Where do we go from here

Since the 2007 publication of Tom Davenport’s book Competing on Analytics: The New Science of Winning, businesses have become sold on the notion that they must make use of their data to derive insight. Many organizations have jumped on the analytics bandwagon in recent years. In fact, according to a recent survey by Bloomberg Businessweek, 97 percent of companies with revenues of more than $100 million are using some form of business analytics, up from 90 percent just two years ago.

But while businesses have warmed to the idea of fact-based decision making, a steep learning curve remains. Only one in four organizations believes its use of business analytics has been “very effective” in helping to make decisions. This is a far cry from the competitive edge

promised in all the hype around analytics, clearly raising the question: Is business analytics overrated?

A Bloomberg Businessweek Research Services study, conducted among 930 businesses across the globe in

various industries, provides insight into the current state of business analytics in today’s organizations. It also examines the challenges companies face when using analytics, and explores tactics favored by companies that have succeeded in using analytics more effectively than their peers.

The following are research insights about the current state of business analytics:

Business analytics is still in an “emerging stage.” While business analytics has gone mainstream, most organizations still rely on traditional technology. Spreadsheets are the No. 1 tool used for business analytics.

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Results are often confused with better numbers. There are many ways to get better numbers. The easiest way is to simply change them. I once knew a plant comptroller who did this regularly to give upper management the numbers they wanted. It happens more often than we would care to admit.
Another way to get better numbers is to change the formula—the way the numbers arecomputed. Denominator management is an example. We can get much better numbers by changing the way we measure or compute the denominator in a ratio. The earlier example regarding DPMO
computation for circuit board quality level is an object lesson of this practice.

There are certainly other ways to get better numbers without changing anything substantially. These will only be limited by the ingenuity of creative people. But, they are false improvements. The only true improvement comes from improvements in the processes of production, and these must support efforts to optimize the entire enterprise, or they too will be false improvements.

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When General Motors filed for bankruptcy yesterday it marked the end of an era. The first truly modern, manage-by-the-numbers corporation, created by Alfred Sloan in the 1920s, was laid to rest as a viable concept. But what comes next?

This is not just a question for GM or large enterprises more generally. Yesterday also marked an end of the lean narrative that has been unfolding for thirty years, ever since GM first began to decline in the recession of 1979. David (in fact a team of Davids) finally felled Goliath just as Goliath was finally paying attention to the lean message. So we need to consider what happens next for the Lean Community as well.

What’s Next For GM?

At the beginning of 2009, GM had three major weaknesses. It had too much legacy debt – bondholders and retirees. It had compensation costs for current employees that were too high to compete with transplant operations in North America. And the money it received for its products in most segments of the market was far below average, partly as a legacy of decades of defective products and partly due to losing the pulse of the public on what the company and its products should mean for customers.

Ironically, GM also had considerable strengths. It had competitive factories in terms of productivity and quality and a competitive product development process when it could focus its energies. (E.g., the new Chevy Malibu.) After failing for 15 years to learn lessons from NUMMI (its California joint venture with Toyota), GM had in recent years developed a competitive and consistent global manufacturing system and rationalized its global product development organization. It had even taken impressive steps to lean its internal business processes. But — as in the case of its cast-off parts supplier Delphi — lean came too late.

The bankruptcy re-sets the trip odometer. The legacy debt has been written down to a manageable level and compensation costs for current employees will now be much more competitive. In addition, the company is dramatically retrenching toward a reasonable portfolio of brands with production capacity appropriate to its realistic share of likely market volumes.

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True! The only reason for improving quality is nothing but a way to help us to get new deals, to create value, to continue to grow, to create employment and to get richer!
All of these require our customers to continue buying our products or services. They will only do so if they are convinced of the real quality of what we are proposing and because they know our company implements everything needed in order to increase satisfaction.
It goes well beyond taking into account their satisfaction; it even covers understanding, meeting and anticipating their requirements.

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Economic crisis

The economic crisis and growing recession is caused by one problem: the failure to manage the business



20th century management of all enterprises today lays organization and management structures over the business to manage the enterprise, rather than managing the business. This causes the fundamental problem in all enterprise management that has caused all previous crises and is the underlying cause of the current financial and economic crisis. The problem is the failure to manage the business.



The symptoms of current problems are numerous and complex. But, the problem is basic and simple. Today, all governments, enterprises, and experts are trying to understand the symptoms and to alleviate the symptoms. No one is trying to get beneath the layers of symptoms to solve the basic problem. The only real solution is to organize and manage the business to eliminate overlaid structures, capture actual business data, and produce one accurate set of transparent information needed to account for and manage the business.

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