Publication

Reveal the full potential of Analytics through Insights Management

14.08.2019

By treating “Insights Management” as a capability, organizations demonstrate the impact of their customer insights and accelerate the value creation from their customer data.

Editor’s note: Yan Jiang (Bayer), Dr. Daniel Jonas (SVP of Campana & Schott US), Carolin Diercks (Consultant at Campana & Schott).

Data analytics is disrupting business across all industries. For most businesses, understanding consumer behaviors and needs through data is the pivotal focus to become a customer centric organization. To generate these data insights from customer behavior, companies have invested heavily into collecting combinations of data… about products, markets, demographics, and more recently real time information such as weather, time of day, personal emotions, or ‘voice of customer’ from primary research.

Just an example… Imagine sitting on a plane, flying overseas with your best friend or colleague. Now, imagine the exact same flight together with your spouse – what’s different? According to data from millions of flights, passengers are much more willing to pay for extras on board – such as better food, better seats, or better service –when flying with friends or colleagues. However, when traveling with their spouse, it is less likely that they will treat themselves to a little bit of extra comfort. As you see, willingness to spend when traveling on the same flight differs based on who one is flying with. Airlines use this knowledge for more personalized services. It’s the power of customer insight, that should be leveraged into incremental revenues or enhanced customer experience.

We have seen that data and analytics are – by far – the fastest growing functions across all industries that companies invest into. Considerable proportions of effort go into introducing and implementing new technologies, as well as building large-scaled departments of data scientists. Yet, many Insights and Analytics (I&A) departments are still struggling to demonstrate their work’s value to their business and senior leadership. Thus, driving organizations to question the actual return on investment of their I&A departments. As a result, many of them remain to be perceived as expensive cost centers, which continue to be dependent on other business units’ budget and considered merely a back-office function.

 

Insights & Analytics as a value generating hub

While there lie many challenges in becoming a data-driven organization, we strongly believe that only with I&A departments as a central hub of this change, organizations will truly make data-driven decisions. Insights and Analytics departments are often the units that are truly capable of understanding customer demand and needs as they are sitting at the source: data. They need to be the main contributor to drive innovation and product development through leveraging these data insights.

So why is it so difficult for organizations to recognize I&A as value generating that sets the base for customer centric decision-making and innovation? Out of our experience, a combination of three factors leads to the lack of understanding the true potential.

First, firms often employ an inefficient way of working. I&A departments lack a transparent and systematic approach to generate and drive their insights. Often, hundreds of data scientists work in myriad ways within the same department, which is why clear accountability and standardized processes are needed to accelerate data insights into impact.

Second, business units often work in silos. I&A departments struggle to show the value of growing their insights into business to brands and senior leadership. As soon as brands or business units become part of generating and validating insights across silos, more ideas will be collected, and repetitive effort is prevented. Through the collaboration with I&A teams, the revenue of the pursued insights is tracked more easily and be allocated back to the I&A unit.

Third, firms, often too easily, try to quickly link investments to short-term profitability. I&A requires strong investments, which is why it is hard for decision-makers to commit if they can’t link incremental revenues to the investment.

Think about the airline example... You now know that the average spending of a passenger is different depending on who the person is flying with. But this knowledge alone doesn’t increase revenues yet. One must evolve ideas based on these data insights and develop these to formulate and implement actions and service adjustments.

A systematic and transparent approach to validate and eventually implement these ideas is needed to prove that the investment will be profitable. From our experience so far less than 30% of potential insights are pursued further, mostly due to lacking awareness of the potential long-term impact.

 

A new Operating Model that is driven by Customer Insight

To shift from operating like a cost center towards operating like a business unit, the operating model must shift from ‘research-based insights generation’ to ‘customer centric value-creation’. This transformation takes time – sometimes even years, but we believe that the biggest enhancement of I&A can only be achieved by changing the mindset and the way companies operate.

What do we mean by that? Currently, the very simplified data value chain of most organizations looks something like this:

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The data is collected (or bought), consolidated, and analyzed to gain data insights. Most of our clients still heavily invest time and effort into technologies and platforms that support this first part of the process to generate valuable data insights. But what happens with these data insights? We have seen very few organizations that truly master data-driven decision-making and the creation of business value from their insights. Only a few early birds have started to reinvent their I&A by connecting the link between data analytics and data-driven actions, resulting in customer centricity not being a trade-off for profits any longer. In our opinion, the emergence of a new operating model has the potential to become a new standard across industries with I&A becoming the center piece for customer experience and data-driven innovation.

Together with industry experts, we co-created a new operating model “Insights Hub” to mature insights from a raw idea based on data insights into real business impact one bite at a time. Insights Hub is enhancing the data value chain by introducing the capability to mature data insights all the way to actual impact, such as enhanced customer experience and incremental revenue. The simplified data value chain is advanced by insights management to undergo this transformation:

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The basic idea is to leverage an insight maturity process… the more reliable proof you have for the value of an idea, the more mature it becomes. Hence, the more likely it is to achieve its business impact. In this context, insight management is a capability, something your organization can do repeatedly and benefit from both in short- and long-term. It breaks silos across the organization and accelerates insights through a shared language, way of working, and clear accountability.

The process is not necessarily linear, sometimes mid-way through, you may reject an idea and go two steps back. Out of 100 rough ideas, most will probably be proven wrong over the course of the process. Still, these rejected ideas have strong value as they often describe what not to do or not to repeat, which is why it’s important to keep them on record.

Ultimately, less than 10% of the initial ideas will make it all the way to the implementation stage vetted by the filter of a solid business case and proven impact. But these 10% can have considerable impact… Think about the increased revenue if an additional 5% of all airline passengers would pay for upgrades and additional services.

To anchor this maturity process, we enhanced Insights Hub with a platform to specifically address our clients’ pain points. The platform is the center piece of the new operating model and consists of a streamlined process, high accessibility, and automated reporting; carving out redundant tasks of the analytics team through automation. Additionally, the platform provides a strategic overview of all insights structured by maturity and business impact. It allows a deeper view into all ongoing pilots & experiments, and it helps you to demonstrate insights business values and invests at the same time.

We see our clients adopting the Insights Hub Platform in their daily meetings, which puts customer behavior into the center of discussions and decisions. This comes along with close collaboration across, otherwise siloed, business units and brands. Insights Hub, combined with a customized platform, provides full transparency on the insights pipeline: by customer segment, product, and other relevant focal points. It answers how much value an insights team creates, and for whom that value is being created for. 

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Conclusion

The benefits of Insights Hub:

All in all, proper insights management can transform organizations and accelerate insights into impact by enabling I&A to act as an innovation center that matures data into actionable insights. By overcoming silos, I&A can systematically mange insights across teams and functions to enhance data-driven decision-making and innovation. By doing this, organizations will advance their data value chain and therefore stay ahead of competition in the ‘Analytics Race’.