You need this style today. You probably do not have it. Thirty years ago, statisticians starting using regression to improve response rates to direct mail campaigns. Ten years ago, artificial intelligences (AI) academics discovered new (and old) approaches to predicting the future. Five years ago, businesses saw the benefits and started incorporating future-looking analytics into the environment cost effectively. One year ago the recession hit and everyone said they were surprised (well, except a few people).
Predicting the future is hard. At the economic level it is really hard. But predicting the future at a customer level, while hard, is a much more bounded problem.
The Future Style of analytics uses your corporate customer data (touchpoints, surveys, purchase transactions) and combines with it with any other available data such as demographics, firmagraphics, behavioral and attitudinal to create a prediction. Perhaps you need to predict when a customer will churn from their cellular company, when a customer will fall into quiet mode for their DVD rentals, what they may need or want to purchase next or when they will move from the student segment to the affluent segment.
The Future Style gives you predictions at all levels, then helps you anticipate changes and provides a window, sometimes small, to do something about it. It’s up to you to act.
The Future style is not easy. It never is.
You need a large amount of past historical data. You have to assume that past behavior can reasonably predict future behavior. You also need the right math and science working on the data to make the prediction of the future with confidence. You need to take into account all of the variables that you think could influence the prediction. That’s a lot of machinery, a lot of infrastructure. It takes a coordinated effort to make this happen well, happen quickly, and most importantly integrate it into your business process.
Lets face it, if you can predict the future but can’t do anything about influencing the present to make money, there’s no point. Stop wasting time. The biggest, and I mean the biggest, issue with the Future Style is using a prediction to take action today. A lot of clients have spent their money to create a Future Style capability but they could not get their “customer channel” to change their business process and the way they interact with the company’s customers (despite my best efforts to address this with them). I said “company’s customers” because if your SBU or functional group believes they own the customer, you have to work with them (or go to the CEO) as a partner to implement actions to make the predictions valuable. That’s hard. Maybe it should not be hard, but it is.
The key to the Future Style is, yes, to have the capability to predict but also the ability to intervene to your benefit.
Analytically enabled agile companies balance all three analytical styles and use them where needed. Knowing which style to invoke in which circumstance means knowing what you want to measure—back to our strategy once again. The other necessity for analytic enablement is to have the information infrastructure behind you to support flexible, reliable and efficient access to the data and an ability to manipulate it for insight.
In the next series of blogs, I will look at what it takes from the technology perspective to be an analytically enabled agile enterprise.