Epic businesses create lasting value for owners (shareholders), influencing their employees, communities and environment for good. It’s a huge challenge yet endlessly rewarding - something truly worth living for!!!
There’s a whole ton of stuff which goes into creating epic business. It starts with leadership (favourite author: John C Maxwell) and flows right into ethics, purpose, vision and process. Once you hit the practical side of things, you need excellent capital allocation, worthwhile returns on capital and ways of tracking relevant performance metrics - all supported by a management team who can create a highly motivated, passionate workforce.
Todays post is my argument that without epic analytics it’s impossible to build epic business!!!
I’ll start with everyones favourite part of work: performance measurement - aka KPI’s, Bonus Indicators, What My Boss Rakes Me Over the Coals With or All Management Really Cares About.
There’s a bunch of research about how important tracking performance metrics is. Many management courses teach the theory and meaning of performance metrics, but the reality is getting this right creates incentive for people to come to work and means that everyone is pulling in the same direction. One leader of an epic company had this to say:
Jack Welsh - CEO General Electric
Here’s the thing: Only an epic analytics team can make this possible!!!
As the Information Age gathers momentum, the speed at which business is conducted, combined with the nature of decision points being tracked results in enormous quantities of data pouring into information systems. All this data has to be analysed, considered, tested and turned into information - and getting this right is a combination of art, science and a touch of intuitive magic.
An epic analytics team gets this. They get the business, get the leaders intent and know how to take this river of data and transform it into a stream of useful information. Working with the IM team, they will build an analytics capability which will provide the kind of metrics most people can only dream about. All of sudden a business transforms into being data driven, changing everything!!!
Epic capital allocation
Within the world of value investing, championed by the legendary Warren Buffett, one of the greatest ways to create value for business owners (shareholders) is through effective capital allocation.
Capital allocation refers to the manner in which capital is invested on behalf of a company to build margins. The margins part is critical, because capital allocation is not just about increasing revenue - it can be as much about reducing costs or figuring out how improve processes as anything else.
Epic analytics in this area is crucial to creating epic businesses. One of the most profit destroying issues within organisations are the hidden costs of doing business, and it takes epic data analysis to figure out where and what they are. Once these hidden costs have been discovered, capital can be invested to eliminate this waste, creating value for owners. This process can take months or years and uncover all sorts of challenging issues - but the result is transformative. Capital allocation becomes exponentially more effective, with the flow on effect of freeing up more and more capital for other projects.
Epic employee motivation
Pretty much every leadership book ever has one point - motivating those around to achieve the goal. Epic CEO’s and founders are renowned for being able to motivate individuals and create motivating work spaces.
It’s interesting then to note that there’s a huge amount of research which shows that employees are most motivated when there is a clear link between an organisations values and their own - known as value driven organisations. It's even more interesting to note that one of the factors which comes up when this is discussed is employees desires that their performance be tracked and results mapped out - for instance in this article 'Values Driven Performance: Seven Strategies for Delivering Profit With Principles'
So here’s the thing - linking values to outcomes requires understanding what indicators drive these values and which measures of success need to be tracked. Planning on positively impacting a community for the long run? Define positive. Show employees what that means. Want to create products which change the world for good? Show me what you need to achieve to get there, per person, per day.
These are the kind of questions epic data analysis provides answers too. And if this capability is missing, it’s going to be impossible to get there!
And so it is that I reach the point of this post. Epic business requires epic data analytics.
Data analytics forms the glue which binds organisations together to pull in one direction. It dives into the data and begins to tease apart the questions of why and how and who and when and what. It gets involved in an organisation and brings insight, understanding and resolution. Data analytics allows you and every person who works for you to understand the same story and reasons and work together to fix them - testing, assessing and adjusting each step of the way as you see the results unfold.
For this reason, I submit to you - reader, CEO, CFO, CIO that you need data analytics.