Friday, April 19, 2024

Data that’s better than gold

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Winning baseball pitchers have a secret we need to know. It’s not the different types of pitches they can hurtle that win games. Victory comes by selecting just the right pitch for the current batter’s next swing. We have the same challenge when playing the game of IT projects funding. Proposals that pitch the right kind of value to the right person get the money. Unfortunately, what executives are calling value is undergoing radical change. As a consequence, most business cases based on value assertions made in the recent past will fail today. Let’s examine these changes in value so we can be ready to throw the right pitch when the time is right. To throw the winning value proposition, we need to know what makes one pitch different from another, what pitch to use, and when. Okay, team, here’s how an all-star value pitcher prepares for that winning throw:

Keep in mind that the key metric you want is often based on the scarcest, or most restricted, resource.

In business, as in life, success can pivot on “one thing.” For the CEO of a newly formed networking services subsidiary of a Fortune 50 firm, that one thing was guaranteeing skeptical executives a 12-month payback on a controversial $50 million high-tech investment gamble.

This CEO followed the principle I have seen work frequently: Dramatically build your business case around a single performance measure. Not just any metric, but the one that most drives executive behavior–for example, the metric that drives their bonuses. I call it the golden data nugget. Once found, link that gem tightly to your proposed investment, and project funding is on its way.

Want to quickly find the one nugget that can fuel your business case success? Then emulate the most successful nugget finders of all time, the California Gold Rushers of 1849. Their secret to hitting it rich was to focus fast, dig quickly, mine cleverly, and authenticate immediately.

Keep in mind that the key metric you want is often based on the scarcest, or most restricted, resource.

Focus fast: The 49ers focused on just one thing–gold. Lesser treasures, such as coal or copper, were left to others. For your business case, the gold you seek is the operational driver that makes the monetary payoff of your business case possible.

For example, in public firms, senior management typically lives and dies by the metric of earnings per share (EPS). But EPS is an economic result of the operational metric for which you are searching. You are hunting for the main driver of EPS in your firm, such as the number of inventory turns in a manufacturing company, or sales per square foot in a retail concern. Keep in mind that the key metric you want is often based on the scarcest, or most restricted, resource.

To discover which data nugget drives your enterprise, pepper your execs with questions like, “What is the one measure that most indicates our success for the next 12 months?” Or, for a more personal and accurate approach, “What metric most drives your biggest bonus this year?” Other useful sources for gaining insights into executive minds are annual reports, published management interviews, and industry analyst assessments.

Once you’ve got your data nugget identified, your next step is to find its targeted value.

Dig quickly: The guardians of data nugget values are controllers–those friendly “measurements-are-us” folks. Dig for this gold by quickly setting up an interview with the controller to explain how essential this number is to the enterprise opportunity you seek to justify. Then ask for the data nugget’s target: “What is the sales-per-square-foot number that we need to hit?” When he or she says, “$130,” you’ve struck a vein of gold that’s ready to be mined.

Mine cleverly: In this crucial step, you mine the gold by linking your newly found data nugget to key features of the proposed investment.

Our miner’s tools here are sticky notes placed in three rows on a tabletop (see infographic, “Data’s golden vein”). Write your enterprise data nugget–increase sales per square foot–on a sticky note and place it near the top of the table; this is row 1. Now, in row 3 at the bottom of the table, write a key feature of the proposed investment. For example, let’s say a critical component of a customer-relationship-management (CRM) system investment you wish to justify is shared customer data. Write that feature on a sticky, and place it on row 3.

Next, ask yourself the following question: What is a cause-and-effect link that shows how the feature of this investment (in row 3) helps drive the coveted executive metric we placed in row 1? The answer, using our example, might be “uncovers new cross-selling opportunities.” Write that on the sticky, and place it on row 2, above the “shared customer data” sticky in row 3. This row 2 sticky is now “driven by” the feature in row 3, and is the “driver of” (i.e., the “cause”) the data nugget in row 1.

Now write down the logical links between these three stickies and place them as labels on connecting arrows. So, “Shared customer data,” you might say, makes it possible to uncover new cross-selling opportunities, which in turn makes it possible to increase sales per square foot. Voila’! An irresistible proclamation. You’ve mined your gold, and brought it to the surface.

Authenticate immediately: At this point, doubters will want to know if you’ve mined fool’s gold or the real thing. Once again, follow the 49ers’ lead. Get authorities to vouch for your find. For the 49ers, that meant a trip to the assessor’s office. In your case, you make visible the politically influential people who support your metrics, values, and cause-and-effect logic. For example, for your CRM justification, your best assessor might be your executive sponsor, such as a VP of marketing.

Finished all of the above? Then congratulations! You’ve nailed the data nugget that drives your business case toward successful funding. Now your 21st century reputation is complete: You’re the miner who found the data that’s even better than gold.

Subscribe to Data Insider

Learn the latest news and best practices about data science, big data analytics, artificial intelligence, data security, and more.

Similar articles

Get the Free Newsletter!

Subscribe to Data Insider for top news, trends & analysis

Latest Articles