New MIT Sloan Management Review study: An advanced analytics culture outweighs all other factors — David Kiron

The Need for Culture

The Need for Culture

What distinguishes the winners from the losers among companies converting data and analytics into a positive force in their strategies and operations? And what practices are keeping the winners ahead?

The Analytics Mandate, a new research report from MIT Sloan Management Review and SAS Institute, takes several steps toward answering these questions.

Our most significant finding? Our study shows that an advanced analytics culture outweighs other analytics-related factors -including data management technologies and skills-among companies that strongly agree they are gaining a competitive advantage from analytics. Essentially, a strong analytics culture is the lynchpin in moving from competitive parity to competitive advantage.

The need for change within a corporation’s culture, and the best way to achieve it, are both nicely illustrated in a case study included in our report.  WellPoint, the largest for-profit managed care organization within the Blue Cross Blue Shield umbrella, knew that sharing insurance data with physicians would provide doctors with a 360-degree medical view of every patient. This in turn, would better enable them to spot patients more likely to go to the emergency room or be readmitted to a hospital, contributing to expenses that drive up the high cost of health care delivery.

Within WellPoint, creating the data reports for physicians initially became a classic showdown between IT and interests from the business side.

The initial reports, prepared by the IT team, were late and lacked fundamental functionality.  For instance, different units within the company reported an emergency room visit in different ways.  The IT team’s explanation: no one told them the definitions had to be the same. This much was true — the business side didn’t think it needed to specify that emergency room visits be consistent across reports. They had assumed this was a given.

The high-profile project was subsequently placed in Red status. At this point, senior management got involved. Problems were brought to executives who, in turn, ensured resources were allocated. Outside consultants and experts were hired. More resources were diverted to the project.

Finally, after many challenging discussions, IT and the business side began working together using an iterative development approach called “Agile”, which focuses on “user stories.”. This meant understanding the perspective of the end user—the provider—and the context in which he or she would be using the data, as opposed to just developing according to a static set of  requirements.

Early reaction to the data system from doctors has been highly positive.  Over time, WellPoint believes that the proactive, coordinated-care model made possible when providers have actionable insights at their fingertips can cut health care costs by as much as 20%. That could work out to billions of dollars, given that WellPoint reimbursed more than $99 billion in health benefits for commercial and individual members in 2013.

In short, to create strategic benefits with analytics WellPoint had to change its organizational behavior. Without an effective collaboration between the business side and IT, the program would have remained in jeopardy. Without leadership’s involvement, the program would have remained in jeopardy. Preparing data for a strategic role often means changing business conduct and that, more often than not, requires a top down process to create the necessary alignment of incentives and goals.

To read the full report, please visit “The Analytics Mandate.”

David Kiron is Executive Editor, Big Ideas initiatives, for MIT Sloan Management Review.

Unlocking the value of data – Allison O’Hair

MIT Sloan Lecturer Allison O'Hair

MIT Sloan Lecturer Allison O’Hair

Compared to five years ago, the amount of data we now generate is huge. Some companies collect that data, but more often than not they don’t do anything with it. Business analytics is an important tool to help organizations harness the power of that data. By unlocking its value, you can do things like improve profits, predict consumer behavior, better understand markets, and make more informed decisions. Most importantly, it can give you a competitive edge.

For those of us in the field of operations research, data analytics is a huge and exciting area. It’s a critical tool for businesses moving forward. As a result, we’re offering MIT Sloan’s popular Analytics Edge course on the MITx online, interactive learning platform this spring. We want to share the cutting-edge knowledge generated at MIT on this important topic with people around the world. Read More »

Using analytics to manage diabetes – Allison O’Hair

MIT Sloan Lecturer Allison O'Hair

MIT Sloan Lecturer Allison O’Hair

What do data, analytics, and optimization have to do with diabetes? I believe they have a great deal to do with each other. These operations research tools may be the key to solving this major health crisis.

First, let’s examine the problem:

- About 25.8 million people in the U.S. – or 8.3% of the population – have diabetes today.

- By 2050, it’s projected that one in three U.S. adults could have it.

- In 2010, 285 million people worldwide had diabetes, with that number projected to increase to 438 million by 2030.

- If not controlled, diabetes can cause serious complications, such as heart disease, kidney disease, blindness and amputation.

- Diabetes cost the U.S. $245 billion in 2012 alone Read More »

Modeling Twitter — Tauhid Zaman

MIT Sloan Assistant Professor Tauhid Zaman

We often hear that the Internet is unpredictable, that it’s the “Wild West.” That would seem to be especially true of a social medium such as Twitter. After all, tweets are by definition instant and short-lived. But in a paper I and my co-authors just submitted to the Annals of Applied Statistics, we describe a model we have developed that predicts how popular a tweet is likely to be within just a few minutes of when the “root tweet” is posted.

And anyone who wants to can now try out our model by visiting www.twouija.com.

Read More »

Why digital maturity matters–”Digerati” drive true value from investments — George Westerman

MIT Sloan Research Scientist George Westerman

For all of the talk about how social media, mobile and analytics are transforming our lives, the majority of big companies still have a long way to go in their digital transformation. However, two years of study with more than 400 firms around the world shows that a quarter of firms are already achieving a measurable “digital advantage” over their peers.

This research, conducted by the MIT Sloan Center for Digital Business in cooperation with research sponsor Capgemini Consulting, shows that the digital advantage is not about luck or about the industry your firm is in. It is not just about how much cool digital stuff firms are doing. Companies that manage their digital activities in a certain way are 26% more profitable than their industry peers, and outperform on other measures as well. Read More »