Last Wednesday evening while waiting for a connecting flight at Vienna airport, I came across an interesting eBook by Tyler Cowen: ‘The great stagnation“. Thanks to the iPad, I ended up reading the entire short book on the flight back home. To keep things short, Tyler Cowen looks at some of the reasons why the US economy is in a slump. One of the key points of the book is that the US (along with the majority of the Western world) have hit a technological plateau that results in slower growth, slower increases in median income and also slower productivity gains. While some of the earlier innovations such as the steam engine, refrigerators, air travel or TV had a huge impact on our overall quality of life and also our productivity, many of our recent innovations like the internet have had less of on impact (compare having or not having a fridge with having access or not having access to the Internet, or look at the options that air travel opened up for international trade).
This blog post is not intended to be a book review, although I do highly recommend this quick and insightful read. But there is an interesting aspect that Cowen mentions: productivity gains are slowing down. We have already grabbed the ‘low-hanging fruit’ by exploiting machinery for example. This got me thinking: What about all the great technology that we have implemented in the past 20 years? Could it really be that we are not experiencing substantial productivity gains by using this technology in a smart way? The statistics apparently say no (Cowen points out that the productivity surge in the US from 2009-2010 was mostly driven by a substantial reduction in headcount). And what about Business Analytics? Shouldn’t that help us be more productive and to drive profitability?
ARE WE REALLY PRODUCTIVE?
To answer that question let’s take a look at a very simple example: the office of finance. A few weeks ago, I posted the results from a survey we conducted. It showed that many professionals still conduct their work by copying and pasting data into spreadsheets. And that type of activity is error-prone and takes a lot of time. As a matter of fact, many finance professionals still spend a solid part of their week loading, scrubbing & massaging data. And the resulting reports often leave a lot to be desired. They are static and not interactive. The result? A bunch of highly qualified and highly paid individuals do work that they shouldn’t be doing. Wikipedia defines labor productivity as “amount of goods and services that a worker produces in a given amount of time”. Spreadsheet maintenance hardly qualifies as a service or good, wouldn’t you say? In other words: whether we like it or not, many of us have a very low level of productivity.
BUSINESS ANALYTICS AND PRODUCTIVITY
Business Analytics has a huge potential to help us increase productivity. And I would argue that there is plenty of ‘low-hanging’ fruit. Think about a story that happened to me a short while ago: A CFO decided to implement a dashboard of about 50-60 KPIs (let’s not start arguing about that part…). His team was excited and started building a 65 page Powerpoint master template. The CFO was delighted. Guess what – three people spent almost two weeks per month on preparing this dashboard. Lot’s of time was wasted on extracting data from different source systems. Lot’s of time was wasted on creating Excel lookups, queries and charts. To sum it up: A big waste of time. The low hanging-fruit came in the form of a traditional BI platform. We hooked up the source systems, created the reports once, linked different charts to Powerpoint and voila: the monthly reporting book. It took one person about a day per month to check & refresh the data (there was still some manual labor involved). Consider the difference: three people for 10 days vs 1 person for 1 day. 30 man days vs 1 man day. Not bad?
Based on my own experiences, I would argue that we have a huge opportunity on hand. Many companies have started Business Analytics projects but a lot projects are still highly focused and not pervasive. Once we start pushing capabilities out to a broader audience, we should be able to see significant increases in productivity. And this is not only about driving efficiency. This is also about driving effectiveness: just imagine what we could do, if we had the ability to understand our customers better. Just imagine what we could do, if we clearly understood which products are truly profitable. Business Intelligence allowed us to get to a lot of this valuable information. But I believe that we have only scratched the surface. The addition of predictive analytics to the mix offers completely new opportunities for all of us. I frequently work with some clients that have done some amazing stuff with the software. And their overall corporate performance is very impressive. I highly recommend reading the IBM CFO study which provides some great examples and insights about this topic. We just have to get started! What are you thoughts?
Here we are again. It’s that time of the year. We sit down and review our accomplishments for the year. And we are also starting to plan ahead for the next year. We craft plans and we get excited. Excited about improving our performance and the performance of our teams (apart from personal goals). Many of us typically focus on specific items that we can check off (attend a class, get my CPE credits, travel to Dubai, etc.). While these type of goals are great, we rarely focus on continuous improvements. And that’s a bummer. Research has shown that short-term initiatives typically don’t necessarily bring about lasting change (think about the infamous diet schemes). It is changes to our behavior that typically have a lasting effect.
Last weekend, I was watching winter sports on TV. Biathlon was on. The TV showed pictures of guys floating through the snow-covered landscape, they showed athletes trying to get their heart-rates down to steady their rifles. Pretty impressive stuff. And one of the commentators talked about the summer program for a certain athlete. Amazingly impressive stuff. The guy he was talking about (sorry….forgot the name…) is highly professional and scientific with his approach to achieving excellence in his sport. That made me think. We all admire professional athletes. And most of us have dreamed about being a professional athlete at some point in our lives. So we want to be like them, but are we really as professional in our jobs as these guys are? I honestly have to say: not always and I could certainly do better sometimes. Having had the opportunity to work with a few professional cycling & running coaches in the past, I pulled together a short list of things professional athletes do. Take a look and ask yourself how you rate in each one of these items:
Continuous improvement: Athletes cannot afford to stagnate or to stand still. The competition is intense. They are extremely focused on improving their skills. Day after day, week after week. These guys set themselves challenging & objective goals and they go after them with a club. Ask yourself: Are you really working on improving your skills, or are you just getting work done. It is worth taking a moment and reflecting on where and how we have improved. How can we make sure that we stay competitive? Coasting is not an option. Set some ambitious developmental goals and work on those every day.
Discipline: Athletes are extremely disciplined. There is no partying on the day before an important competition. There is no casual approach to eating & drinking. If achieving the individual training goals requires riding a bike in freezing rain for six hours, they will do it. But they let go (within limits) and relax when they know they can. Ask yourself: Am I 100% disciplined when it comes to my profession? Am I 100% prepared for meetings or am I taking the ‘let’s wing it approach’? Review some situations where a more disciplined approach could have improved your performance. Work on your discipline.
Coaching: All professional athletes work with coaches. Coaches help us identify strengths and weaknesses. They help us develop improvement plans. And they provide feedback which we can use to increase our performance. We are sometimes too lazy or too afraid to ask for feedback. Ask yourself: Have you actively solicited feedback from your manager, spouse, friends? Who could act as your coach? At a minimum, plan to take some time to review your performance once in a while.
Innovation: Athletes typically have the latest and greatest material. Whether it is a super-light carbon bike or a stiff ski, athletes know how to use innovation to their advantage. They probe, they test and they demand the best. And it is not just about materials. There are also training methods. Lance Armstrong always pulled together a team of experts from different disciplines to craft new training methods. They pushed the envelope. In our jobs we often get too busy to look for ways to innovate? We are afraid to test new tools to deliver a superior performance (example: there are plenty of managers that are still afraid of social media). Make innovation a core value. Develop a healthy level of curiosity. Take some risks. Try something new. Adopt new technology. And keep an open mind.
Rest Periods: Athletes know that they can’t run one marathon after another. Our capacity is limited, unfortunately. Rest periods allow our bodies to replenish resources and to heal. Athletes therefore schedule frequent rest. During these times, they let go (think: less discipline), they relax and they step back from their demanding jobs. Soccer players stop chasing a ball, cyclists put their bike in the garage, etc.. Many people are afraid that rest will set them back. But as a matter of fact, we typically return in much better form. So, take a good look at your schedule. Are you engaged in a never-ending race? Schedule active rest periods (vacation, etc..) and don’t feel guilty about it. Plan on doing something completely different and leave your Blackberry at home.
Good luck with your annual planning! This is one of the most exciting times of the year. Implementing all this stuff is damn hard. It sometimes really sucks but it can also be a lot of fun. Nothing feels better than getting a lot of stuff done and to realize how much progress we are making.
As always, I’d like to hear from you to learn about your own experiences. That’s it for now…I gotta prepare for a long run out in the freezing cold snow…hmm…maybe…;-)