09/10/2019
Have we ever wondered what do good culinary chefs have in common? Probably, they attended prestigious culinary schools, inherited family secret recipes, had access to quality ingredients or cooking equipment or even more importantly, possessed extra ordinary tenacity and strength of character to appease the taste bud of the hungry.
Likewise, a good business strategist would need an access to quality information in the forms of business intelligence (BI). Otherwise, in the absence of quality BI the strategic plan tends to be “malnourished or half-cooked”. Good BI does not necessarily translate into good strategies but good strategies are derived from good BI.
BI could be aggregated into internal and external information. Internal information is more about the company’s i.e. resources and capability such as production and sales figures. The information could normally be obtained from the company’s internal systems or resources. Whereas external BI is about the competition, market and customer and other forces affecting the industry. This external information which is the focus of BI is not normally readily available in ICT systems and needs to be researched, compiled, stored and shared. ICT systems can help to compile and aggregate the information, but it lacks the human wisdom in making sense of the information i.e. translating it into decision making.
Prior to the proliferation of ICT in business organizations, BI was a “manual” affair. When I wrote a research paper on BI for a strategic management class in 1992, the role of ICT in BI was almost non-existence. BI information requirements were identified and manually compiled from various publicly available sources of information such as print media, trade shows, advertisement, etc. BI culture tends to be acculturated throughout the organization to allow broader participation of employees in collecting, disseminating and using BI information. Even support employees such as dispatch personnel or customer service officers could contribute towards the compilation and dissemination of BI information based on their day-to-day interactions with the customers.
The transition from “manual” BI to system-based BI has effectively decreased the active involvement of employees in BI information gathering and dissemination. BI has gradually been overtaken by technology and is now synonymous with ICT systems without which there would be no BI. The new generation of employees grow with the notion that BI is part of the ICT systems i.e. implementing BI means implementing ICT system.
Most employees are under the impression that everything one needs to know about BI could now be sourced from ICT systems. While it might be true for internal BI information, external BI information would still need to be researched and compiled as they are not normally automatically captured by the systems. For example, one can analyze and predict the strategic direction of company by looking at the patterns of its advertisements or job vacancy advertisement. This piece of information must be manually compiled and analyzed and not readily available from standard ICT system. No ICT system could replace the human wisdom and intelligence in interpreting data gathered through ICT systems.
HOW BUSINESS INTELLIGENCE SHAPES STRATEGY
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
― Sun Tzu, The Art of War
The above quote from Sun Tzu emphasizes the importance of BI in strategy formulation. Knowing the enemy is a form of external BI. In this case, the enemy refers to the external environment such as industry forces, government policies, customer preference and the competition. A good BI enables a company to formulate and implement superior strategies in facing the competition and strive towards achieving its vision.
BI contributes to the formulation of an improved strategy formulation and implementation in the following dimensions:
1. More accurately define the competitive environment such as the industry dynamics, the maneuvering of competitors and customers change of appetite. This will help to prevent decisions that are based on hearsay and “good feeling” of the management.
2. Better forecasting of future competitive scenarios. The forecasting of future scenarios is normally based on the various forces shaping the future such as the convergence of technologies, innovation and potential constraint on resource supplies. BI would validate the forces thus providing more reliable inputs for the forecasting of competitive scenarios.
3. More vigorous challenging of underlying assumptions. Strategic planning is shaped based on certain assumptions and available information. “The least expected” competitors could shake the industry landscape and pose new competition. As access to internet is getting easier and friendlier, the “brick and mortar” businesses will have to either join the bandwagon or go bust.
4. More informed adjustment and validation of strategies. The revision of strategies is a normal process but must be based on solid BI. For example, the forecast of certain targets such as sales target will need to consider all forces affecting the sales such as the availability of information for the customers to compare products or services. Notably in a fast-moving industry, the strategies will need to be constantly reviewed and adjusted.
5. More heightened identification of incoming threat or surprise moves. A sudden cut in prices or the introduction of new product package should have been predicted based on a good BI. The hints about the competitors’ move could have come from promotional brochures, websites, industry talks and news channels. Otherwise, the company might be constantly on costly reactive or “fire-fighting” mode.
Useful BI information is characterized by the following features:
1. Timely. Old or outdated BI would be ineffective in strategy formulation or implementation. For example, when Maxis introduced MaxisONE Prime for the entire needs of the family, Celcom or DIGI should have found out about the plan earlier and come out with mitigation strategy to bolster their positions. Otherwise, reactive actions would be futile.
2. Integrity. BI could not be based on hearsay. The sources must be reliable and trustworthy. For example, information viral in social media will need to be thoroughly verified before being disseminated for strategy consumption.
3. Consistent. Consistency is an indication that the information is reliable and can be trusted. One test of consistency is that information originated from different sources carry the same message.
HOW TO LEVERAGE ON BI IN STRATEGY FORMULATION AND IMPLEMENTATION
Having recognized the above, the key question is how to apply BI in strategy formulation and implementation. Some of the possible measures that could be taken to leverage on BI on strategy formulation and implementation are as follows:
1. Incorporate BI as part of the formal process of strategy formulation and implementation and challenge the assumptions adopted during the strategy formulation and implementation. The information gathered should only be adopted once validated by the BI efforts.
2. Assess the impact of the new strategies on firm’s capability to deliver i.e. its capabilities and weaknesses. A good strategy is as good as its implementation. It’s imperative that the capacity and capability to deliver is assessed prior to the strategy implementation.
3. Develop possible scenarios how the strategies will affect competitors or industry and assess their likely responses to the new strategies. Prior to any external strategic maneuvers, one must assess the likely response of the enemy. Without enough preparation, the strategic move might be “retaliated” by stronger competition.
4. Put in place a mechanism to monitor the effectiveness of the implementation of the new strategies and potential competitor’s responses. The BI needs to gather data with the aim to measure the effectiveness of the strategy implementation. The worst concern is that the strategy may perpetrate more harm than good.
5. Assign responsibility to monitor the effectiveness of strategy implementation. The monitoring should result in the revision or scrapping of the new strategies before it is too late.
CONCLUSION
It is imperative that the often neglected BI needs to be an integral part and parcel of strategy formulation and implementation. The external BI information might not be readily available in ICT systems and extra efforts are thus vital for compiling and analyzing the information.
The notion that BI is about ICT system is illusional and short-sighted. ICT system suppliers who are not normally business strategists, have the predisposition to push their so-called BI products ahead of the strategic needs of the organization. Strategic planning and BI demand hard work and wisdom. Not just a dashboard screen from the so called BI ICT systems.
