Companies Not Ready to Realize Promise of Big Data According to Corporate Executive Board
More than 60 Percent of Employees Lack the Skills Needed to Make Good Business Decisions; CEB Outlines Steps to help Companies Capitalize on Business Intelligence Investments & Minimize Risks Related to Failed Judgment
ARLINGTON, Va., Sept. 7, 2011 /PRNewswire/ -- Despite putting considerable financial and human resources against intelligence tools designed to harness the power of big data, most companies are not equipped to use data assets to create competitive advantage or drive corporate performance. This is because more than 60 percent of employees lack the skills required to make good business decisions. According to Corporate Executive Board (CEB) (NYSE: EXBD), an insight deficit is emerging because these employees fail to complement data with the necessary judgment to arrive at optimal conclusions. In many cases, this lack of judgment has led to widespread corporate crises negatively impacting everyone from the CEO to the average consumer.
CEB surveyed approximately 5,000 workers at global companies and found the insight deficit to be pervasive not only among the general employee population, but also among management, with more than 50 percent of senior managers lacking in analytical skills and processes. Research revealed that a typical employee either relies on data too much or too little. Forty-three percent of employees trust data without questioning the results and almost 20 percent dismiss data-driven insights in favor of a "gut" assessment. The employees who are best equipped to make good business decisions – those who effectively balance judgment and data—possess strong analytical skills and take into account the opinions of others. This group, which CEB calls "Informed Skeptics," represents only 38 percent of the average workforce today.
Fortunately, many of the qualities that make Informed Skeptics an asset can be cultivated to enhance corporate performance. In fact, companies that equip employees to overcome the insight deficit can achieve a boost of as much as 24 percent across a wide variety of metrics, including effectiveness, productivity, employee engagement, and market share.
"To overcome the insight deficit, big data—no matter how comprehensive or well analyzed—needs to be complemented by 'big judgment,'" said Shvetank Shah, executive director at CEB. "Recent financial and business events show all too plainly what happens when rich data and analytics collide with lapses in judgment. Leaders need to ensure that organizational processes and human capabilities keep pace with their computing firepower and the information they import, or we will inevitably see more crises emerge."
To maximize existing investments and capitalize more fully on the promise of big data, companies must develop and refine employee skill sets. CEB recommends that executives begin by cultivating Informed Skeptics across the organization by:
- Broadening the base of employees with analytic skills - Exploiting data will require broadening and deepening analytic capabilities across the enterprise. Ensure these skills are not limited to a small number of analytic experts;
- Educating employees on the limitations of data – To apply judgment successfully, employees need to understand the "narrative behind the numbers." Understanding the origin of the data will allow employees to ask the critical questions to gain deeper insights and question faulty logic;
- Developing an analytical training curriculum – Two-thirds of employees have access to information and analytics training, but only 25 percent find it effective. Adopt a multi-pronged approach to design training that supports employees across the information lifecycle and focuses on conducting analysis;
- Building a team of "quant" coaches – Coaching skills are what make analysts most effective in reducing the insight deficit across an enterprise. Change your recruiting approaches to test for these skills when hiring analysts; and
- Formalizing decision processes - Insight-driven cultures are best realized when business and decision-making processes are formalized. Make performance metrics transparent, embed them in performance objectives, and use them regularly.
While building the base of Informed Skeptics is crucial to harnessing the power of big data, companies can also take steps to reduce the insight deficit by making information more usable—including providing a greater selection of analytical tools and improving information presentation capabilities—and by understanding and challenging internal biases to stress test risk and strategy assumptions more effectively.
About Corporate Executive Board
By identifying and building on the proven best practices of the world's best companies, Corporate Executive Board (CEB) helps senior executives and their teams drive corporate performance. CEB offers comprehensive data analysis, research and advisory services that align to executive leadership roles and key recurring decisions. CEB tools, insights, and analysis empower member companies to focus efforts, move quickly, and address emerging and enduring business challenges with confidence. CEB's client and member network includes 85 percent of the Fortune 500, 50 percent of the Dow Jones Asian Titans, and 70 percent of the FTSE 100. It spans more than 50 countries, 5,300 individual organizations, and 225,000 business professionals. For more information, visit www.executiveboard.com.
SOURCE Corporate Executive Board