The Role of Analytics
ProOrbis® Analytics are designed to use numbers
to tell the story of the strategy — what has happened, why its is happening,
and what will happen next. Putting
numbers together in a way that can inform decisions is what ProOrbis analytics
are all about.
Defining Measurement Terms of Art
ProOrbis uses specific definitions for three terms that
often get used interchangeably:
- Vision/Goal: “Where am I going?” - point B
- Objective: “Why am I doing this?” - the point of B
- Strategy: “How am I going to get there?” - how to get from
point A to point B
The ProOrbis® Framework defines the nature of
measures and deploys an array of those measures to create a comprehensive
picture of performance. These include
the following measures: Effectiveness (Did you make it to point B or an interim
goal), Efficiency (How much resource did you use to get there?), Cycle Time
(How long did it take to get there?), and Integration measures (How well linked
were the capabilities needed to achieve the goal?) These measures are designed
to create a comprehensive picture of performance and are typically arrayed in
Enterprise Dashboards (see ProOrbis® Framework) or in Cross-Company
Comparisons.
Cost vs. Investment
The most serious deficiency in the analytics used by the
vast majority of organizations is that they adopt the traditional accounting
view. Most organizations see
organizational assets (especially intangibles such as human capital, R&D,
brands, channels, etc) as a “cost” — and therefore, often a cost to be reduced
when times get tough. The problem is
that, as assets, these intangibles have value — therefore the “cost” is really
an “investment”. However, if the value
is not visible, calculable, or even understood, it appears that “cost cutting”
will lead to better results — yet often it does not. ProOrbis analytics make the intangible
visible, puts the investment in the context of value, and creates an ROI
context for decision-making.
Cross-Company Comparisons
Once a company has a clear picture of its returns, the next
questions is “are these returns any good?”.
Cross-Company industry comparisons offer a context to answer that
question. There are a myriad of external
factors that effect a firm’s performance (such as increasing oil prices,
shortage of a major input, technology shifts, etc…). Cross-company industry comparisons wash out
those exogenous variables from the analysis to clarify how well the
organization navigated those factors.
Most comparisons, sometimes termed “benchmarks”, are often
misused by decision-makers. They tend to
be “cost focused” — with little or no relationship between the investment
(cost) and the value it creates. Well
constructed comparisons must be relevant in terms of the comparative group, the
data collected, and the measures constructed.