Predictive analytics

Performance management by Gary Cokins

Here is an excellent book that I would recommend to anyone interested in thinking one step beyond. The book is extremely dense and filled every other page with food for thought that will tie together the strategy, execution and scorecard of your business. It also introduces a couple of very interesting concepts that I could apply directly in my line of activities:

• Managing risk: benchmarking your activities for risk allows you to detect levels that are risky in comparison of the return expected but also and very importantly potential for untapped growth and opportunities where your risk levels are low in regard of what your business is usually ready to cope with. Thinking activities and metrics in terms of risk is a very interesting concept that indeed aim at reducing risk but also -and counter intuitively- increasing it
• Predictive analytics: Variance analysis, looking at past data certainly explains what happened, looking at current data helps knowing where one stands, however wouldn't it be better to manage your activities when an likely opportunity is detected and anticipated? When indicators warn of a possible risk before it transforms itself into a real concern? Predicting a situation through analytics gives you the ability to anticipate, exploit or correct situations before they even occur. Gary Cokins explains extremely well this mind frame that forces you to organize yourself in such a way that you rely a lot less on last month data and a lot more on what you should aggressively pursue next.

In my current activities, I applied these concepts directly with our distributors in the APAC region.  It is essential to keep the pulse of our business partners in this credit crunch context and shrinking economy. Knowing when we can take risk without stopping the business or what to do when we start detecting difficulties that must be corrected has been key and given us the tools to reduce exposure or accept risk. The beauty of the approach is that we can manage the events before they even occur and redirect the business where it should go.