Being Analytic. Avoid innovation short-sightedness.

Back in 1995, Nicholas Negroponte wrote his book “Being Digital”, in which he describe the unstoppable information migration from physical to digital formats. Through the whole book, Negroponte described different tasks using phrases as “it will be possible”, when he referred to activities nowadays are totally ordinary, as watch a rock concert broadcasted trough Internet, perform banking payments from a personal computer, or keep in touch with our friends and relatives trough smartphones without necessarily “talk” to them.

The transformation process took over 20 years. Nevertheless, the impact of this changes could be understood belter if we go back to 1995, and at that moment, try to prophesying the Britannica Encyclopedia won’t be printed in paper again, the vinyl records vanishing (whom are returning to witness the compact disc decline!), our watches becoming mobile phones, fridges recalling us to buy milk, and in general, a series or gadgets that would be seen as amazing and hilarious as some portrayed on the 70’s cartoons as “The Jetsons” (Hanna & Barbera).

Once we have the chance to analyze a big change like this one, with a retrospective view, often we judge the witnesses at that era whit some lightness, blaming them of suffer an unacceptably short-sightedness towards innovation in the light of history: how could be possible not foresee the household use of electric power?, it wasn’t clear how TV will reshape entertainment industry?, wasn’t evident e-commerce potential? In other words, today use a phrase as “being digital”, is not a prediction but the description of business as usual, and if is the case this status has not been reached yet, condemn us to be anachronistic.

The wise thing to do is learn the lesson, and stand at the present times and question to ourselves: are we in the middle of one of those “silent revolutions” and we are not sizing the opportunity? If we are not in the process of “Being Analytic”, doubtless we are wasting a great chance.

Beyond digital.

Being analytic could be defined as the utilization of all available elements to identify mechanics driving all organization’s relevant objectives, as sell more, attract more customers, score risk on each transaction we do, or perform early qualifications looking for fraudulent operations. Being analytic consists on having the conviction to understand why things are the way they are, and be able to repeat them or avoid them every day and everywhere. It is to apply the same approach of Newton and other scientist did: watch the universe and come up with a law for gravitation and become able to describe the movement of a falling apple and the stars or planets in the open space.

Among the key elements to be considered in the implementation of this paradigm, we have in first place the operational data gathering. This data represent the records of the organization’s operations and the current environment in which they were performed; starting on top of them, we will be able to understand past events and infer future behavior.

Secondly, you must choose a model to explain or simulate the expected results and the way in which the conditions present at that moment, influenced those results. The purpose of a model, is identity the drivers on such results, and hence to be able of prognosticate or lead future results. Models are generally implemented through mathematic formulas or statistical treatments, and as the time goes by, more advanced methods has been identified, showing to be reliable and dependable, as well as applicable to a wide variety of situations, regardless the complexity of each of such challenges. The set of this methods has been named as analytics.

Among the analytic methods, we will mention the following;

• Time series to perform reliable forecasting with several aggregation levels (region, product, etc.).
• Data mining, to identify best predictors on customer behavior, allowing us anticipate future actions becoming in better products or value services.
• Link analysis, to understand interaction among users and customers, explaining how they become related through a social network, which of them are the more influential in that network, and hence our best marketing targets.
• Text mining, in particular “sentiment analysis”, allowing the process of huge amounts of data crossing social networks in order to score if comments are favorable or unfavorable to our organization, and then take actions to improve or avoid potential “avalanches” of bad comments.

Some of these methods has been integrated within enterprise solutions in which analytics are just one piece of workflows designed by business users, allowing them to take advantage of their results, without necessarily involve specialists or scientists. This approach has enabled solutions devoted to fraud-detection and prevention, risk management on financial institutions to comply with international regulations, marketing campaign management addressing to big audiences and still consider individual preferences, distribution-route optimization, demand forecasting or taking advantage of social network behavior (of the ones whom are in the networks and the information flowing among them).

We can say we are at the right moment to become analytic, because is not a “silent revolution” anymore: the challenges are there, the proven methods to face them, and there are solutions to implement such methods in a feasible and practical way. Pretend to be analytic just by the fact of utilize computers, arithmetic, and basic statistics to support our organizations, could be the same as saying we are being digital just because we have a watch with a numeric display in our wrist. Let´s learn the lesson by jumping into this paradigm, and when we will have the chance to seen backwards to this era, we will be in position to say we were no victims of innovation short- sightedness, but the ones to take benefits from it. Breaking Wise.