Research Shows — The C-Level Is Failing At Analytics
Insights From More Than 100 Interviews & Follow Ups
I didn’t start out intending to conduct a survey. If you are stickler for experimental design & statistical validity, my findings will fall short. Still 100 interviews and subsequent follow-up is a solid foundation to draw some conclusions from — just not enough to declare them indisputable. With that in mind, I am going to focus on the process. I think it holds the most insight for readers.
Two years ago, I began networking with other C-level executives who had or wanted an analytic presence in their organization. I wanted to understand what they did and whether it worked. It didn’t take more than a dozen conversations to understand that they really didn’t know. At least, not with any confidence.
It didn’t take more than a few months to learn just how frustrating this entire process was… for them and me. Some of these executives actively began avoiding me, simply because they didn’t want to confront their “obvious failure” — their words not mine. A few, I never found again. But I am persistent and resourceful, I was able to reconnect with most — to conduct a post-mortem.
“I just wanted someone who could help me make value out of my data.”
It was a common refrain. Value, sense, opportunity — it varied, but the intention was there in more than 80% of these executives. They were looking for insight from their data. That was their focus.
Not all of these executives were building a new analytics function. Many were struggling with an existing function that wasn’t working. The common thread was that ALL of them were about to invest in building/improving it. These companies were of varied sizes. Was it a representative distribution? I don’t know. But it was broad and broadly speaking, size only seemed to matter when it came to the budget.
What did they spend?
The short and frustrating answer was — they didn’t know! They knew the salary (roughly) of the individual/s they hired. They had little sense for any of the other costs involved. Hiring costs, onboarding, licences, software, hardware, and other peripheral expenses like benefits. In the end, most thought they spent roughly half of what they actually invested. That realization stopped many of these folks in their tracks.
Did it work?
Again, they didn’t really know with any clarity. But in roughly two thirds of the cases — the presumed answer was “No”. Sadly, the majority of the other third was… “I don’t really know”. I only got a firm “yes” answer in two cases… more on that later. The next thing we need to tackle — is what actually defined work, in their minds.
The answer to that was simple, if not highly quantifiable. They simply wanted to see outcomes. For them outcome meant their data turned into usable insight. This was a poor goal on two levels, but lets focus on the one that notices “usable insight” is not a highly measurable outcome.
Questioning an executives definition of success around a decision they already made is difficult enough. Questioning that definition knowing they already judged the result to be a poor one… well, that takes some real management. Suffice it to say, that the information I collected here was far from clinical. It couldn’t be.
The better outcomes seemed to come when the question was turned around on me. So let’s start there.
“Well, how would you have defined success?”
My answer was simple. Five. Five times ROI. I would want to know that I generated five times my investment (salaries, etc) in incremental revenue or cost save (or some combination). The reaction was insightful… and remember, most of these executives were still judging their “I” to be roughly half of what it actually was. It became clear that even when forced to quantify like I was — they were merely seeking “break even”. Or “I just wanted to get out, what I put in”. Both phrases were frequent.
Stop on that for a moment. Some of you are wondering just how simple calculating a 5x ROI would really be. But the insight I am relaying — these executives were essentially ballparking 1/10th of that and 2/3rds were coming up short! Worse 98% were at best breaking even. They were spending a dollar to make 50 cents! And we thought the dotcom age was over…?!
Even the two companies that reported a firm yes admitted that their ROI was likely closer to 2. Against these benchmarks — call that a win. But after further review, even they are raising their expectations for the future.
So what did I want you to learn?
If you are waiting for a list of mistakes, tricks, or missteps — you missed the point. The first and most crucial misstep is right in front of you. If you are going to invest in analytics, you need to have clear and measurable investments and returns. That is the only way to learn and learning is what analytics is all about. Not… getting value from my data. Analytic is about making better decisions, but it helps if you start with that first investment.
At this point, I would offer that just over a dozen companies did a really good and thorough job of understanding how much they actually spent on their analytics team. Would it surprise you to learn that the two companies who said “yes” were both among them? Me either… but it is not statistically significant. Those two were also outliers in having tried to measure their results. One might believe their is a recipe there… ?
One Final Note
I would love to tout that I am engaged in helping all of these companies to re-invest in their analytics. But the sad truth, among them — they spent over $100 million. Or should I say — lost $100 million dollars?
Most of them have surrendered any hope of re-investing. Some are stubbornly “making-do”, while over half have just “cut their losses”. Now — not all 100 companies have been at this long enough to be in this final insight… but broadly speaking, those that are do not give great hope.
Said differently — while only two in one hundred found success, seven are no longer an ongoing concern. Do you think they would like their $1 million back? Knowing this, are you liking your own odds?
Thanks for reading. If you would prefer 5X ROI, reach out:
