Advanced analytics is nice, but how about we start with simple analytics?
I know, I get it! You’re excited about all your data and you want to hire a data scientist right away to get started on all the advanced analytics you can do with your data.
In reality, though, I’m not sure that phrase means what you think it means. Stop for a second and ponder this – do you have people doing simple analytics on your data? Are you actually starting to dig into simple metrics to see how your business is operating? As a Data Scientist, I would say in 90%+ of cases, people who hear the term “Advanced Analytics” think they should jump on that bandwagon. Unfortunately, this can be a waste of your company’s time and resources until you truly need it.
80/20 rule of advanced analytics
Most people at this point are familiar with the 80/20 rule, or Pareto’s Principle. In essence, you gain 80% of any benefit from only 20% of the inputs. This is the case when it comes to analytics as well. When you are first starting out with understanding your business and working to develop a data-drive method of management, you can get 80% of the insights you want out of 20% of the effort. This 20% effort can be basic summary statistics about how many users you have, how many sales you’ve made, or what your gross revenue over a period of time has been.
Advanced analytics is definitely the 80% EFFORT that gets you the 20% BENEFIT. This is why when you start out, you definitely don’t need advanced analytics. Once you’ve maxed out your ability to understand your business and your customers with basic work, only then should you move to advanced analytics.
Why you don’t need advanced analytics yet
The world only ever talks about the sexy stuff like data science and artificial intelligence. You rarely read articles in Forbes or Business Insider about “boring” stuff like simple analytics or data management. In reality though, until you need to split hairs in customer segments to squeeze out a little more revenue per customer, you don’t need advanced analytics.
I am a huge fan of the Lean Startup Movement and the primary idea of minimum viable products (MVP). An MVP in the case of analytics for your business is simple analytics. Once you start to understand what you need in terms of data, people, and resources to analyze that data, then you can move on to advanced analytics.
The data science job without data
In case you aren’t convinced, let me tell you a bit of a story. I was recently hired as a Data Science Consultant to help an organization tackle some problems with their business. Now as many of you know, Data Scientists are not the cheapest people to hire.
So I walk into the building and sit down in my first planning meeting and ask about when I can get access to the data…blank stares.
We thought you would do that. We have no idea how to work with our data
And that is exactly my point. Before going through the motion of hiring people with fancy degrees and expensive resumes, you need to ask yourself and your company simple analytics questions like, can we even access data to do advanced analytics on?
In the end, yes, you will likely end up with people doing advanced analytics full time for your company, but please, save yourself some time and money and start with simple analytics first!