Starting with the End in Mind

In our previous article “The Value of Data,” we introduced the idea that data analytics centers around solving specific problems using smaller amounts of high value information rather than a broad analysis of all available data. After reading that, you might ask yourself, “If I’m not supposed to look at everything, how do I know which data provides the right information to analyze?” It might seem strange, but in order to answer that question, you need to work backwards.

The first thing you should do in any data analytics project is identify what business problem or issue you want to solve, and then go from there. We call this starting with the end in mind.

Action Oriented

At the heart of it, the primary goal of data analytics should be to drive some sort of action. Analyzing without any sort of action is just monitoring, and that has limited value, if any.

For example, imagine you have a goal of losing weight. You decide to start weighing yourself each morning. You track your weight, what you eat, when, and even how often you work out for a month. Let’s say you do all that, and at the end of the month you compile all this information into pretty charts and graphs. If you let it stop there, you have not really done much. Unless you use the information you compiled to actually change your habits and behaviors, you won’t see a change in your weight the next month (at least not a decrease!).

The same concept applies when analyzing data in the business world. You won’t see any real value until you use the information you analyze to drive action. In order to use this approach, you need to have a problem in mind to solve.

If you do not start out with a clearly defined problem you want to solve, you might waste time trying to solve a problem that no one cares about or get overwhelmed by the amount of data available and not know where to start. An effective analytics project identifies the problem first and then determines what data you need to solve that specific problem.

The Magic Wand

There are many ways to approach identifying a problem/issue, but we like to use the “Magic Wand” method. Just imagine you have a magic wand with unlimited wishes. Are you doing that? Now, ask yourself, what would you change about your business if you had this magic wand? I bet you can think of more than one! No problem. Write them all down for now.

Maybe you would increase sales or cut customer churn by a certain percentage. Maybe you would move your office location or hire a few new employees. Do not worry about costs or barriers right now; remember you have a magic wand. Once you have a good list, you can narrow it down and identify the underlying problem or issue related to those wishes.

To narrow down your list, you want to pick two or three items that are going to give you the most bang for your buck. What changes, if implemented, would give you the most benefit for the work required to make them a reality? Start with those; you can always go back to some others later after you have success in other areas.

The Best Solution

Now that you pared down your list, you need to look through each item and figure out what underlying problem or issue really relates to each of those items. For example, maybe you used your magic wand to wish for a new office location. You may not consider that a problem, but it could point to an underlying problem that could potentially be solved by moving your office location. For instance, a desire to move might stem from the fact that your main customer base lives an inconvenient distance from your current location.

You might find that when you identify your underlying problem and analyze the data, the right solution may be something completely different than what you would have wished for with your magic wand. In this instance, the right answer might entail starting an online sales presence rather than moving offices. If that becomes the case, that is not a problem because you ended up finding the best solution to your issue in the end.

Ultimately, this example demonstrates the heart of data analytics: helping you find the best solution to your problems and then putting it into action.

Now What?

The next article in our series will help you determine how to start gathering the data you will need to solve the problems you identified. If you would like to get started solving these business problems or issues today, contact a Hantzmon Wiebel team member to get a data analytics project started now.

 

Articles in the series: 

Part 1:The Value of Data

Part 2: Starting with the End in Mind

Part 3: Selecting Data Sources

Part 4: Using Data to Create Action Steps 

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Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.

 

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