Wednesday, June 30, 2010

The Analytic Organization

There are several possible ways of defining the term "analytic organization".

One way is to define a set of capabilities and working practices loosely called "analytics", and use the label "analytic organization" for an organization that has reached a certain level of collective competence or "maturity" in these. This is the approach taken by Peter Graham, who recommends the following set of characteristic features (Building the analytic organization, Information Management, August 2007).

  • Formal functional role (e.g. Chief Analytics Officer)
  • Enterprise analytics applied across all functions of the organization
  • Shared analytics
  • "Understanding the drivers of the business"
  • Focus on applying order to information to create knowledge
  • Common platform centrally maintained by analytic functional group

It's often a good idea to have a centre of excellence to promote and coordinate some desired capability, and Peter's centralized approach may make sense for many organizations. However, I'd be reluctant to say that Peter's approach is the only possible approach for building the analytic organization, and I should like to think that some organizations (depending on culture and circumstances) will achieve greater results with a more decentralized approach.

Meanwhile, @joemckendrick talks about an analytic organization in terms of the ability to fully leverage data (Joe McKendrick, 7 Simple Steps to Becoming an Analytic Organization, Insurance Experts' Forum, June 18, 2010). He quotes Christina Colby of CapGemini as identifying three ingredients for using analytics to its full potential as a competitive asset:
  1. treasure-troves of data
  2. the right analytic applications
  3. effective management. 
Picking a software vendor at random for contrast, I found a page on SAS's website which appears to define the analytic organization as one maintaining a large and diverse portfolio of analytic models. See SAS Analytic Advantage for Teradata.

Lex Donaldson goes one step further than everyone else. His book is called The Meta-Analytic Organization, and is based on something he calls "Statistico-Organizational Theory", which appears to be a combination of statistics and psychometrics.

Meanwhile, other writer focus attention on what a so-called analytic organization cannot do. The suggestion here seems to be that an organization that is dominated by a certain kind of thinking is consequently incapable of other kinds of thinking. This may be what is intended in the following chart from @flowchainsensei.

The Four 
Mindsets and three transition zones of Rightshifting on Twitpic

Some writers use the left-brain / right-brain metaphor, and characterize analytics as exclusively left-brain in character. I'm not convinced by this metaphor, but it may well be true that analytic organizations have characteristic patterns of strength and weakness. So I was especially interested to find a "think piece" from the CIA which calls for

"an alternative analysis approach that is more an ongoing organizational process aimed at promoting 'mindfulness'—continuous wariness of analytic failure—than a set of tools that analysts are encouraged to employ when needed".

and concludes that

"Intelligence Community analytic organizations need to institutionalize sustained, collaborative efforts by analysts to question their judgments and underlying assumptions, employing both critical and creative modes of thought. For this approach to be effective, significant changes in the cultures and business processes of analytic organizations will be required."

Thus opening up the possibility for analytic organizations of transcending the stereotype.

Warren Fishbein and Gregory Treverton, Rethinking “Alternative Analysis” to Address Transnational Threats,
The Sherman Kent Center for Intelligence Analysis, Occasional Papers: Volume 3, Number 2, Oct. ‘04.

[For further comments on Treverton's work, see my post Puzzles and Mysteries.]

1 comment:

Alison said...

Great comparisons & lots of great links here. At SAS, we're currently developing a series of articles describing different analytic organizations. The first in the series is about Kimberly-Clark Corp & how they've reshaped IT's role from tech order-takers to a business consultant function.