Thomas Davenport is one of the best know voices in the field of business analytics. He has a book with Jinho Kim which discusses how individual business people can best manage their work in a world where analytics are a key part of many business strategies. The aim of the book is to enable managers, and other people engaging with “quants”, to best use the talents of the quants. Their aim is to help create quantitative analysis that is rigorous but also connected to business needs. In order to do this they offer the three stages of business analytics.
The Three Stages of Business Analytics
They map out their approach to quantitative analysis in three stages. (This encompasses a total of six steps. I’ll concentrate on the stages, to avoid confusion between steps and stages). The first stage is, Framing the Problem. This includes problem recognition. This is the question: why are we trying to do something? It also includes a review of previous findings. What do we already know?
The next stage is Solving the Problem – the actual analysis. Critically, the authors are keen to emphasize not to jump straight into trying to solve the problem. This is because if you don’t know why you are doing the analysis, or what you already know, any analysis is likely to be highly ineffectual. The actual analysis includes choosing the model, data collection, and analyzing the data using the chosen model.
I would say that one of the strengths of the book is the numerous examples it gives. These, therefore, help the reader understand what is going on at each stage.
Communicating And Acting On The Results
I was particularly pleased about the emphasis the authors placed on the final stage. They say, and I agree, that Communicating and Acting on the Results is just as important as the analysis. It isn’t enough to do some analysis. The analysis has to change an action to be worthwhile from a business perspective. Results presentation and generating action are key to success. Analysis without proper communication of the findings is a waste of time. It is great to see such major figures in business analytics emphasizing this point.
For more on analytics see here, here, and here.
Read: Thomas H. Davenport and Jinho Kim (2013) Keeping Up with the Quants: Your Guide to Understanding and Using Analytics, Harvard Business Review Press