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The quickest way to identify areas for analysis

PUBLISHED ON 10 JUNE, 2015

Analysis can help you discover revealing patterns of human behaviour, flaws in your strategy or implementation, or external factors impacting on your performance, and understanding these elements can help you make decisions to improve outcomes. But knowing where to start with analysis is not as easy as it may seem.

Tim Wilson raises a great point in his recent blog post: that there are “two (only two!) reasons for analysis: opportunities and problem areas”. His post is in response to the vast experience he has had with clients struggling to understand what to focus their analysis on, a phenomenon not uncommon to many we speak to. Analysts often agonise over what areas of analysis to prioritise within limitless databases, and analysis without direction can be as ineffective and time-wasting as manually compiling reports in Excel. So Tim’s extremely powerful, but often overlooked advice is to undertake analysis “when there is a problem” or “when there is a potential opportunity”, and this is a conclusion we also support.

But how can we know when there is a problem or an opportunity?

Ensuring easy access to the most essential information is critical. As is presenting it in a way that illuminates problem areas or opportunities at a glance. The following three tips will help you identify these at lightning speed:

Show your indicators within their historical context

By automating data integration, we can easily and effortlessly (after the initial implementation!) gather a history of performance which will allow us to understand current performance compared to the historical trend, or compared to specific similar time periods in the past.  In this way we can easily identify where problems are occurring, or where potential opportunities may arise. In this manner we also give analysts back precious time to analyze these.

• For example, if a sudden drop in KPI performance leaves it well below its average historical value, you most likely have a problem and you should do  additional analysis
• Or, if your history indicates improved performance every March compared to other months, you have identified an opportunity. analyzing why can help you come up with insights on how to further capitalise on this opportunity.

Use predictive modelling to forecast your future performance

Or critically, use predictive modeling to highlight when problems or opportunities could occur.

• If your prediction is for poor future performance, current issues may be affecting your trajectory. Likewise, where performance falls below its predicted level, analysis will help you uncover issues.
• If your prediction is higher than expected, you may not need to undertake detailed analysis as you have not identified any problems. Then again, this may be because you have inadvertently uncovered and are currently reacting positively to opportunities. Deeper analysis of these will help you to better use them to your advantage. On the other hand, if your prediction is not very positive, you may need to readjust your strategy and search for further opportunities.

Map current performance of KPIs against goals

In addition to looking at patterns in past performance and predicting future outcomes, mapping current performance against goals can uncover problems or opportunities. These don’t necessarily only arrive when you are under-performing according to statistics, but also when you are failing to reach your strategic objectives. After all, in business, success isn’t based on whether you beat your performance from last week, but whether you meet stakeholder expectations and succeed in your mission! Therefore, it is vital that key decision makers are involved in the process of helping to define reporting systems as they are the ones with crucial strategic knowledge of organisational goals.

• Where it is clear that you will not reach your goal within the time period you have set out, there are two likely outcomes. Firstly, perhaps you have set unrealistic expectations for performance, or secondly, some sort of issue is obstructing your success. Analyzing the data to understand problems, or to identify opportunities can help you to reach your objectives – where you have undertaken serious consideration and decided they are not unrealistically inflated.
• Where your objective will be easily surpassed in your permitted time frame, you may be able to rest easy. Alternatively, you could reevaluate your objectives. Are they unduly underwhelming? If so, readjust them and shoot for higher levels of success. If not, analyze why you have been so successful in order to better future outcomes.

When you understand ‘what’ you must analyze, then you can get to the task of analysis itself to understand ‘why’ you are performing as you are. Only once you understand the ‘why’ are you able to make changes to solve issues, or avoid repetition of poor actions or implementations. This ‘why’ can also help us to make improvements and learn about our successful actions to allow us to repeat or readjust them for future scenarios.

This whole process, however, can only be successful where you have strong systems for communication. Where these problems or opportunities aren’t made apparent to analysts, they are not able to analyze them to discover the ‘why’. And where they are not able to communicate this to decision makers (with valuable business knowledge and the power to implement actions), recommendations for actions to incite change will never be discussed and changes will not be made within the timeframe necessary for them to have a positive impact.

 

Do you have any further tips on ways to quickly find areas for analysis? Are you struggling to implement any of the three tips above?