To sustain and grow, companies set business goals they want to accomplish each year. A company, depending on its vertical, its size, its operating market, or other business variable, will pursue set of goals that is unique to that organization. Revenue and profit are the most ubiquitous, but others include cost stabilization and control, customer and employee retention, or productivity and efficiency maximization, to name a few.
Beyond business goals, companies develop business strategies for how to accomplish them.
Goal: Revenue Growth ⇒ Market Penetration & Development
In the case of revenue growth, a company can pursue a strategy like market penetration or market development, where they sell their existing products in their current market or adjacent markets. A great example of market development is Ike’s Sandwich Shops. The original Ike’s opened in San Francisco in 2007, and after finding a successful formula, opened additional restaurants in the SF bay area before expanding to markets outside the bay area and outside of California.
Goal: Revenue Growth ⇒ Channel & Product Development
A company can also pursue a business strategy of channel or product development to achieve its goals, where they sell existing products in new channels or create new products for existing or new customers.
An example of this type of business strategy, and one of my favorite female-led success stories is that of Pepsico and it’s recently retired CEO, Indra Nooyi. She was CEO for 12 years before retiring in 2018. In her tenure, Pepsico’s revenues increased by 80% as it introduced new products, including healthier foods targeted to female buyers, to counter declining interest in sugary beverages.
The Role of Analytics
What do business goals and business strategy have to do with analytics? Analytics is the process for measuring how well business strategies are succeeding and driving outcomes. Analytics also helps identify business opportunities for achieving goals that the company hadn’t previously strategized about.
In my last blog post, I provided a great example of exactly this for the restaurant chain industry, where an analysis of the breakdown of sales within and across restaurants exposed opportunities to offer dining incentives to existing customers and to eliminate unprofitable shifts like mid-day lunch, where there wasn’t enough business to support them, thus reducing restaurant operating costs.
As companies define business goals and strategies, they implement a series of tactical organizational and business process changes to accommodate the strategies. These could be organizational or hierarchical changes, new product launches, new or updated internal systems (ERP, Finance, HR, Go-to-Market, CRM, for example). Each of these changes creates data within its proprietary application. The data, when integrated across systems, provides the foundation for analytics and is used to measure effectiveness of tactics and strategy, in order to drive business outcomes.
Based on analysis of the measures (data aggregation) companies can make changes to their tactical implementation or to their business strategy, or both, to get the business outcomes they desire.
Having a well defined analytics strategy enables you to reap the greatest rewards of using analytics to measure effectiveness of strategy and tactics. An analytics strategy ensures that you are measuring the right activities for the right users using the right technology for your organization. With an analytics strategy in place, that defines the who, why, what, and how of your analytics program, as well as prioritization of delivery and the technical program that delivers it, you will have a numbers-driven approach towards achieving goals.
In my next blog post, I’ll talk about the role of data and data platform technology (collection, integration, visualization) on the actualization of business strategy and the achievement of business goals using Cohere Insights’ Analytics Value Pyramid. The Analytics Value Pyramid hierarchically categorizes the process of achieving business goals through data, where there is a continuous feedback and information flow up and down the hierarchy (data to goal and vice versa).
The pyramid is a great instrument for demonstrating the value relationship between data, technology, analytic apps, and what the business wants to accomplish. When articulated across teams, it creates buy-in on approach and facilitates delivery of successful analytics applications.
Andrea Amaraggi is Founder and Principal of Cohere Insights. She helps companies leverage technology and engineering to build business focused analytics applications that drive revenue, reduce costs, achieve operational excellence, and create customer successes. Contact her at email@example.com.