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SSA & Company Notebook | Winter 2017

Ideas That Made Us Think

Evolving Customer Sentiment Can Unlock Your Supply Chain’s Potential

Consumers’ demands to know what’s in their products is putting unprecedented pressure on companies. Supply chains are increasingly fragmented, and “suppliers are often reluctant to share their formulations, buyers balk at higher costs, and in some cases cost-effective safer substitutes simply aren’t available.” According to Bloomberg, companies, including Levi Strauss & Co., are demanding increased accountability and transparency from their suppliers, and the market is starting to respond. Pike Research forecasts hypergrowth for the green chemistry market—from $11 billion to nearly $100 billion by 2020. In order to meet this growing demand, companies can partner with suppliers to understand constraints, collaborate on ways to efficiently use green chemicals, and minimize the costs passed along to consumers. Forward-thinking companies can utilize their supply chains as public differentiators to become category leaders.

Bad Writing Might Be Destroying Your Company’s Productivity

In HBR, a survey of 500+ businesspeople revealed that respondents spent an average of 25.5 hours weekly reading for work, including email. “A majority say that what they read is frequently ineffective because it’s too long, poorly organized, unclear, filled with jargon, and imprecise.” Bad writing is an inefficient consumption of resources, yet permeates organizations at all levels. The author highlights that “fuzzy writing allows fuzzy thinking…inexact and passive language reflects gaps in thinking.” By promoting a culture of brevity and clarity, managers spend less time deciphering unclear thinking, employees understand the intentions and directives of leaders, and customers trust companies. Clear communication is not a cultural challenge; rather it is an operations one, and it requires organizational commitment.

White Hats Can Propel Your Operational Performance

Companies are creating bug bounty programs that welcome—and reward—hackers into their system. The goal is to unearth risks and vulnerabilities and brainstorm innovative solutions. Once deployed exclusively in tech companies (e.g. Uber, Facebook, Google, etc.), bug bounty programs are now the norm in aviation, automotive, defense, and more. Companies that adopt new technology also adopt “the security risks [and] the operational risks that come with that technology.” At United, bug bounties can reduce operational risk and result in fewer delayed flights. For the Defense Department, programs can better secure U.S. military networks. Similar to data adoption, to be successful with bug bounty investments, companies need to undergo a cultural shift to become hacker-friendly. Leaders must encourage typically risk-averse teams to embrace problems to find better solutions.

Talent Management: The Art and Science of Evaluation

Human capital is both a company’s greatest asset and cost, yet most do not prioritize measuring, assessing, and retaining it. In “The Art and Science of Evaluation” in AMA Quarterly, SSA & Company’s Jason Meil and TMG’s Matthew Bedwell detail several ways data and analytics can drive performance management and help organizations grow and create value. For example, leaders struggle to quickly and easily capture feedback. Using new technology, like TMG’s lloop, an app that helps capture performance feedback “in the moment,” organizations can better record, organize, and analyze feedback, which can help drive “fact-based conversations and analyze performance against specific development goals.” While each organization may choose different data strategies for human capital, there is little doubt that “applying art and science to the performance evaluation process has the potential to make your talent development program more effective and your enterprise more successful.”

Big Data. Big Ideas.

Even “Conservative” Businesses are Leaning into AI

Move over Siri and Alexa, Bank of America’s Erica uses predictive analytics, AI, and cognitive messaging to assist and advocate for customers’ banking needs. From making payments and checking balances to identifying opportunities for customers to optimize their banking and increase their credit score, Erica endeavors to grow and become more personalized over time. The bank also benefits in reduced costs and time spent by employees on routine transactions and questions. Additionally, Erica and Wells Fargo’s new artificial intelligence-based technology will provide the banks with a wealth of real-time information. Bank of America joins a growing list of companies in traditionally “conservative” industries that embrace and lean into emerging technologies. To be successful with new digital investments like voice technology, it is critical for businesses to integrate new data into existing platforms and operations at the same speed it comes in.

How to Real-Time Operationalize Insights and Make Profits

Companies have begun successfully using advanced analytics to deliver value to the company and clients. Citigroup, for example, has radically improved operations and customer retention and acquisition by adopting a data-driven approach and creating a “Data Innovation” program. Citi leaders disclosed to Forbes that part of the program’s success can be attributed to focusing on projects with “very specific metric-based outcomes.” Additionally, lower prices for data and advanced analytics have made projects more accessible. The new challenge lies in how to “operationalize insights fast enough to make them valuable to the business in a timely fashion” and create differentiation.

Does Your Organization Maximize Unstructured Data?

Healthcare data is more available than ever, but many struggle to realize collected data’s full value. Collected data tends to be unstructured, and it cannot be analyzed in traditional databases. Companies like McKesson are building proprietary systems using advanced algorithms and natural language processing to maximize unstructured data’s value. Dan Lodder, Vice President and General Manager of technology solutions for McKesson Specialty Health, stressed the importance of untapping data for customer health, saying: “think about figuring out when and if a patient is in danger…and sending specific information about the danger to the floor nurse so she can act.” This is especially true in the era of value-based care where healthcare providers are incentivized for delivering high-quality, efficient, and affordable patient care instead of being paid based on the volume of patients they treat.

The New Leadership Paradigm: Models for Using AI to Make Decisions

In a recent HBR article, Michael Schrage—research fellow at MIT Sloan School’s Center for Digital Business and SSA & Company Advisor—offers four new managerial models for leading in the age of algorithms and smart computers. The new business MBA is now Management by Algorithm, and leaders must accept the reality that smart algorithms need greater autonomy to succeed. “Empowering algorithms is now as organizationally important as empowering people. But without clear lines of authority and accountability, dual empowerment guarantees perpetual conflict between human and artificial intelligence.” These four models may differ in the autonomy given to algorithms, but all require buy-in, accountability, and responsibility and clarity around direction, delegation, and deference. The challenge for CEOs is not forcing autonomy but instead making it a powerful source and force for competitive advantage.

Drive Future Growth Through Advanced Analytics

SSA & Company hosted 100+ Fortune 500 executives and private equity leaders at roundtables featuring Michael Schrage and Deb Henretta, former Group President, Global e-Business, Procter & Gamble. The discussions highlighted the opportunities and pitfalls of big data strategy execution. We’ve developed an Advanced Analytics, Leadership, and Future Growth playbook to help leaders use data and advanced analytics to drive growth.

SSA & Company Quick Hits

  1. Richemont’s Board of Directors is gearing up for a new organizational structure. Following slumping performance, the luxury conglomerate abolished its CEO position and will have senior leadership report directly to the board.
  2. Machines can explain that, right? Artificial intelligence is everywhere, but most struggle to grasp what it is—and what it isn’t. A Medium post provides leaders with an AI primer.
  3. What do Stanley Kubrick and high-tech investing have in common? Our Jason Meil comments for US News & World Report and YahooTech.
  4. Safety on eighteen wheels. Using new developments in telematics and telemetry, advanced analytics, sensors, and new technology, transportation companies can predict lorry collisions and improve safety.
  5. Balancing leadership’s and shareholders’ interests often creates divides, especially in PE. HBR examined the governance problem and outlined benefits and drawbacks of typical private equity and family models.
  6. Job ratings provide the next untapped data resource for investors. Glassdoor provides investors a free login to access its data and notes the relationship between corporate cultures and investment returns.