Do You Have the Talent to Compete on Analytics?

Leading organizations are arming themselves with all of the analytical assets needed for this progression. It’s certainly necessary to have the right software, hardware and business processes in place.

Even more important is having the right people. And therein lies the difficulty. When asked what’s hard about changing their organizations to compete on analytics, executives point to the difficulty of getting the right kinds of people in sufficient numbers.

Who are the “right” people? In research for our book, Competing on Analytics, we found that analytical skills in high-performance companies reside in three categories: the senior management team, the professional analysts and the analytical amateurs. Armed with this knowledge, business leaders and their HR teams can take a more targeted approach to hiring the analytical people they need. A quick look at each category helps illuminate why.

The Analytical Champions
An analytical approach to business strategy will not work unless a C-level executive champions the shift. And that usually means the CEO must lead the way. Examples of “data dog” CEOs include Sara Lee’s Barry Beracha, Amazon.com’s Jeff Bezos and Harrah’s Entertainment’s Gary Loveman. These executives don’t confine their analytical prowess to a single division or business unit. They want to establish “a single version of the truth” so that their companies don’t get bogged down by clashing views of the same data. Serious about their duty to build their organizations’ analytical orientation and capabilities, they build fact-based cultures that even extend to their suppliers and other partners.

The advocates in the top office know they can not inspire others if they themselves are not passionate about analytics. So they practice what they preach. They do not have to be experts in mathematics; they do have to have a grasp of statistical tools and be firm in their resolve to act on the results of quantitative analyses. It’s also their job to understand where analytical skills matter most in their organizations, today and in the future.

The Analytical Pros
Every company needs a robust cadre of analytical professionals—the people capable of designing and carrying out experiments and tests, defining and refining algorithms, and performing data mining and statistical analyses. Known somewhat inelegantly these days as “quants,” most people who fit this description have Ph.D.s in fields such as statistics, operations research, logistics and market research.

Here’s one example: Katrina Lane of Harrah’s. As vice president of channel marketing, it’s her job to figure out which marketing initiatives to move through which channels. What skills does Lane bring to this complex task? She pairs a doctorate in experimental physics from Cornell University with extensive business experience gained as head of marketing for a leading retailer and as a consultant with McKinsey & Co. That combination of skills and experience is rare, which is why assembling a capable group of analytical professionals is never easy.

One challenge is the need to establish a close and trusting relationship between analysts and decision makers. At one consumer products company, the head of the analytics group concentrates on seeking out “Ph.D.s with personality”—strong quantitative players who can also speak the language of the business and who are good at marketing their work to customers. Needless to say, such people are not exactly lined up at company doors in great numbers.

The Analytical Amateurs
As important as “quants” are to an analytical competitor, they are usually not on the front lines. Much of the daily work of an analytically focused strategy must be carried out by analytical amateurs—sharp people who are comfortable with data even though they are not experts with advanced degrees in math or operations research.

How much analytical sophistication is needed on the front lines? The answer varies by company and industry. A company like Capital One, which has raised customer segmentation to an art form, mostly does not go after Ph.D.s, but it does hire large numbers of people with at least some analytical background.

But as a general rule, companies that want to compete on analytics must ensure that a wide variety of their employees has some exposure to data analysis. IT specialists, for example, will not be able to create applications and databases that are useful unless they have a grasp of what kinds of analysis are needed. Similarly, HR people will not be equipped to hire people with the right kinds of analytical skills unless they have some analytical understanding.

So what should companies seeking to move toward analytical competition do?

• First, CEOs and boards need to get religion. Isolated pockets of analytical competition within an organization will not move the needle much.
  
  
• Second, HR leaders need to beat the bushes for those rare finds who combine quantitative expertise with business sense.
  
  
• Third, they need to beef up efforts to increase the ranks of analytical amateurs, both through training and recruiting.

It does not take a doctorate in statistics to understand the challenges. But the growing ranks of high-performance businesses that are on their way toward becoming analytical competitors indicate that these challenges should not be ignored.