An in-depth understanding of consumers sits at the heart of what we all need to do, but we know it’s not always easy to uncover insights that will unlock a true innovation opportunity.
A new report claims four in five Australian executives are using data and analysis to optimise customer value for their organisation, even as most still rely on their intuition or peer advice to make strategic business decisions.
The Economist Intelligence Unit (EIU)’s new Gut & gigabytes: Capitalising on the art and science in decision making report, which was sponsored by PricewaterhouseCoopers, found 68 per cent of Australian executives rely on either their own intuition, or the advice and experience of others, to make big decisions. This compared with 58 per cent globally.
Only 29 per cent of global executives said data and analysis was the primary method used to make big decisions, and 30 per cent admitted their decisions were “opportunistic”. Across the board, 44 per cent of respondents are making a big decision every month, which could potentially impact their profit by $1 billion or more.
When asked why they weren’t utilising data and analysis for big decisions, 52 per cent of global c-suite executives admitted to previously discounting data they don’t understand, and 31 per cent said timeliness of data was an issue.
Yet 80 per cent of Australian respondents claimed they are using data and analysis around customer value. In contrast, just 11 per cent of US respondents said they were doing the same.
The global EIU report was based on a survey on 1135 executives in May, 54 per cent of which were c-level or board members. Twenty-four per cent of respondents came from Asia-Pacific countries including Australia.
According to PwC Australia’s data and analytics leader, John Studley, customer analytics is increasingly common at an operational level, notably in deep pockets of the marketing department for more targeted marketing campaigns, cross-sell and upsell initiatives and loyalty programs.
He also agreed several local organisations in the retail and financial services sectors are using data innovatively around customer programs.
“But there is a disconnect when taking a more strategic view of data assets inside as well as outside the organisation,” Studley told CMO. “The operational work hasn’t reached the boardroom table when it comes to strategic decision making.
“Data assets in the organisation are not necessarily connected to each other. Getting the holistic view of the customer is step one, but step two is getting a holistic view of the market.”
Often, data didn’t exist in a format executives needed, or wasn’t geared for the type of “sprints” in decision making modern leaders have to make today, Studley said.
The surprising discrepancy between Australia and the US when it comes to customer data utilisation was also reflective of the differing level of maturity and knowledge around data analytics, Studley continued.
“In my experience, the US is well ahead of the Australian market in this [using data and analysis around customer value] – they know about this and understand the issues and challenges when addressing this,” he commented. “This could be a sign of the ‘Australian psyche’ of self-sufficiency; we could be being complacent in terms of capability, or not have faced some of the bigger issues yet.
“There are a lot of people talking about data and analytics being a big challenge, but few are getting on and doing something about it.”
There is change in the air, however. Just shy of two-thirds of global respondents said big data had changed decision making at their company, and 25 per cent were planning for it to do so.
The top three changes to big decision making cited in the report are greater use of specialised analytics tools and techniques; employing a dedicated data insights team to inform strategic decisions; and relying on enhanced data analytics.
“In reality, experience and intuition, and data and analysis, are not mutually exclusive. The challenge for business is how best to marry the two,” the report authors stated. “A ‘gut instinct’ nowadays is likely to be based on increasingly large amounts of data, while even the largest data set cannot be relied upon to make an effective big decision without human involvement.”
Top of the list of decisions for global execs in the next year are growing existing business; collaborating with competitors; shrinking existing business; entering a new industry or starting a new business; and corporate financing.
“In high-growth environments, executives have more leeway to rely on gut instinct, as the downside from a poor decision might not be so severe,” Studley claimed. “However, in environments where growth is constrained, decisions should be backed by the rigour and insights that data can provide, particularly as the margin between success and failure is that much tighter.”
As a response to the findings, EIU and PwC set out four main ways executives can better use data to improve and speed up decision making. These are: Pinpointing and prioritising the decisions that will have the most impact on the organisation’s future; simulating how industry trends will affect the business; quantifying the expected outcomes of decisions; and identifying changes to organisational processes, technology and culture that will improve how decisions are made.
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