If there is one “truism” that has emerged in the credit union analytics revolution, it is that successful analytics initiatives are usually driven by, or strongly sponsored by, the CEO. Most grassroots efforts to launch such initiatives fail because the amount of organizational change required for success can only be effectively led from the C-suite.
However, it is not enough for a CEO to preside over the launch of analytics. Top managers must also be prepared for a second wave of post-launch complications that threaten to scuttle even the most promising programs.
In a recent Harvard Business Review article, the authors studied 36 companies in 8 industries to understand these complications and prescribe actions corporate leaders can take to manage them.
Complication #1 – Analytics Can Make Waves in the Leadership Ranks
To make these programs effective, CEOs need to create a role that drives the analytics effort. Many larger organizations are appointing Chief Analytics Officers. In credit unions the role might be called Vice President of Analytics. Whatever the title, creating this role can threaten the CEO’s other direct reports who fear a loss of prestige and authority in this face of this poorly understood innovation.
CEOs need to be ready for such resistance and send a clear message that the old way of doing things is being replaced by a new model. Education to promote awareness and upgrade skillsets must be provided to support the mandate. In the end, all leadership team members need to be on board or possibly face replacement.
COMPLICATION #2 – CHOOSING THE RIGHT ANALYTICS LEADER
There is no more critical staffing task than choosing the person for the lead analytics role. Yet, since this area is relatively new, the talent pool is limited. Also, personal chemistry is especially important. This role is not only establishing important new processes in the organization, but there will also be the task of getting his or her peers on board in supporting new initiatives.
The authors note these qualities are important in selecting the analytics champion:
- Collaborative - Must be able to work across organizational silos and cultures as the analytics evangelist.
- A Student of the Enterprise – Must be very knowledgeable about how the organization works across multiple disciplines and how analytics can deliver innovation in all these settings.
- Energize the Spirit of Discovery – Must be able to generate excitement and thirst for discovery across all levels of the organization.
COMPLICATION #3 – CHANGING “MENTAL MODELS” ABOUT INFORMATION
The CEO needs to drive a change in the way the organization thinks about information. Old models rewarded top managers who were perceived as exceptional intuitive decision makers. Decisions backed by data were seen as the exclusive purview engineers or scientists. The analytics revolution has proved that top performing companies are increasingly depending on analytics at the highest levels of decision making. Getting the organization to see information as a strategic, shared asset is a task of the highest priority for the CEO.
COMPLICATION #4 – SPEEDING UP THE INNOVATION ENGINE
Gaining competitive advantage using analytics seems to some CEOs to be an impossible task. Even if a credit union successfully adopts analytics across the enterprise, other credit unions are doing the same thing so an advantage is soon lost. However, the velocity at which a credit union innovates using analytics is the real differentiator. The organization must be prepared to move at a fast pace in finding and exploiting innovations spawned by analytics. The CEO is instrumental in motivating this pace by tying incentives like bonuses to new discoveries.
. . .
CEOs are not only the primary movers in launching successful credit union analytics initiatives. To maintain long-term success they need to be ready to recognize and manage the inevitable complications that come with growing such programs over time.