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The people dimension of retail business analytics transformation


Creating a culture of insight

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									                                                        Retail — Human Capital

The people dimension of retail
business analytics transformation
Creating a culture of insight

                         The tools and technologies of analytics are
                         important, but equally important are the
                         people who use analytics-driven insights to
                         do their jobs each day. Without attention to
                         the people dimension, analytics efforts can
                         often fall short.

                         Buyer beware: The power of the people
                         It can require a significant investment to transform how
                         a retailer uses their existing customer, product, supplier,
                         and workforce data to provide new insights. The increased
                         access to detailed and timely data is the payoff, potentially
                         offering improved understanding of customer behavior,
                         merchandising trends, supplier price flexibility, talent gaps,
                         and workforce/labor scheduling and risks.

                         But what happens after that initial investment in
                         technology or analytics? A business analysis does no good
                         sitting on a shelf. Technology is beneficial only when
                         people know how to use it and know what to do with the
                         information it produces.

                         Regardless of the type of business, the size, or the effort
                         involved, ultimately it is people who will use these new
                         tools and insights to make decisions and take action to
                         improve the business.

                         Unlike technology, you cannot simply flip a switch and
                         turn on new behaviors in your workforce. Instead,
                         leadership should plan for the people dimension of the
                         analytics transformation by moving the workforce through
                         several stages of preparedness to make them capable of
                         using the new tools and taking action on the available
                         analytical insights.
    Specifically, there are three areas of people risk to consider   Migrating to business analytics can change this. Depending
    addressing:                                                      on how extensive your analytics transformation, planners
    • Reaction                                                       may be using different reports, buyers examining different
    • Understanding                                                  trends, and store managers seeing a change in either
    • Adoption                                                       report format or the metrics used to generate the numbers
                                                                     in those reports. From a people perspective, taking away
    Planning for and taking the correct action in each stage         reporting tools that users are familiar with naturally
    will help firmly embed analytics — and the insights              introduces some uncertainty and anxiety into a workforce
    delivered — at each level of the organization.                   that leverages these reports each day to make business
                                                                     decisions. After all, the information delivered through
    The dilemma of first impressions                                 these reports often represents the metrics by which
    Retail businesses run on reports. The same reports               employees are evaluated and compensated.
    come out day after day and look the same from month
    to month. Financial planners utilize the same reports            As a result, many workers initially react negatively to this
    when preparing annual budgets, and purchasing groups             sudden change in how information is presented. Managers
    reference the same trends when making buying decisions.          within the business may refuse to use the new analytical
    Store managers know exactly which line items on their            tools and instead continue to perform business as usual,
    daily reports to reference and what actions to take if the       wasting time and resources to reproduce the old reports
    numbers aren’t within the desired range.                         they are used to. Leaders within the organization may even
                                                                     decide to shut down the transformation before it has the
                                                                     chance to realize its full value.

                                                                     Organizations can reduce negative reactions and help
                                                                     smooth the transition by devoting resources specifically to
                                                                     the challenge of managing the change, achieving buy-in,
                                                                     making analytics personally relevant, and training users.

                                                                     Devoting resources — Establish guiding teams
                                                                     Effective transformation does not “just happen.” It requires
                                                                     strong leadership support and organizational commitment.
                                                                     Ideally, a group of senior executives are actively involved
                                                                     to drive the implementation and endeavor to keep the
                                                                     transformation on track. But senior executives can’t be in
                                                                     each meeting. Establishing guiding teams at relevant levels
                                                                     of the organization to steer the effort can help buffer initial
                                                                     resistance and move things forward.

                                                                     Achieving buy-in — Communicate, communicate,
                                                                     Resistance may arise for many reasons, and is often
                                                                     very personal and individualized. It is important to
                                                                     communicate frequently and reiterate the importance
                                                                     of the initiative as well as the benefits that are relevant
                                                                     and exciting to the business and each individual. It is
                                                                     also important to get analytical data from assessments,
                                                                     interviews, and other vehicles in order to help identify and
                                                                     mitigate specific resistance risks.

                                                                     Analytics can be just as helpful in gaining insight into the
                                                                     concerns of individuals and teams within the workplace
                                                                     as it is in more effectively understanding the concerns and
                                                                     desires of customers.

Making analytics relevant: win their hearts                      managers reviewing Profit and Loss statements reverted
and minds                                                        back to the older systems that they were familiar with
Most analytics-driven transformations attempt to move            because they did not understand the new reports. This
people through the reaction stage by simply showing them         behavior compounds confusion and introduces errors.
the facts. Unless stakeholders feel an emotional connection
to the rationale behind the analytics implementation,            While a well-planned analytics transformation can address
however, they will likely be apathetic at best, or simply feel   some of this behavior, it cannot solve each of these
frustrated that this is yet another change being “forced         people-related problems. Unless action is taken to prepare
upon them.”                                                      employees to understand the new tools, they may often
                                                                 use the wrong systems, make the wrong decisions, and
Wining hearts takes a mix of planning and passion.               may even revert back to creating custom-made reports.
It requires a personal realization of the benefits. If
performance metrics are changing, the organization should        Train, train, train
show how improved performance can lead to increased              The preferred way to prevent this reaction, to avoid
compensation. If tools are changing, the business is tasked      backsliding, and to pave the way toward adoption is
with demonstrating how these tools can result in increased       to consider planning and implementing an appropriate
productivity or less time spent on repetitive tasks.             learning and development program for associates. This
                                                                 program may require your learning organization to move
Emphasizing the benefits — Make the change stick                 from developing task-based skills toward enhancing
When an organization implements new tools and                    analytical and decision-making capabilities.
technologies, it is important to take steps to make sure the
change sticks and the business does not slide back into          Some basic items a learning and development program
business as usual.                                               should cover include the value of the report, how to
                                                                 read the new reports, where to find the numbers most
One of the preferred ways to do this is to make sure the         relevant to a given business unit (whether it be the stores,
organization understands not only the benefits of this           purchasing groups, or merchandising), as well as how the
transformation, but also how to use the new tools and            numbers in these reports are calculated.
apply them to make business decisions.
                                                                 One of the biggest miscalculations companies express
                                                                 post-implementation is that they underestimated the
Analytics hits home — A real-life scenario:
                                                                 amount of training required — not only training on the
A retailer could not get their associates to accept that
                                                                 tools, but understanding the details of new reports and
a change in how they did business was needed.
                                                                 the sources of the numbers that are important to end
So they brought in a customer to talk about their
                                                                 users. Employees also need to understand more advanced
frustrations with getting the right product shipped
                                                                 topics, such as what the information means, what insights
to the right place. Hearing the pain of their customer
                                                                 can be gleaned, and what action to take to improve the
directly got everyone focused on fixing their reporting
                                                                 business based on the data they are receiving.
and analytics problems.

                                                                 Now what? Driving adoption
The result: The customer’s story struck workers at many
                                                                 With new access to new information comes new ways of
levels of the organization emotionally and got them
                                                                 thinking, leading, and managing the business. Business
to take action.
                                                                 leaders are often left looking at the new data and thinking,
                                                                 “Now what?”
Toward real understanding
Many employees do not understand the measures or                 To fully realize the benefits of an analytics transformation in
calculations behind the existing reports. Instead, they have     terms of competitive insights and growth, changes should
memorized a certain place on the report that contains the        be considered across the organization and its talent. Post-
information they need. And although it may be the primary        implementation, employees whose job it was to prepare
responsibility of some employees to simply copy and paste        spreadsheets and develop custom reports will see basic
between spreadsheets to create “custom” reports, in some         changes to their jobs. They will no longer have to copy
cases they are unknowingly creating alternate versions           and paste between spreadsheets. Instead, they may be
of the data “truth” by doing so. At one company, store           called upon to perform analysis and draw conclusions from

                                                                     The people dimension of retail business analytics transformation Creating a culture of insight. 3
                                 available data. Many associates will not be ready for this       While analytics can help leaders make decisions more
                                 transition. Countering the possible financial implications of    effectively, objectively and economically, the fact
                                 this situation can require putting the effective people in the   is, redrawing the boxes of an organization — the
                                 required place for the applicable tasks and with the proper      organizational charts that make up a company —
                                 incentives to fill any knowledge gaps.                           cannot, on its own, deliver business results.

                                 More and more retailers are choosing to create analytics         Instead, effective organizational change begins by
                                 centers of excellence in finance, merchandising, and             assessing critical drivers of organizational performance
                                 procurement. Such models help to create new insights,            (e.g., people, process, and technology), identifying and
                                 but also take forethought. This approach requires new            prioritizing opportunities, and building a roadmap and
                                 capabilities, new job descriptions, new roles, all of which      for implementation.
                                 fit differently in the organization.
                                                                                                  Effective/Results oriented organizational strategies
                                 However, if action is taken to align the organization and        also consider the need for effective decision-making
                                 talent early on in the effort, the risk of the transformation    frameworks (e.g., decision types, model, roles, processes
                                 can be reduced and the likelihood of realizing the full value    and tools) across interdependent business processes,
                                 of the transformation increased.                                 functions, regions, and business units. Finally, effective
                                                                                                  organizational strategies establish an operating model,
                                                                                                  core capabilities, and metrics necessary to align with and
Improving turnover rates — A real-life scenario:
                                                                                                  deliver on the business strategy.
A discount retailer wanted to more effectively understand which factors might be
influencing high Store Manager turnover and what the potential benefit would be
                                                                                                  Consider aligning the workforce to realize the value
from improving turnover rates. Among the findings: A fifty percent reduction in
                                                                                                  of analytical insights
targeted turnover could result in $10 million in additional profit. By analyzing internal
                                                                                                  A “bad hire” can cost 1.5 times his or her original salary
organizational data, combined with external data sources, the retailer was able to
                                                                                                  to replace, and failing to prepare the workforce to take
identify the specific triggers for turnover and develop targeted interventions.
                                                                                                  advantage of new analytical insights can cost much more.

                                 Consider structuring the organization to take                    If an analytics initiative is providing new tools for the
                                 advantage of new insights                                        organization, the business should take steps now to retain
                                 The ability to deliver against business priorities may           talent capable of adapting to and using these tools.
                                 be compromised because a company is too siloed.
                                 When soiled functional areas and disparate data sources          Where gaps exist, people who can make effective business
                                 exist, it is difficult to pursue an integrated focus on          decisions with new analytical tools should be hired. These
                                 operational excellence.                                          candidates should have a demonstrated track record with
                                                                                                  such tools and be able to realize opportunities identified
                                 Often the business is too fragmented to achieve the              by insightful analysis.
                                 collaboration required for innovation, or too internally
                                 complex to recognize and focus on the opportunity. For           Finally, compensation incentives should be aligned to new
                                 example, finance planners may not be able to influence           metrics created by the initiative.
                                 the purchasing decisions of buyers, or the real estate
                                 organization may make store location decisions without           Don’t underestimate the people dimension
                                 the input of merchandising, or any of these organizations        If you’ve decided to embark on an analytics transformation
                                 may be too spread out geographically to achieve effective        initiative, congratulations. Soon, your organization can be
                                 collaboration.                                                   more informed in areas of corporate interest, and more
                                                                                                  equipped to make business-impacting decisions. But in
                                 Most companies can sense when an organizational                  order to be effective, don’t neglect the people dimension.
                                 strategy is not working, but are often unsure how to             Give your workforce the tools, training and knowledge
                                 address the problem. Leaders may attempt quick fixes,            necessary to be effective along with the transformation.
                                 or patches, changing some management role here or                Be prepared for their reaction, help them understand
                                 redefining some job there, rather than focusing on an            the benefits, and work with them as they adapt to new
                                 integrated approach.                                             approaches, new challenges, and new opportunities.

For more information, please contact:

Jamie Clark                     Rob Platt
Director                        Senior Manager
Deloitte Consulting LLP         Deloitte Consulting LLP
Tampa, FL                       Seattle, WA
+1 813 3908485                  +1 206 716 6074 

For further information, visit our website at

                                                                 The people dimension of retail business analytics transformation Creating a culture of insight. 5
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