Blog Graphics.001Analytics is moving out of the data crunching space and into the space of operational decisions. Analytics is helping organizations make operational decisions. Decisions like how much stuff do we need at each place during each time period? The “stuff” can be FedEx packages, iPhones, or advertizing dollars. You name it.

Can Analytics help make the really “big,” strategic decisions that executives face? The figure on the left shows a breakdown of the high-level decisions that executives are concerned about. These are the decisions that keep them awake at night because they are game changers. Product and service planning, and geographic expansion are at the top of the list. (I know I use this slide often. It’s just the best way I’ve found to be specific about what the “strategic decisions” really are.)

I haven’t seen any Analytics projects contributing to the strategic decisions  — at least not yet. I think it will happen eventually. It will happen when information users start driving analytics. Right now  Analytics is being driven by technology and information providers. I’m not saying this is bad. It’s just the reality of new tools finding their way into the market place.

Blog Graphics.002I use Steve Haeckel’s information hierarchy to think about Analytics. (Haeckel was a researcher in IBM’s Research Center.) The information hierarchy is discussed in Vince Barabba’s book  titled, “Hearing the Voice of the Market: Competitive Advantage through Creative use of Market Information.” Vince uses it in the chapter on, “The Problem of Market Information and Decision Making.”

The information hierarchy starts at the bottom with data and ends at the top with wisdom. Analytics is rapidly working up from the bottom of this hierarchy. I think we are getting somewhere around “intelligence” and “knowledge.”

IBM’s Watson is probably somewhere in the intelligence range. Watson can deal with huge volumes of information and make inferences. It’s output is a set of probabilities on possible answers to a question. When the probability of the right answer gets high enough it pushes the buzzer. The Jeopardy-playing monster is certainly very good at inference. When will the general field of Analytics start moving beyond the Watson range? I don’t know. Playing Jeopardy is a long way from strategic decision making.

st1-1379Executives making strategic decisions need people who can help them get from knowledge to wisdom. This requires synthesis. Synthesis is at the top of the information pyramid. It’s back to Steve Jobs and “connecting the dots.”

Executive decision makers need decision coaches who can use Analytics. They also need coaches who can help them synthesis the voices of customers, the voices of stakeholders, and the voices of experts to facilitate wise decisions. As decision coaches we should be following Analytics very closely. How can it help us with the really big decisions? What can Analytics tell us about the future of technology? Future prices? Future political developments? Sorting through these issues takes knowledge and wisdom.