The very long horrendous political campaign is over in America. The people have spoken and the candidates have spent more money than ever convincing the voters about their ‘policies’ and promises.
The PR people, the marketing people, the advertising people, the strategy teams, the local ‘get out the vote’ groups and other organizations have all created various forms of success. But what really is this success? We are expecting massive success through the inauguration of one person as the leader of the ‘democratic-free-voting world’ or the leader of the ‘largest economy’; this may be an unrealistic goal.
One person cannot make this transition a success. Success will take a combination of effective leaders, advisors, and decision-makers who will carry out the policies, decisions, actions, and (process, law, or rule) changes.
All of the above is ALSO true for changes in business during economic downturns. The leaders change, the operating committees re-adjust their priorities and expenditure plans, and the masses of associates or employees are asked to ‘hunker down’ and save expenses.
And, we all know, ‘you cannot save your way to greatness!’ So why try it now ?
Smart executives are seeking ways of enhancing their abilities to make decisions at lower risk, higher accuracy, and more influential to their customers and partners. These leaders invest in business intelligence, a renewed infrastructure to catapult their knowledge capabilities, and foster changes at the front-lines by empowering their customer contact personnel. One might question whether this actually has proven to be a success. Well, yes, without doubt, especially with top executive support and direct involvement in the projects and changes. This was even true at NCR and Teradata over these same years.
Mercer Management performed a study, in the early 2000’s, which focused on companies that invested in better decision-making investments, changes to the value chain, and enhancements to the types and amounts of detailed data to enable better process management. The results were astounding. The leadership companies of the periods preceding the study, which were post-recessionary, showed that companies investing in DW and BI and associated tools and enabling systems…. Led the turnaround periods.
Lets take, as a classic example, companies being able to change their industry or define new methods of gaining competitive advantage. In many of the graduate business schools where I have presented, these past ten years, there is the classic example of Wal-Mart Stores (WMT). Many sociologists, economists, technocrats, consultants, and management gurus have presented various cases of success including WMT. How did WMT establish a lead over some many previously successful competitors? First, it was by providing information to enable decisions as hundreds of points in the business. Everything from sales analysis, market-basket analysis, category and shelf management, faster replenishment, changing the buying cycles to much much shorter periods, working with and enabling suppliers to view their own inventories and striving towards Just-In-Time shipments of replenishments, and evaluating everything from store placement, store layouts, product movements by day-of-the-week to seasonality and demographics of the shoppers themselves. These are known as leadership actions of retailers. But how many of our businesses (today) are sharing their detailed data for active NRT decision-making?
WMT does not ‘know’ each shopper and their habits. But Sam’s Club does know each shoppers purchases, market-baskets, and also new LifeStage changes inside households.
At Union Pacific Railroad, headquartered in Omaha, they have focused on customer service and capital asset management. Not just for saving money, but for driving better customer loyalty and ‘knowing’ their customers and their requirements so much better.
UPR was a leader in tracking their expensive engines and each railroad car. Yard managers have detailed information on shipments, loading factors, fuel usage, capacity of trains, and timely arrivals of products to thousands of (customer requested) locations.
This is a highly complex set of decisions, made every minute, which operates 24x7x365 to drive higher return on assets, higher revenues, is sometimes beating their trucking competition, and also leading in changing the way railroads gain profitability. BNSF and Norfolk Southern have also instituted many changes to create higher ROI and more use of the detailed data in what some people thought was a dying or boring industry.
At Royal Bank of Canada, they invested in extensive data warehousing and Business Intelligence to drive better performance of their banker (customer contact and sales people), enhanced the capabilities of the call centres, and defined a new methodology for calculating the profitability of each and every customer. This allowed them to resegment their customers, with 75% of them changing two deciles or more, and astonished bank management. This banking group has succeeded in implementing a truly successful CRM philosophy, practice, processes, and systems to drive greater customer satisfaction, retention, and cross selling multiple services (which makes customers stick to the bank more).
Many of these successes were similarly achieved by Wells Fargo Bank and also Bank of America. All of these banks have also gone through mergers and acquisitions; made much easier by their enterprise data warehouses.
In Houston, at the headquarters of Continental Airlines, the data warehousing team has assisted that airline in going ‘from worst to first’ in the hearts of their cherished frequent travelers. The extensive applications, data types, cross organizational data; fast loading of transactions and changes, and many other business information resources has changed the whole way that CAL does its hourly, daily, weekly, and monthly business. Customer contact people have access directly to the historical data of the customer they are handling and also continuous models are running to advise remote managers of actions to be taken in their respective stations and flights. Other airlines have begun to follow. Even marketing has taken a place in using all of the data to truly communicate with relevancy, timeliness, and meaningful interactions.
Each of the above examples was implemented during a downturn in the economy or in their industries. Each succeeded in catapulting their firms to leadership by also extending revenues and new decision-capabilities to ensure future leadership.
Let’s think about time and real impacts. If “time is money”, then more effective decisions equals enhanced profitability. As you read this article let’s think about the number of decisions that affect your customers, your marketing, your services, and how many of them are the same exact decisions that have been made thousands of times in the past and now require little or no human intervention to make the same decisions. If these little decisions, not strategic decisions, but little decisions, affect our customers and can be achieved in a very positive manner --- why is the management still requiring the human to make the decision ? Answer usually is: we are not confident in our systems or our models and believe that there are exceptions to the rule. So be it, if there are exceptions to the rules (or rule-based decision-making from historical and present data) then let’s have the human make a decision. Otherwise, let’s store the processes, the rules, the potential decisions, and the actions --- all within the active data warehouse. Then the humans can more closely use their knowledge and experience to handle more challenging decisions.
(If we had coded and modeled the basic rules of risk, asset protection, insurance, leveraging, and basic accounting and economics in the banking and insurance systems; maybe we could have avoided the overleveraging and value-less package selling that were being traded that caused our latest financial crisis. It is basic accounting, GAAAP, and rules. Sound familiar? I know it is not THAT simple, but it could be someday.)
As the service economy increases, and the manufacturing and construction industries struggle out of this recession, it is becoming more and more evident that executives and technologists should focus on the ability of their people and processes to utilize DW and BI as a means of not only savings expenditures --- but also positioning for growth in the future. Catapulting your business through intelligence is a hallmark in many industries.
As I meet with dozens and dozens of Teradata’s customers each year, it is astounding how many have quietly created gigantic successes and wait (for years) to talk about it publicly. I guess this is part of being competitive and also somewhat wise. If that is true, then we should all be looking to the decision-enabling and extensions to the EDW’s that were implemented between years 1998-2002 and learn from them. And then invest now, to achieve what these firms accomplished then…position for immediate success, growth, and competitive advantages in the future.
