Strategic expertise

You’ll need to include someone on the team who has a deep understanding of your corporate strategy. The strategic vision will form the basis for all plans and discussions within the company, including the data strategy. This vision will have been specified by the shareholders, refined by the board of directors, and shaped by the culture within your organization. It will dictate the purpose and principles that underpin how you use data. If your new data strategy is not aligned with the company’s overall strategy, your subsequent efforts will not support parallel initiatives within your organization and will fail from lack of internal support.

There are many excellent frameworks for developing corporate strategies, and I won’t explore those but rather emphasize the importance of synchronizing data and corporate strategies. I’ll illustrate with the framework of Tracey and Wiersema,⁵⁵ in which the strategic focus of a corporation may be to develop an advantage in exactly one of the following sectors: customer intimacy, product leadership or operational excellence. Within this strategic framework, if your company has chosen to differentiate itself through enjoyable shopping and excellent customer service (e.g. customer intimacy) you’ll choose a data strategy leading to improved customer experience (e.g. an intelligent personalization engine) rather than one focusing on cutting operational costs.

Business expertise

According to a recent global study, business teams lead the adoption of big data more frequently than IT teams.⁵⁶ Big data is a team sport, and your efforts will likely fail without strong input and support from your non-technical colleagues. If they aren’t convinced of the benefits of your data initiatives, you are probably doing something wrong.

Harvest the intuition of colleagues with the deepest understanding of the customer, the product and the market. Get them involved at the start of your analytics programme and keep them closely involved at each stage of development.

You’ll see many advantages from involving business stakeholders in the initial stages.

• They will understand the nuances of the market, including the impact of demographics, product segments, and seasonality/holidays.
• They will have a good idea what is most important to customers and what customers view as your product differentiators. They will have spoken with a variety of customers over the years. The insights they’ve gained will be invaluable to your analytics programme.
• They will remember past initiatives your company and similar companies have tried. They will remember what did or didn’t work well. They will tell you why things went wrong and suggest how they could go better next time.
• They will have insights into other companies in your industry, perhaps having worked there, and will be familiar with their strengths, weaknesses and key differentiators.
• They will tell you ‘obvious’ details that can easily save you months of effort.

Incorporating business intuition is a tricky balancing game, and I’ve seen it go both ways. I’ve seen analysts sitting in isolation come up with models that completely missed key aspects of the business, and I’ve seen business directors make strong statements later proven by the data to be completely wrong.

Intuition sometimes is right and sometimes not, so it’s important to take seriously any non-measurable input from the business, while subsequently seeking data to verify that intuition.

Involve the business experts in the following ways:

1. To introduce the basics of how the business operates, including the customer base, the products and the competitors. They should explain the competitive differentiators of each market player, how companies and their market share have been changing over time, and how customers themselves have changed during this period.
2. To explain their insights into the business, in areas such as customer preferences, marketing channel effectiveness, customer segment price sensitivity, purchasing rhythms, potential product improvements, etc. They may consider their insights as facts or as hunches. Either way, take them with a grain of salt and use them as starting points until you have had a good look at supporting data. These insights will form the basis for your initial list of analytics projects, either as assumptions to be verified or as opportunities for further analysis, leading ultimately to product improvements.
3. To provide continuous feedback during the data collection and modelling processes. The business experts will typically have some of the best insights into which data is reliable and which data should be disregarded. These insights will be critical for analysts. In addition, the business experts will have intuition into which data is most relevant for specific analysis.
   Let your business stakeholders review your analytic models. They can often quickly catch errors in a modelling process by flagging aspects that seem counter-intuitive.
   To illustrate, consider a recent study at the University of Washington. Researchers took a standard data set and created a classification model that performed with an accuracy of 57 per cent (rather weak). A modelling expert then removed spurious (misleading) data and improved the accuracy to 70 per cent. The researchers gave the same data set to non-technical model reviewers and asked them to also remove the spurious features from the data. After three such iterations, the non-technical reviewers had beaten the technical modeller in identifying the most relevant data, improving the accuracy of the final model from 57 per cent to over 75 per cent,⁵⁷ and thus demonstrating the value of having non-technical business experts review analytic models.
4. To provide the broader context of product history and what has brought you to where you are now. This gives you context and helps you avoid repeating costly mistakes. It also helps you to understand the accumulated learning and the thought processes that form the history of your company. It can resurrect options previously dismissed but which have since become more attractive, perhaps due to advances in technology, market movements or customer base.
   It is important to rehash options over time. Not only is technology developing rapidly, but people are also changing in how they use technology. As an example, we have as consumers developed over the last fifteen years an increased willingness to enter credit card details and a decreased responsiveness to certain forms of marketing.
   Your company may have developed a whole product strategy based on customer insights that are no longer relevant. By understanding the historic backdrop that led you to where you are today, your project team will be better positioned to consider which questions need new answers and which improvements might be made through applications of data and analytics.

Analytic expertise

Don’t start an analytic initiative without including someone with a strong background in developing and deploying analytic models. I know this sounds obvious, but I’ve seen large companies try to do just that, and it’s painful to watch. You need to include an expert who understands what is possible with data and analytics and can estimate what is needed to attain what is possible. This person should have a strong technical background, several years of analytic leadership experience within a comparable industry setting and a broad understanding of the models, tools and applications available for bringing business value from data and analytics. You can substitute academic experience for industry experience, at a risk.

Your company needs to identify high-potential analytic applications, and it needs to choose from a broad selection of analytic methods and models. In addition to the methods of artificial intelligence and deep learning, which are currently trending, many traditional methods rooted in the fields of statistics, network/graph algorithms, simulations, constrained optimization and data mining have proven their worth over recent decades. Each algorithm has strengths and weaknesses, and you must take care to choose algorithms suited to your data and applications. Considering only a subset of these tools when approaching a business problem will limit your success and can lead to a tremendous waste of effort.

You’ll need to understand what techniques will continue to work well as your problem size grows. Each algorithm will differ in how it scales, so your analytics expert should understand whether a technique that performs well with a small data set is likely to scale well to a much larger data set. In summary, it is important to bring a broad understanding of analytic models to the project team.

The tools you’ll consider range from basic to advanced functionality. At the most foundational level, there are many programming languages that can be used for building solutions from the ground up. These include Java, C++, Python, SAS, R, S-plus and a host of others, some of which are free and some of which are proprietary. Each programming language will have its own strengths and weaknesses, some of the most important considerations are:

• execution speed;
• ease of development (including the availability of relevant libraries);
• the ability of the language to easily interface with relevant technologies (third party and those of the company itself); and
• the breadth of the user / support base (again including support within the company itself).

You should also be familiar with the development frameworks available for optimizing development and deployment of your base code, and how you can deploy custom code within larger software packages you may use, such as R or Python code within an SAS application.

Overall, you’ll need to make a nuanced version of the classic ‘build vs buy’ decision, deciding how to mix and match pre-existing analytic tools that have differing levels of complexity and inter-operability. Some of these tools will be open-source and some will be proprietary. For some well-established analytic models that have had time to be highly optimized by specialist vendors, such as linear programming, there are strong advantages to investing in an off-the-shelf solution. For specialized AI methods with limited but important application within your business, consider a pay-per-use model from vendors such as Google or Salesforce (Einstein) rather than expending internal effort.

The analytics specialist should bring a broad understanding of potential applications for data and analytics within your organization, along the lines of the applications I’ve listed in Chapter 4.

As you think about how to utilize data science within your organization, consider:

1. With which analytic applications are the business units already familiar? Web developers may be familiar with A/B testing, finance professionals with statistical forecasting, marketing professionals with funnel analysis and bid optimization, etc.
2. Are there additional best practice analytic applications that the company has not yet considered?
3. Have there been recent technical developments that could improve performance of analytic applications already implemented, such as the incorporation of new big data technologies, algorithms or data sources?
4. Are there innovative methods that have recently been employed in other industries, which may in turn introduce possibilities for new competitive advantages within your industry?

For each of the above points, your analytics specialist should be able to estimate the data, technology and personnel requirements necessary both for prototyping as well as for deployment.

As part of this process, they should be forming a holistic picture of the company’s existing and potential data assets, including standard operational, customer and financial data; the raw data collected in data lakes; third-party data that could be purchased or collected; and possibly even the dark data within your systems.

Technical expertise

The project team will need technical expertise to ensure operational success. This will be someone with an understanding of the technology for data collection and transfer, general infrastructure and corporate databases. Data is a critical component of analytics initiatives, so your technical expert should bring an understanding of the extent and accuracy of the various data stores within the organization.

Your company may also have one or more operational data stores, data marts and/or data warehouses, which will provide the data for analytics projects. In addition, analysts will need to create tables, sometimes large tables, in one or more of these databases and may even need additional types of databases, such as graph or document databases (discussed further in Chapter 8).

The technical expert will provide direction and assistance related to your computing infrastructure, whether it be in-house server capacity or possibilities to provision in the cloud.

It’s important to build solutions that you can maintain long term. This will help you maximize the chance your analytics projects will bring long-term value. Your technical expert will help ensure these projects can integrate with existing technology.

To this end, ask the input of your technology expert regarding:

• acceptable choice of development language, frameworks and operating system;
• requirements for version control and documentation; and
• requirements and resources for testing (QA) and deployment to production.

Your analytics efforts depend on IT support. Many projects fail because they do not get the buy-in of IT. Involving IT from the start serves four purposes.

1. It informs the analytics expert of the available technology landscape.
2. It helps ensure long-term success in the organization by showing what standards and technologies should be utilized.
3. It allows IT to contribute valuable ideas and insights.
4. It helps secure buy-in from IT from the very beginning.

After years of being awoken at 3 am or phoned during a holiday to fix malfunctioning production code, many IT staff will be extremely sensitive to analytics initiatives with even the slightest risk of breaking existing code. They may also be averse to any vagueness or uncertainty in project planning, wanting every project step to be laid out at the start. As we’ll see later, analytics projects don’t typically lend themselves well to extensive pre-planning, so some tension can easily develop in this regard.

Other IT staff can be very eager to try new technologies and new analytic methods. These are typically the younger ones with fewer 3 am experiences under their belts, but sometimes also the senior staff. Quite often, the developers in IT are extremely enthusiastic about analytic projects. These people will typically be some of the strongest and most valuable supporters of your analytics initiatives.

Strategic input

Start the kick-off meeting by reviewing the purpose and principles that govern your efforts. Continue by reviewing the strategic goals of the company, distinguishing between the long- and short-term strategic goals. Since some analytics projects will take significant time to develop and deploy, it’s important to distinguish the time-lines of the strategic goals. If there is no executive or strategic stakeholder involved in the process, the team members present should have access to documentation detailing corporate strategy. If there is no such strategic documentation (as is, sadly, sometimes the case), continue the brainstorming using an assumed strategy of plucking low-hanging fruit with low initial investment, low likelihood of internal resistance and relatively high ROI.

Business input

After reviewing the principles and strategy, review the KPIs used within the organization. In addition to the standard financial KPIs, a company may track any number of metrics. Marketing will track click-through rate, customer lifetime value, conversion rates, organic traffic, etc. Human resources may track attrition rates, acceptance rates, absenteeism, tenure, regretted attrition, etc. Finance will typically track financial lead indicators, often related to traffic (visits, visitors, searches) as well as third-party data.

At this stage, probe more deeply into why certain KPIs are important and highlight the KPIs that tie in most closely with your strategic and financial goals. Identify which KPIs you should most focus on improving.

The business experts should then describe known pain points within the organization. These could come from within any department and could be strategic, such as limited insight into competition or customer segments; tactical, such as difficulty setting optimal product prices, integrating data from recent acquisitions or allocating marketing spend; or operational, such as high fraud rates or slow delivery times.

Ask the business experts to describe where they would like to be in three years. They may be able to describe this in terms of data and analytics, or they may simply describe this in terms of envisioned product offerings and business results. A part of this vision should be features and capabilities of competitors that they would like to see incorporated into their offerings.

Analytics input

By now your business objectives, principles, and strategic goals should be completely laid out (and ideally written up in common view for discussion). At this point, your analytics expert should work through the list and identify which of those business objectives can be matched to standard analytic tools or models that may bring business value in relieving a pain point, raising a KPI, or providing an innovative improvement. It’s beneficial to have cross-industry insight into how companies in other industries have benefited from similar analytic projects.

To illustrate this process, a statistical model may be proposed to solve forecasting inaccuracy, a graph-based recommendation engine may be proposed to increase conversion rates or shorten purchase-path length, a natural language processing tool may provide near-real-time social media analysis to measure sentiment following a major advertising campaign, or a streaming analytics framework combined with a statistical or machine learning tool may be used for real-time customer analytics related to fraud prevention, mitigation of cart abandonment, etc.

Technical input

If IT is represented in your kick-off meeting, they will be contributing throughout the discussion, highlighting technical limitations and opportunities. They should be particularly involved during the analytics phase, providing the initial data input and taking responsibility for eventual deployment of analytics solutions. If your technical experts are not present during the initial project kick-off, you’ll need a second meeting to verify feasibility and get their buy-in.

Figure 7.1 Template for Impact Areas for Analytics document.