CEOs Say They’re In Charge of Analytics (Others Aren’t So Sure!)

Thanks to a tweet from Carsten Linz, the head of SAP’s Center for Digital Leadership, I stumbled across some fascinating research from McKinsey on leadership in analytics.

What really caught my eye is that CEOs believe they are in charge of the analytics agenda in their organization:

But other executives aren’t so sure:

“Thirty-eight percent of CEOs say they lead their companies’ analytics agendas, but only 9 percent of all other C-suite executives agree. These respondents are much more likely to cite chief information officers or business-unit heads as leaders of the analytics agenda.”

What’s also fascinating about this is the reasons that CEOs give for not investing in as much analytics as their competitors:

Given they think they’re in charge of the initiatives, CEOs naturally don’t think senior leadership is a problem. But it’s by far the highest reason given by other senior leaders. What’s going on here?

CEOs say that the biggest problems are “uncertainty over which actions should be taken” and “lack of financial resources.” The latter is a fancy way of saying that CEOs don’t believe that analytics has a high enough ROI.

What's the ROI of knowing what you don't know?
What’s the ROI of knowing what you don’t know?

Creating formal ROI cases for analytics has always been a problem — it’s hard to do a traditional financial analysis of the benefits when you “don’t know what you don’t know.” But many different studies over the years have consistently shown that once the business has new insights, they optimize the organization new ways. Forrester, for example, has shown that analyzing real-life cases before and after implementation produces very high ROI for analytics projects.

And without a clear way to determine the relative benefits of different analytics projects, it’s easy to see why CEOs think that the second biggest problem is uncertainty about how to proceed.

So what’s lacking, and what should organizations do about this?

It takes takes a leap of faith to believe that better analytics will indeed to better business outcomes, as it always has done in the past (counter-examples, anyone?) — and that’s a job that the CEO is fully qualified to do.

The bottom line is that formal ROI cases work well for many types of IT projects — but not for analytics. We live in an era where business is moving faster than ever, the benefits of investing in better visibility are clear — so what can we do to help CEO’s take the leap?

For more great McKinsey research, check out their latest round-up of analytics-related articles: Analytics Comes of Age.

Photo by Danielle MacInnes on Unsplash

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