data, more computerized analysis of the data, and more orientation to fact-based decision making.

The authors' research suggests that 40% of major decisions (from strategic planning to everyday operational decisions) aren't based on facts but on the manager's "gut," or intuition, instead. It's time for every organization to address both how to make better decisions today and how to sustain high performance across business cycles and generations. Analytics at Work, a sequel to Davenport and Harris's Competing on Analytics, is a "how-to" book that describes frameworks, assessment tools, and organizational examples for building analytical capabilities and determining analytical maturity.

Putting analytics to work can help your managers and employees make better decisions--and help your organization perform better. Being analytical requires the use of analysis, data, and systematic reasoning to make decisions. Analytics is an organization capability that can be measured and improved. The authors urge companies to move, over time, toward a mentality and strategy of competing on analytics.

The capabilities for success with analytics are described using the DELTA model:

[ILLUSTRATION OMITTED]

D for accessible high-quality data--the prerequisite for everything analytical

E for enterprise orientation--integrating across organizational silos

L for analytical leadership--the deciding DELTA factor

T for strategic targets--picking your spots for analytics

A for analyst--managing scarce and valuable talent

To make real progress, you have to move forward with all five DELTA success factors in rough proportion. …

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