How to Use Analysis Effectively

Analysis can be a powerful tool if used correctly. I have seen analysis help large complex organizations dig themselves out of unimaginable losses; and, have watched organizations unable to control analysis to such an extent that they became paralyzed, unable to take corrective actions. That is the good and bad of analysis.

The good: using the analysis to discover what isn’t apparent; and,

The bad: excessive review that delays or blocks meaningful change. With proper management, analysis can help business leaders engage stakeholders, discover improvement opportunities, and make enhanced decisions. To be effective, a leader needs to know when analysis required and when to call a halt to continued study.

Most organizations are highly skilled in doing analysis. Analyzing problems or errors is on-going work. Because analysis is in their comfort zone, controlling how much analysis is done can be a challenge. A leader who can manage analysis will have a powerful tool at their disposal especially when they need the participation and support of their team.

Engaging Stakeholders

Leaders may know where they want to take the organization and why, but to lead they need to bring the organization along; they need to persuade their team to execute a vision that the group may not agree with or believe is possible, desirable, or optimal. The right data and analysis of data can help garner the support needed for a leader’s decision. The analysis underscores the benefits and risks of a given objective while outlining the impact on stakeholder groups.

Analysis should be used to identify the impact of changes on the organization, departments, roles, and individuals. The fact that analysis identifies some severe changes and even catastrophic upheaval should not deter a leader from pursuing their vision for the future. Analysis allows them to make changes in full view of the implications. When used in a controlled, systematic manner, analysis can reduce some of the pain and disruption that accompany significant changes.

Individuals have their own experiences, fears, and emotional investment in the processes and success of their workplace. They have families, lives, and dreams that are dependent upon their job and even minor changes to their environment can be uncomfortable, while significant changes are frightening. Fear can generate resistance, that may fail to execute or delay of execution of the changes required to reach the objective/vision of a leader.

To prepare for the changes and transition to a new future, the people who will be impacted most by the proposed changes must participate in any analysis. Engagement of stakeholders throughout the evaluation of changes allows them to be owners and authors of change, and not be surprised. In most cases, their participation in the analysis may result in the discovery of new opportunities.

Finding Meaningful Opportunities

In every organization, there are opportunities to improve, eliminate waste, streamline processes, decrease cost, and increase profits. Many of these opportunities are buried, hidden from view; and those at the front-line know about them and suffer from added work caused by inefficiencies, errors, and rework. Some opportunities are overlooked because of the informal traditions or beliefs of the organization. Focused assessment and analysis can uncover opportunities and expose them to the light of day.

A large hospital was struggling to stay afloat. Over time this hospital acquired various surgical specialties because the leadership team was convinced that these services were needed to be competitive. One of the surgical specialties was losing money, a lot of money. This specialty service cared for just a few patients each year. Hospital leaders, however, maintained that this particular service allowed them to compete with their main competitor and was worth the cost.

How Analysis of Data Helped

A market analysis discovered that, to the leadership team’s surprise, fewer than 2% of patients for this service (or any of their services) lived in the geographical area served by their presumed competitor; and many fewer patients that lived in the hospitals own geographic area went to the competitor hospital. They were not competing with this hospital for patients at all. As a result of this analysis, they divested the service.

Had this analysis been completed before acquiring the service, the cost of acquisition, service set up, maintenance, and divestiture would have been avoided. The study helped the hospital discover other areas to decrease their costs further. Others in the organization were encouraged to review other failing services and find opportunities. Opportunities to make meaningful changes in any organization or system are plentiful, and the time and money spent to decide the relative value of each potential change reap benefits.

Interpreting Results

The power of analysis lies in interpretation. Look for patterns, or lack of patterns, relationships or lack of relationships that can be discovered when data is organized and subjected to scrutiny. Some patterns reveal connections that may be obvious without data but proven with data. While other patterns can be hidden because of the complexity, or noise that obscures the opportunity from a clear, prominent view. Look for significant patterns or relationships – use 80/20 rule – focus on getting results. The opportunities are there; they need to be discovered. If used correctly, analysis is a potent tool to identify opportunities and allow leaders to make enhanced decisions.

Making Better Decisions

Some decisions can be made quickly and confidently with little or no external research. This is true when the decision-maker is fully aware of the critical components of the choice. For a leader to make more complex and enhanced decisions, she/he must have improved information based on the analysis. However, for analysis to be a powerful tool, it must be managed and focused.

Leaders have a personal preference for how much analysis they need to make an effective choice. Preferences run from making a) no analysis, i.e., decisions are based on what information and vision a leader has, to b) extensive analysis creating an analytical framework and making the decision based on what the investigation reveals. Most leaders play somewhere between the two extremes using a mixture of these tactics. To be most effective a leader must be able to adjust how much analysis is used depending on the complexity of the decision.

Going with Your Gut

Making decisions with little analysis or with only the data, information, and knowledge currently available has the advantage of speed to execution. This method allows the rapid focus of resources on delivering the goal. On the other hand, these decisions can be suboptimal or may fail for any number of reasons.

Leaders with this approach exercise their vision based on experience and insight and run the risk of leaving others out of the process or making a flawed decision. If you are already set on your goal, focus on implementation. Do not allow an excessive investigation to delay your decision. Delay may weaken your choice and waste time and effort; on the other hand, a terrible decision can be catastrophic.

By using controlled, focused analysis, a leader can make enhanced decisions and limit exposure to risk. Making decisions backed by extensive data analysis has the advantage of being supported by past performance and may help avoid repeated errors. However, the data from the prior study can provide some guidance when making changes but only approximates the future. Too much data analysis can stifle creativity, muddy the picture, and delay change.

Don’t Over Analyze

Waiting for all analysis to be completed requires patience. The speed to act or change is slowed but may be worth the wait to gain the support of the organization. For analysis to be a powerful tool, leaders must choose how much study is needed for the given decision. So how much analysis is needed? It depends! How much study is required depends upon what the objective is:

a) the size and complexity of the decision,

b) the need for stakeholder engagement and agreement,

c) the urgency of the environment where a slow response to market changes or competitive threats could be disastrous,

d) the severity of the consequences of making a wrong decision, and

e) the confidence of a leader that regardless of the outcome she/he can make their organization successful.

To use analysis effectively, a leader needs to focus and manage analysis and know when enough is enough. A leader who can lead analysis will have a powerful tool at their disposal especially when they need to make a better decision, find opportunities to improve, and gain the support of their team.

Six Ideas to Manage and Control Analysis Efforts

For analysis to be an effective tool, it must be managed and controlled. Organizations can succumb to analysis paralysis. This happens when both staff and leaders seek increasing amounts of data or more, and more analysis of data before committing to a decision, or action. Incessant analysis consumes time and resources, and returns on that investment diminish. When decisions or actions are postponed or delayed unnecessarily, leaders can become paralyzed, and accomplish little. Here are some ideas to manage and control analysis:

1. Project manage all analysis

Assign someone (or hire a consultant) to be responsible for creating a process for completing any analysis. Require all project leaders on the use of the process. Spending less time analyzing and more time planning can help improve project budgets. Clearly define the focus and objectives of the analysis and what questions you are trying to answer. Limit the scope and time of the analysis. Set a deadline and stick to it.

2. Use what you already have

Before beginning any new analysis, investigate what analysis has already been done. Dig out old consulting reports, process improvement documents, meeting minutes including Board recommendations or minutes, project updates, and team reports that are related to what you are trying to achieve. Review and summarize the findings and recommendations. List recommendations that have NOT been implemented. Do a very rapid (1 week) assessment to update the impact of the current environment and before embarking on more analysis, implement those recommendations. You have already paid for the study – don’t double pay for the same results.

3. Estimate your analysis efforts

Estimate what percent of your organization’s paid hours are devoted to or engaged in analysis work. Create a goal for both the quantity and the quality of analysis that your organization produces. Some analysis is appropriate, but excess analysis wastes time and money — Monitor actual utilization and quality against the budget.

4. Engage stakeholders early

Assign critical stakeholders to conduct the analysis work and allow them to take ownership of answering their questions: set expectations, an aggressive timeframe. Work with them to identify what issues need to be answered. Set a deadline and conduct twice-weekly updates on progress.

5. Replace extensive analysis with experiments

Pilot some of the changes and use analysis to evaluate the results of the pilots. Create pilot groups to experiment with significant changes and analyze the results of the trials. Piloting change is a powerful method to get stakeholders not only to believe and participate but also to facilitate and drive execution. Use the scientific method (hypothesis – experiment) and focus on the quality of analysis rather than the quantity.

6. Stop analysis that is used to predict results

Use analysis to forecast likely results and determine what not to do. Do not use analysis to attempt to predict the exact results. Trying to predict exact numbers is mostly a waste of both time and resources. Spend this effort on creating a better vision, communicating goals, and tracking progress against both the vision and the goals. Use analysis to set ranges savings, revenue, quality, safety goals but remember that actual savings, income, and safety performance WILL be different from the estimates.

When estimating an ROI for any project using the low range for the RETURN and the high range for the INVESTMENT to get your most conservative result. Because organizations are experienced in analysis, analyzing their business is on-going work. While analysis is in their comfort zone, managing how much analysis is done is a challenge. A leader who can manage analysis will have a powerful tool at their disposal, especially when they need their team’s participation and support.

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Paul McBlaine