Despite billions of dollars invested in big data and analytics, the simple truth is that most projects and programs fail to meet expectations. And we have figured out why: analytics forces changes on the C-suite that the CEO has to anticipate and manage, but many don’t.
From how we choose presidents to what movies we choose to watch, big data and analytics have become integral parts of our lives. But for too many companies, analytics is an unsolved puzzle with the pieces flung all over the floor. In research spanning 20 years, we closely examined 36 companies in eight industries to find out why companies are struggling. The findings show that fewer than half of analytics programs met initial return-on-investment (ROI) goals.
But poor ROI is only part of the story. Other signs that something is wrong included:
These are not minor problems, and the fixes are not easy. While CEOs typically understand the transformative potential of big data/analytics, they often do not consider the flip side of the coin — that analytics efforts unleash forces within an organization that can threaten the analytics program itself. These forces must be understood and managed for the entire initiative to succeed. The CEO has to work on four things:
Actively manage C-suite dynamics. Every C-suite maintains a delicate balance of power. When the CEO assigns ownership of analytics, that executive will command bigger budgets and more time on the board agenda and will oversee a powerful new pool of resources. Simultaneously, other executives will not only experience a loss of influence but also feel vulnerable. This vulnerability frequently compels traditionalists to resist analytics.
CEOs must anticipate this reaction. Start by talking openly about the journey and the inherent sense of vulnerability executives are bound to feel as the business model changes. Being transparent about the level of expected change and the different skills executives will need to manage the change gets the dialogue above the table. Finally, the CEO must identify the executives most vested in the status quo and proactively manage their resistance — up to and including weeding out the obstinate ones.
Choose the right analytics leader. Seemingly, the simple solution would be to just hire a highly technical person or an analytics evangelist who preaches the potential of big data. But that is not always the case. This is about more than technology.