Business intelligence does not necessarily translate into executive intelligence, and often the gap between the two is large, according to Indian River Consulting Group’s Mike Marks. Marks recently spoke about that “reality gap” and how to overcome it in a recent MDM Webcast, The Link Between Business Intelligence and Profitability, available at mdm.com/business-intelligence.
When it comes to distribution technologies, a lot of attention is frequently paid to the latest and greatest, such as e-commerce and mobile.
While these may pay off for distributors in the long run, the most immediate return on investment may come from technologies that have been around for a while – solutions that help distributors profit from the data already in their systems. Still, business intelligence does not necessarily translate into executive intelligence.
The key is leveraging these tools effectively and efficiently, according to Mike Marks of Indian River Consulting Group.
The gap between knowing something and effectively doing something with that knowledge is often large, Marks says in the recent MDM Webcast, The Link Between Business Intelligence and Profitability. As a result, much of the opportunity available from business intelligence tools is lost.
That doesn’t have to be the case, Marks says. But it does take work and a change in the way distributors think about the data they have and the way they sell.
Minding the Gap
Translating capability into action requires two simultaneous drivers, according to Marks: quality insight and the ability to absorb it. Too often the solution to a business problem is to buy new tools and hope that one of them resolves the issue, Marks says. “I’ve seen companies spray a money hose at it, and it just ends up ugly” because they don’t have the data needed to apply those tools.
In other words, if your leadership is saying brilliant things, but no one really understands how to use those brilliant things, the value to your business is minimal. By the same token, if your team is willing to try something new, but there’s nothing new coming at them, there’s no value in that either.
So how can a company develop quality insight? Marks advises getting the right tools – software and training – in place at the beginning of the evaluation process. “You don’t have to … buy all of these intergalactic things,” he says. Instead, it’s about choosing something that makes your business more effective – and implementing it a little at a time.
It is also important to make sure those tools are measuring the right information, and not just the easy-to-measure information. Simply looking at what’s easy to measure may create a gap between what’s important to your customers and how you measure your success.
For example, Marks says, the way airlines determine their on-time departures is by the time the airplane door closes. While the aircraft may not be ready to depart, the chosen measurement keeps the company’s on-time record in line with its goals. Never mind that they may have shut the door on some passengers, leaving them disgruntled, Marks says. Or that the passengers on the airplane may still have to sit on the tarmac, sometimes for hours. It’s an easy measurement, but it makes the business blind to the real problems.
The third component of quality insight is making sure the data being used is clean – and that processes are put in place to ensure continued cleanliness of the data. “If you don’t lock the system down, within six months it will be a mess again,” Marks says.
The second driver of translating knowledge into action – the ability to absorb quality insights – is often the “critical constraint for a distributor,” Marks says. This driver requires a structural alignment that creates clear accountability and the willingness to consider new ideas rather than just focusing on doing the same things better.
When the Business Fights Back
The problem with considering new initiatives is that businesses are a lot like the human immune system, Marks says. “White blood cells protect the status quo,” he says. If an infection or something new is introduced into the body, the white blood cells attack that foreign body to maintain the intricate balance that already exists.
In much the same way, “anytime you try to introduce change into an organization, you’re going to be met with a very strong white-blood-cell reaction,” Marks says, because there’s an underlying assumption that if something needs to be changed, it must be because something is wrong.
“If there’s something wrong, it’s because someone did something wrong,” he says. And suddenly the sales team is put on defense, with typical responses of “It is not my fault.” or “It won’t happen again.”
The reality is that the world changes, Marks says. As a result, how business is done needs to evolve, as well. It’s not always about something being wrong. Existing strategies may have been the best approaches a few decades ago, but they are not necessarily the best choices in today’s market.
Allow everything to be on the table for change. Assuming that incentive or organization structures are fixed or untouchable can keep executives from seeing new opportunities.
But don’t try to change everything all at once; that will guarantee a violent white-blood-cell reaction, Marks says. Instead, figure out the one thing that would make the biggest improvement in overall performance and focus on making that change.
“Do not go win-lose to force the change,” Marks says. “Instead, just persistently share and remember that data is our friend.”
Access the entire MDM Webcast, The Link Between Business Intelligence and Profitability, including practical examples of leveraging business intelligence in your business and a real world action plan, at mdm.com/business-intelligence.
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