Inter-organizational Business Analysis Pitfalls- Valutrics

When analysis is ineffective, both the analyst and the decision maker often don’t recognize it in time and frequently cannot identify the root cause(s) of the errors, problems, or failure. There are both internal and external factors.

The major internal organizational factors  contributing to unfavorable outcomes are discussed.

• Some decision makers don’t understand the analysis: In many organizations, decision makers neither understand the role or place of intelligence analysis nor recognize the value it can generate in improving decision-making quality. As more companies focus their attention and resources on understanding competition and the competitive environment, they are realizing that they are unsure of how to properly utilize the intelligence collected. Insufficient understanding of the intelligence function leads to a deluge of poorly translated data, as departments request information, without filtering out the most relevant issues. By churning out vast quantities of purposeless information, the analysts and their departments are unable to properly apportion their time to the accurate analysis and assembly of useable intelligence.

• Clients cannot specify their critical intelligence needs or questions: The first critical step in the analysis process requires that the decision maker clearly articulate his or her needs to the analyst. This is frequently easier said than done. Many decision makers have difficulties briefing their analysts, struggle with explaining the decision that they are facing, or actually ask for the wrong thing. During the course of a project, the analyst will often uncover information that suggests the initial question needs to be modified. Unless the decision maker is fully familiar with the decision they are facing, they are unlikely to know if this new information has relevance.

• Under-resourcing the analysis function: Because it is invariably a part of some larger organizational processes, analysis is typically under-resourced. The lack of resources in the form of data, information, databases, systems, people, and most commonly, time, are always mentioned in surveys of analysts. Indeed, time is seen as one of the primary barriers keeping them from being more effective in their organizational roles. A large element of this problem is that it is difficult for those managing the analysis process to communicate the benefits derived from their activity in the format that executives ordinarily use in making their resource allocation decisions. Executives typically allocate financial and human resources on the basis of expected return on investment, net present value, or quantitative cost/benefit calculations. Putting a comparative quantitative calculation on the benefits of analysis has typically eluded most analysis managers and their clients.

• Lack of analysis-specific IT support: Organizations now have a plethora of information systems available for management, control, and planning purposes. Unfortunately, most of these systems are not designed to support the business and competitive analyst’s roles and responsibilities in their organizations. Even when companies do employ so-called “intelligence solutions” or systems, these are mainly focused on facilitating the collection facet of the larger intelligence process rather than the analysis/synthesis tasks.

• Lack of thinking time: Thinking is a key component in producing analysis. It is rare for analysts to experience “blinding flashes” of insight or to quickly obtain the essential and previously missing pieces of data that helps them arrive at confident conclusions. Instead, analysts spend substantial time thinking about their clients, data, models, networks, projections, targets, and work plans. There are times when this thinking just cannot be rushed, despite the perception held by many analysts that they need to produce ever more tangible products to more demanding clients. This perception sometimes leads analysts to generate a lot of activity at the expense of insight.

• Organizational culture and politics: In some organizations, the deliverers of “bad” or undesirable news to decision makers are punished. These punishments can range from admonishments, to the withdrawal of cooperation or resources, or ultimately, the elimination of the analyst’s position. Unfortunately for analysts who find themselves reporting to easily offended decision makers in such organizational contexts, there is probably little they can do about it, except to hope for a change in those who act in this manner. If that behavioral change is not in the offing, analysts will often have to find more enlightened employing organizations.

• Time and trust: Analysts and decision makers operate most effectively in an environment of mutual, shared trust. Unfortunately for some participants in the analysis process, trust usually takes some time to develop. Organizational realities demonstrate that many analysts or their decision makers are not in their posts long enough to allow for confidence, mutual respect, and trust to develop. In the absence of an appropriate level of trust, the analyst has to hope that they can develop this asset by carrying out effective analysis and convincing their clients that they can be relied upon to deliver the goods when asked.

• Invisibility and mystery: Although analysis work is increasingly a social and network-oriented task, analysts frequently work in the background of organizations. They are not necessarily on the “front line” facing customers and can sometimes be invisible to the larger organization. Their work is also often part of larger research-related processes, so they are rarely singled out for attention. Analysts are not frequently in the organizational limelight for what they do, except in those cases where analysis failure was blamed for organizational mishap. Because an analyst’s work and their function is sometimes viewed as mysterious or intellectually demanding, analysts are generally left to get on with their task without managerial interference. Unfortunately, this “invisibility and mystery” problem, at times, can be perpetuated by analysts themselves.

• Misconception that everyone can do analysis: Most people do not recognize the differences between the process of analysis and their ordinary ability to think or “connect the dots.” Analysis requires a unique and differentiated form of thinking and is encapsulated in the evolving analysis body of knowledge.  Most individuals have neither been formally trained nor have the natural ability to perform the rigorous and systematic type of specific thinking tasks that constitute competitive, enterprise, or strategic analysis as we know it. We know that analytical capability can be improved and enhanced through formal training, self-learning, mentoring, and coaching, as well as through regular review and evaluation of analysis processes and products.

 

The major external organizational factors  contributing to unfavorable outcomes are discussed.

• Growing range of competitive factors: The weapons used by enterprises in market-based competition have become more varied and better developed over time. Competition has historically occurred using the traditional marketing mix tactics along the “7Ps” dimensions of product, price, place, promotion, participants/people, physical evidence, and process. Today, competitive weapons can be found outside marketing in places such as the supply chain, human resources management, corporate culture, leadership, information systems, research and development, finance, operations, and production, among others. The growth of new knowledge, technological advances, and emerging public policies can all play a major factor in determining if an enterprise wins or loses in its marketplace.

• Complexity and turbulence: Complexity has increased because there are more competitors and stakeholders, interacting in a variety of ways and in greater quantities, to produce more unpredictable and turbulent situations. Turbulence means that the competitive environment is subject to continuous or near continuous change. Emerging concepts such as chaos theory have been applied to the business context in both the popular and scholarly presses. This further reinforces the point that the environment being analyzed today may well be more dynamic than it was yesterday.

• Data overload: Because of the virtual explosion of resources that have been unleashed over the World Wide Web, the Internet, and in corporate intranets, analysts have more data and information than at any other period in history. Analysts commonly view this explosion of information as being akin to “drinking out of a fire hose.” Unfortunately, much of this data is redundant, comes from dubious sources, is in foreign languages, lacks a paper trail, can be expensive to access, and/or turns out to be irrelevant to the analysts’ concerns. Software engineers are recognizing this problem and are beginning to develop effective programs to assist organizations in filtering, organizing, and classifying incoming information into databases that better serve the organization’s management information needs. Despite this, most analysts feel that they are drowning in information, yet starved of knowledge.

• Globalization: This describes the nature of changes in societies and the world’s economy from dramatically increased trade among different nation-states and increasing levels of socio-cultural exchange and interaction. Despite these sectors being intertwined and the blurring that occurs between markets, industries, and geographic boundaries, it is useful to distinguish economic, political, and cultural aspects of globalization. Globalization has also driven changes in technology, particularly in the transportation and communications sectors, where it is claimed there exists a global village with no recognized borders.

• Educational deficiencies: Although there has been a natural and healthy evolution in the nature of Business Analysis offerings available to individuals’ intent on a formal education in the processes and competencies of analysis, not all educational developments in this area have been positive.