Guide: Adopt an analytics mindset

Understand the analytics value chain

Once you have the problem statement defined, use the analytics value chain to address it. Think of the analytics process as a value chain. Each step up the chain requires additional work but yields additional value. Moving up the analytics value chain from opinion to informed action requires a thoughtful approach to understanding, measuring, and analyzing the problem.

For every idea there is a spectrum of how much data can be used to support it, from no data (an opinion) to a data-backed hypothesis. In the absence of data, people tend to leverage their own opinions. As Jim Barksdale, the former Netscape CEO, said, “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”

Opinions themselves are not bad. But data should inform your opinion and, importantly, help you make a more convincing argument when suggesting action. An opinion could be “Employees spend too much time on expense reports.” But without data, this isn’t a very convincing, or useful, opinion. Data could say “Employees spent more than 100,000 hours on expense reports last year.” While still far from action, it’s a far more convincing and useful place to begin building your solution.

With data, you can begin to build useful metrics to better define the problem and conduct an analysis to see if a possible solution or insight lies within your data. One critical insight can be the basis for a hypothesis to be tested and a potential action to solve the problem.

Climbing up the analytics value chain yields better decisions. Opinion - People spend too much time on their expense reports. Data - Employees spent more than 100,000 hours on expense reporting last year. Metrics - Average users spends 10 hours/year in the system. Analysis - 'Heavy' users spend less than 10 minutes/session, implying increased efficiency with more usage. Insight - Minor user interface change would reduce application time for heavy users by 25%. Action - Interface change implemented.

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