Relevance Lost 2.0

When Robert Kaplan and Thomas Johnson wrote about the fall of management accounting systems and pleaded for new perspectives and approaches to strategic process control they wrote a most relevant statement that still stands today. But as organisations are implementing performance measurement systems as applications of their business intelligence infrastructure, news risks of losing the most relevant part of strategic management arise. There is a clear need for a new, extended approach to the balanced scorecard (BSC). If you wonder what this may be, then read more.

In this article I describe the generic strategy process, compare this with the performance management process, how it is implemented in some organisations and analyze the aspects of this process related to the organization’s leadership style and thus the consequences for the balanced scorecard’s effectiveness.

The Strategy Process: Formation and Formulation

Every organisation has its own way of forming and formulating a strategy. It is in the organizational DNA: the way strategic objectives are grounded on a clear problem statement, SWOT analysis, competitive analysis, etc… and evaluated, proper to that same DNA.

Fig 1. The Strategy Process The strategic objectives entail the position of the company for mid- and short term, wanted behavior from clients, associates and partners. These objectives are then dissected, evaluated, scored and appreciated according to the organization’s values and beliefs, the organizational culture and past experience. 

The last phase is the decision phase where the objectives are translated into concrete actions and measurable products and outcomes of these actions.

As the illustration shows, the strategy formation process is usually done in four process steps:

• definition, 
• dissection, 
• evaluation and 
• decision

In the definition process, the strategic problems and opportunities are described and expressed in statements like: “We are not well positioned in the high end market”. Input for this process step is SWOT analysis, as well as analysis of the competition and the customer base. 
In the dissection process, expressions like “We are not well positioned…” are set in context and translated into critical success factors, e.g. “In order to improve our position in the high end market we need to upgrade our image, educate the sales force, identify more high end customers.”
The eva luation process is mainly concerned with prioritizing the dissected elements and looking for causal relationships between these elements to prepare a cohesive and consistent strategic plan which can be communicated to all parties concerned.
Finally in the decision process, the prioritized and feasible targets and ways to achieve these targets with global action plans are chosen. Some targets are based on decisions with tangible and measurable results and others are based on long term decisions with immaterial and almost immeasurable outcomes. 
The following decision points are ranked from very concrete and “hard” targets to more “soft” and less quantifiable decisions:

• which critical performance indicators will receive priority in the action plans and budget allocation,
• which actions are needed in the market place,
• which organizational behavior needs adjusting
• what needs to be improved in the organization’s culture

In the strategy formulation process steps, communication exercises will adjust these elements to match them with the various target groups: associates, clients, suppliers, shareholders, government officials, press, etc…

The Degrees of Collaboration in the Strategy Process

If we imagine a continuum in leadership styles, ranging from autocratic to democratic leadership, the four strategy formation process steps will be subject to shared inputs, transformation and outputs on a scale of zero to hundred percent.

In an autocratic leadership all four process steps are in the hands of the leader. Only the leader decides what is important in the environmental scan, what the objectives are, how the actions  are prioritized. Some autocratic leaders have problems formulating the strategic plan as they still hold up the adage “knowledge is power”. What they gain on control may get lost in the execution phase when their subordinates try to interpret their ambiguous communication.

Long time ago, I studied the biographies of dictators (which names I won’t mention because they deserve to be forgotten) and it struck me that often they communicated very vaguely about their strategic vision, priorities, objectives and the way to accomplish these objectives. Zealous and ambitious subordinates would then translate these cryptic messages into complete (and often horrific) action plans which would then be meticulously and ruthlessly executed. After which the dictator either rewarded the zealot or had him sent in exile because he became too popular or was a liability for the regime to the outside world.  Nevertheless, autocratic leaders can be highly successful in process industries, retail, service organisations and this leadership style emerges everywhere there is a crisis and fast response times are more important than a well pondered decision making process, balancing all market factors, interests and wishes in the organisation.

 In the democratic leadership all four process steps may be in the hands of the entire team. Lengthy discussion and negotiation may require a lot of resources but the upside is that everyone in the organisation is on the same page and the execution phase has less need for control and clear instructions as the organisation members act in a more autonomous way, responding faster to changes on the terrain. Organisations of professionals prefer democratic leadership as knowledge and competence are far more important than rank and power and the status that go with it.

Finally in mixed forms, the definition process may be initiated by the strategic apex, shared with the ranks and business analysts may be called in to dissect the statements into  manageable chunks.

The evaluation and the decision process, depending on the level of democratic leadership, may be done by the leader, a management team or a management team extended with staff members and analysts.

Today, as organisations become flatter and more democratic leadership styles are proper to new industries, there is a need for faster feedback loops to combine the advantages of autocratic leadership with the responsiveness of democratic organisations.

The Performance Management Process

The strategy process, seen from a performance management perspective, is a machine-like approach to define, monitor and manage the actions as defined in the strategic plan.

Let’s see how the strategy process is broken down into the performance management process. The performance management process breaks down the strategy formation process into smaller chunks to decompose the formation (definition, dissection, evaluation and decision) into nine steps.

This is a top down exercise:

·        Analyze the situation (SWOT, competition,…) (Definition Process)

·        Determine the objectives after the analysis (Definition Process)

·        Define the critical success factors (CSF) (Definition & Dissection Process)

·        Derive the critical performance indicators (CPI) from these CSFs (Definition & Dissection Process)

·        Mapping the CPIs on the organizational units down to the individual associate (Dissection & Evaluation Phase)

·        Adapting the HRM policies to these mappings (if trade unions allow, of course) (Evaluation Process)

·        monitor, manage and readjust the CPIs (Execution process)

·        monitor, manage and readjust the CSFs (Execution process)

·        Adapt the objectives to the new SWOT results (Execution process)

Remark how implicit the decision process is embedded in the dissection and evaluation process steps of the performance management approach.

Strategy automation?

In the past ten years I have worked on IT-support for balanced scorecards (BSC) in a university, a bank, an insurance company and a manufacturing company. In all of these cases, a poignant conclusion was unavoidable: “If all you use is a hammer, everything starts looking like a nail”. The ICT tool became a substitute for the strategy process and forced a freeze on the organisation. Let me explain this.

The BSC was used as an instrument to implement a top down strategic governance of the organisation. The strategy decomposition as described above is then modeled in the ICT tool creating links and correlations between the various CSFs and CPIs. Identifying these cause and effect chains is not a trivial matter. If sales go south, all sorts of explanations may present themselves to the organisation. E.g.: Are lower sales due to:

·        … lower consumer confidence?

·        … a competitive move?

·        … a government announcement?

·        … simple seasonality or a gradual shift in seasonality?

·        … the weather?

·        … all of the above?

Or can the sales slump be explained by a factor we can influence like the number of sales training hours received by the sales reps? But then the question arises if there is a correlation between the amount and quality of the training received and employee satisfaction? Or is it the other way around:  because our employees are not very satisfied with their job, they respond poorly to the training received[i]?

But that is not all. As we all know, strategic management is about adapting to the environment. If the ICT tool does not capture  the environmental change either bottom up or top down, then what? There is also another side of the coin: if the strategic decomposition leads to individual targets, personal development plans and other HRM tools how does this affect the flexibility of the organisation to adapt to change?

People act accordingly to the incentives from management: either they integrate the CPIs in their work planning and their approach to the job or they look for ways to beat the system. I remember sales people holding back order forms for a yearly publication to “smoothen” the CPI measures of bookings per month since management did not take seasonality into account when the performance indicator was defined.

Strategy Dialectics Are the Way Forward

It is clear that the latter is unwanted behavior but those who conform with the system should be rewarded, shouldn’t they?

The answer is an ambiguous “Yes and No”. “Yes” if their response, steered and governed by the performance indicator, is in sync with customer demand. And “No” if this is not the case. Needless to add that any strategy which is not sanctioned by your customers is not worth the paper it is written on.

But how are the designer, the monitor and the manager of the balanced scorecard to know this? Henry Mintzberg (1994)[ii] makes the distinction between intended and emergent strategies and the way I see it and experienced it, the balanced scorecard is an almost perfect tool for managing intended strategies. It uses a negative feedback loop, just like a thermostat. And just like a thermostat it sometimes oversees the efforts needed to keep everybody in line with the intended strategy. So people who don’t meet their targets are stimulated to do so or they are made redundant if they are not likely to comply with the desired behavior. But as John Lennon so rightly said “life is what happens while you are making other plans”. Management may have misinterpreted the signals from the environment or changes in the market may be unnoticed by management. In that case,  emergent strategies may provide the answers to these situations as there is some form of “wisdom of the crowds” in the collective response from front office workers and anyone else who is in contact with customers, competitors, prospects, suppliers, researchers and government officials, to name a few. To capture these emergent strategies, the system needs to provide positive feedback loops to reinforce unplanned but successful behavior, even when it is non compliant with the intended strategy. In other words, if top management makes a mistake, it will get noticed in three to five years but if the front office worker makes a mistake, the organisation has an acute problem.

This calls for a special form of management, allowing dissidence in the ranks and considering experimenters and contrarians as assets instead of a liability. “Is this May 1968 all over again, when it was forbidden to forbid?”, I hear you say. No, thanks.

But imagine an organisation form where the exchange between the hierarchy and the ranks is formalized, open, unbiased and where everyone’s fact findings and opinions are accessible to everyone for discussion, refining and leading to decisions and actions.

Imagine a special form of knowledge management which goes further than a glorified chat room and text mining.

Imagine a system supporting both bottom up and top down strategy processes, using the collective wisdom of the entire organisation. Technology may be able to design and build such a system but if management is not prepared to adapt its ways of developing, forming and formulating strategies then the developers needn’t bother.

Knowledge Management and Performance Measurement Systems in Modern Organisations

Remember the initial point I was making: intended strategy is only a partial explanation of the realized strategy because emergent or grassroots strategies contribute to-or reduce- the results of the intended strategy. Since no entrepreneur or manager likes to be only partially in control, we need a new approach to the balanced scorecard implementation. Maybe that won’t be enough, maybe we need to extend the scorecard’s toolset.

What if the exchange process were more important than the results of it?

What if the true outcome of the dialectic strategy process were -other than a plan with measurable results:

·        enhanced motivation because people see the context, the bigger picture and have  contributed to it,

·        a shared vision and sense of direction that enhances group cohesion,

·        a higher level of entropy, turning each individual into autonomous decision making entities without the usual chaotic side effects,

·        increased responsiveness to changing conditions or unexpected phenomena in the market?

  

What if the strategy process became a strategy dialogue?

What if the system could capture the dialogues between the workers and:

•                 middle- and top management,

•                 the customers,

•                 the suppliers,

•                 consultants,

•                 academics,

•                 opinion leaders,

•                 government officials,

•                 the data warehouse,

•                 the external information sources?

What if this dialogue were supported by a tool requiring almost no extra effort from the organisation?

Let’s examine the actions people perform in an office which are –often without knowing- valuable strategic information bits and are already captured partly or wholly by the existing systems.

Searches on the Intra- and Internet,

Consulting information providers ranging from Wikipedia to academic and government sources,

Sending and receiving e-mails,

Creating and reading documents like meeting notes, documentation, process descriptions, …

Handling customer complaints

Dunning customers,

Online and offline meetings, chats,

Analysis and decision making,

etc…

All these activities leave traces in some or another information system. What if you could combine the most relevant words and constructs into input for your strategic plan, supported by a balanced scorecard approach but avoiding a rigid approach to the strategic process management? Let me have a go at specifying such a system and check if the technology is already available.

Performance Measurement Systems 2.0., a Functional Specification

The short description of this system is: ”A Collaborative Strategy Process Manager”   The architectural view is visualized in the schema below.

Fig. 2. The Core Architecture of a Collaborative Strategy Process Manager The architectural picture consists of three interconnected pillars: strategy, individual development and knowledge support. For simplicity reasons we leave aspects like servers, APIs and user interfaces out of the schema. Only the relevant functional blocks are listed. Remark that the planning and execution of the strategy is not in scope. Tools like ERP and CRM can provide the necessary support for that part.

The Organizational Strategy Management Process: this is basically the support for the balanced scorecard with a link to the personal development plans of the people needed to execute the strategy. We refer to vendors like QPR, SAS, and others to discover the features of a balanced scorecard software. But the link to personal development plans (PDP) needs to be established. Imagine this PDP as a database with relevant and “nice to have” competence development plans which are maintained during appraisal and evaluation interviews. If the HRM application can make the link with salary scales, a proper analysis can match the desired competences with the future wage cost trend.

The Individual Development Support: this is a personal balanced scorecard where the interconnections between interests, competences, knowledge and the track record inside and outside the organisation are managed. Imagine a kind of personal LinkedIn with extra depth in the competence area. Instead of generic labels like “marketing” one would find hierarchies like “Marketing > Market Research>Qualitative Market Research>Focus Groups>Brand Experience”

The Knowledge Support System: this pillar is not readily available of the shelve, but some components are.

The first block Search Engine Logs and Ratings bundles the information search behavior, the rating of the results but also the ratings of colleagues search results, and all other communication and processed information. It also includes ratings for decisions to be made by a group or an individual be it multicriteria analysis, simple voting, rule based decision making or more complex algorithms like ELECTRE. Bundling the information search and decision behavior can yield interesting results for the knowledge management team answering questions like “What information did he/she (or didn’t!) look for before making a decision?”

The Object Database is the engine behind the object aware user interface, suggesting hyperlinks whenever users integrate (potential) knowledge objects like information sources, notions, definitions, persons, etc… in their communication. This forces users to be clear about what they communicate and to what ontologies[i] their concepts relate to. These objects, ready for the object aware user interface are structured and edited by a knowledge manager or by the group, depending on the configuration which supports both autocratic and democratic environments. But the object database will also act as a repository for unstructured data which can then be presented to the group or the knowledge manager by “emerging publishers”.

The Object Database also disposes of easy configurable agents which respond to events or trigger events themselves, e.g. “Present the weekly list of most used ontologies”.

The Knowledge Modeling System is where ontologies, learning blocks and documentation blocks are created and managed. These learning blocks and documentation blocks are complete sentences or groups of sentences whether or not combined with illustrations to create the basic material for documentation like ISO process descriptions and procedures, help files and learning material for distance learning or learning on the job.

Finally,  the E-Learning System is where the previous material is used in learning paths, documentation maps and presented in a presentation layer which can be simple text and image, sound and/or video. The material can be used on purpose or pop up spontaneously whenever users struggle with knowledge gaps.

The three connections: the first connection is between the organizational strategy management and individual development tools. With this link, important questions can be answered and reality checks become possible.  A sample of these questions and checks:

                     •                 “Do we have the competences in house to deliver the desired actions?”

•                 “How big is the knowledge gap we need to close”

•                 “Where are biggest obstacles for change management?“

•                 “What unused competences suggest opportunities for new strategic directions?”

The second connection, between individual development and knowledge support tools makes knowledge management more manageable by delivering information to questions like:

• “What knowledge objects are most used by individuals, groups, teams, divisions,… ?”
• “When and where does who contribute to the development or the extension of knowledge objects?”
• “What e-courses have been successfully taken by whom?”

The third connection, between the strategy management support and the knowledge support challenges assumptions and probes for answers to questions like:

·        “Do we have the necessary capacity for the personal development plans?”
·        “Have we made the CSFs and KPIs sufficiently operational for the workforce to understand, adopt and apply them?”
·        “What level of comprehension of the strategy matches with a certain level of compliance to the proposed KPIs?”

·        “What new information can influence adjustments to the initial strategy?“What new information can influence adjustments to the initial strategy?”

If the “What” and the “Why” are implemented properly, the “Where” and the “How” will become easier to manage in an adaptive way because management control 2.0. will increase self control with individuals and groups but leave enough room for new initiatives to respond better to consumer demand.

Fig. 3 The Strategy Execution Process As the illustration suggests, there are two major directions to take when executing a strategic plan: changing the rules of the game or the organisational behaviour in case the results are disappointing or optimize the existing, successful strategy.  The “how” to this “what” can be both shock therapy or an incremental “frog in the pot of tepid water” approach. ultimately it will lead to managing the organisational competences, be they individual or group competences. The “where” is in projects or in processes, i.e. in new ventures or in routine things people do in the organisation. The “why” is not in this picture as it is supported by the collaborative strategy process manager as described above.

Conclusion

Strategy management is a slightly more complex phenomenon than the cybernetic view some scholars and managers have. An organization is a living thing, the environment is something even the biggest organisations can’t control (unless they are in a socialist island republic). Therefore, adaptive strategy management is the way forward.

Strategy management 2.0. will be adaptive or it will become obsolete in a flattened society, where successful organisations in the new economy have exchanged the hierarchical, top down, cybernetic management paradigm for a customer centric, responsive and adaptive organisation where people are motivated, empowered and share a clear vision, a sense of purpose and understand the general  direction the organisation is heading. Only that way, these organisations can face the challenges of a mobile, fragmented and volatile generation Z and build a sustainable business.

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[i] I use the definition from Tom Gruber from Stanford University: “In the context of knowledge sharing, I use the term ontology to mean a specification of a conceptualization. That is, an ontology is a description (like a formal specification of a program) of the concepts and relationships that can exist for an agent or a community of agents. This definition is consistent with the usage of ontology as set-of-concept-definitions, but more general. And it is certainly a different sense of the word than its use in philosophy.” From: T. R. Gruber. “A translation approach to portable ontologies.” Knowledge Acquisition, 5(2):199-220, 1993

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[i] In many cases, this cause-effect identification process is a matter of preparing the strategy formulation phase which has the implicit message: “This is how we see things” or a misused word in the business jargon: the often overstated “paradigms”.

[ii] From: Mintzberg, Henry: “The Rise and Fall of Strategic Planning” pp. 24-27, The Free Press 1994.

An Analytics Perspective on TOGAF 9

TOGAF is gaining traction all over the globe as a framework for enterprise architecture management. I have been using the framework since 2008 and I must admit in the beginning it was a struggle to tailor TOGAF for business intelligence purposes. Mainly because most organizations use it to manage their application landscape and plan and control application development. In their world, business intelligence (BI) is something that comes after “the real stuff” has been accomplished. Simply because in their view, BI is about collecting data from sources, massage them into a readable schema and publish reports.
After seven years of applying TOGAF in BI architectures for logistics, finance and marketing, it is time to open the debate on adapting TOGAF for analytical purposes. 


With the coming of the Internet of Things and other Big Data tidal waves, enterprise architects are under great pressure to deliver meaningful roadmaps to deal with these phenomena.
I sincerely hope my readers will contribute and improve the quality of the BI deliverables from a TOGAF perspective and vice versa.

TOGAF for analytics, three architecture domains

Business Intelligence is a clearly defined business capability: decision making, based on fact-based analytics to improve overall organizational performance. It interfaces on three levels: the business architecture, the data architecture and the application architecture.  The technology architecture isn’t included as BI is agnostic to network and middleware protocols and processing standards.
Yet, not everybody agrees with this three-layered view. A quick search on the Web delivers a more restricted view: business and data. That’s all.

Hennie de Nooijer’s blog states the following: Where is BI positioned in TOGAF? You need to understand the business perspective (baseline and target) and you need to understand how BI could aid the target business perspective in such a way that it can benefit from BI. And BI is much about data and there the data perspective is also specific area of interest in case of BI.
BIZZdesign, a leading Archimate Enterprise Architecture provider uses DAMA’s DMBOK to connect these concepts with business capabilities. Yet a two dimensional (data-business) view like this  is not taking into account how applications support the data definition, data capturing and data usage in operational environments and isn’t operational BI a discipline in itself?
Bas van Gils, from BIZZdesign states:
• Transaction systems directly supporting business processes maintain data at a low level of granularity 
• Business Intelligence is a query, analysis, and reporting capability of the organization that provides insight in historical and aggregated data of the organization 
• A data warehouse (EDW) is a technical environment that enables Business Intelligence

If this is the premise, then I understand why BIZZdesign reduces BI EA to a business – data aspect. But if you accept that Business Intelligence delivers drill paths to the lowest level of granularity and BI is not just about tactical and strategic decision making then the application view comes in to play. Both source and target applications complete the picture. With “source applications” the transaction systems and external data sources are described as they influence the capabilities of the BI system. I use “target applications” to describe well designed solutions derived from the BI system like fraud detection, churn management, preventive maintenance etc…

To paraphrase a well-known dictum from a Finnish architect “Always design a decision support system by considering it in its next larger context":  the way we make decisions based on data, the way we gather and publish data, the way these data are created and used in transaction systems. And, to close the loop, the way we materialise aspects from our world view by defining our data requirements in operations and decision making.
The business architecture looks at the strategy, governance, organization and the key business processes. In all of these the BI aspect is omnipresent:
strategy: “What do we need to know to form, formulate and execute our strategy with a maximum level of confidence?”
governance: “What is our universe of discourse and what are the key definitions everybody needs to know to communicate effectively?”
organization: “Which functions, levels, key people need to have access to which information?”
key business processes: “What Critical Success Factors (CSF) and their related Key Performance Indicators (KPI) do we define, track and manage?”

The answers to these high level questions can be considered as the key business requirements from a business perspective.
The data architecture of the logical and physical data assets is derived from the business architecture. Conformed dimensions and facts from the ultimate target model and the lineage from source to this ultimate target model as well as the patterns for transforming the source data into the ultimate target model are managed in this domain.
Note that I introduce the term “ultimate target model” as there can be many intermediate target models along the way: from Hadoop file systems with schema on read and/or staging tables via 3NF or data vault or in a virtualized environment to end up in a Star schema which can be linked to a file system and/or a graph data is the present state of the art.

The generic Enterprise BI architecture on application level illustrates how important requirements are met:
In case unstructured data from texts and social media are used in Hadoop files systems, the (structured) results can be integrated in the enterprise data warehouse to provide extra context.
Transaction systems data may pass through a data vault as this guarantees flexibility when source systems change because of changing business processes and the ensuing requirements changes.
The Enterprise Data Warehouse (EDW) is a bottom up process based grouping of Star schemas sharing conformed dimensions. These conformed dimensions make sure everybody in the organisation has a consistent view of the facts.  In case the data vault undergoes changes, the EDW needs to follow as well as the data marts. In case the data mart is process based, it is a physical part of the EDW, in case the data mart is based on business functions, it is built on top of the EDW, grouping and aggregating data from the EDW.

A generic architecture from an analytical perspective

The application architecture in TOGAF’s definition deals with the interactions and relationships to core business processes of the organisation. It is easy to start a discussion on what is and what isn’t a core business process as this depends on the type of organisation.  From a BI perspective these are the business processes that are core to any organisation:
collecting information from a business and technology perspective.
The business perspective deals of data collection deals with certain CSF and KPI that influence the reliability of the source data. E.g. a contact centre assistant whose principal KPI is average handling time will find all sorts of shortcuts to log data and will probably omit important information in his after call wrap up process as he gets a bonus when exceeding the expected number of calls per day.
From a technology perspective, the data formats, the transformation rules per source system, the audit trail and archiving prescriptions are managed in this domain. The focus is on governing data quality and data integrity and security to produce reliable information to authorised users.  The objective is aimed at decision making: who decides what and needs which supporting information to make the best possible decision at reasonable cost. This aspect is often lacking in BI architectures leading to a forest of “nice to haves” where the “must haves” get lost.

Managing the Analytics ADM

TOGAF's architecture development method

The TOGAF Architecture Development Method is a phased approach to move from an “as is” to a “to be” situation. As the illustration above suggests, the business requirements are at the centre and connect to every stage in the process. But there is a snag from a BI perspective.
Most applications have been developed from a process support perspective and less from an information management perspective. Take a high level requirement like “I want to manage my inventory processes better, avoid leakage, depletion and high inventory carrying costs”. This requirement led to an nifty ERP module that has all the functionality to deliver. Later on, BI requirements are formulated to support cross functional decision making areas like “I want to optimise my service level” which includes marketing data and customer satisfaction metrics like Net Promoter Scores with comments in text form.  This may lead to rework in the ERP source system as well as a complete review of how customer satisfaction data are gathered and stored. In other words, analytical requirements are an important –maybe the principal- component in requirements management for the overall architecture development method.

Elections’ Epilogue: What Have We Learned?

First the good news: a MAD of 1.41 Gets the Bronze Medal of All Polls!

The results from the Flemish Parliament elections with all votes counted are:

Party	Results (source: Het Nieuwsblad)	SAM’s forecast
Christian democrats (CD&V)	20,48 %	18,70 %
Green (Groen)	8,7 %	8,75 %
Flemish nationalists (N-VA)	31,88 %	30,32 %
Liberal democrats (open VLD)	14,15 %	13,70 %
Social democrats (SP-A)	13,99 %	13,27 %
Nationalist & Anti-Islam party (VB)	5,92%	9,80%

Table1. Results Flemish Parliament compared to our forecast

And below is the comparative table of all polls compared to this result and the Mean Absolute Deviation (MAD) which expresses the level of variability in the forecasts. A MAD of zero value means you did a perfect prediction. In this case,with the highest score of almost 32 % and the lowest of almost six % in only six observations  anything under 1.5 is quite alright.

Table 2. Comparison of all opinion polls for the Flemish Parliament and our prediction based on Twitter analytics by SAM.

Compared to 16 other opinion polls, published by various national media our little SAM (Social Analytics and Monitoring) did quite alright on the budget of a shoestring: in only 5.7 man-days we came up with a result, competing with mega concerns in market research.

The Mean Absolute Deviation covers up one serious flaw in our forecast: the giant shift from voters from VB (The nationalist Anti Islam party) to N-VA (the Flemish nationalist party). This led to an underestimation of the N-VA result and an overestimation  of the VB result. Although the model estimated the correct direction of the shift, it underestimated the proportion of it.

If we would have used more data, we might have caught that shift and ended even higher!

Conclusion

Social Media Analytics is a step further than social media reporting as most tools nowadays do. With our little SAM, built on the Data2Action platform, we have sufficiently proven that forecasting on the basis of correct judgment of sentiment on even only one source like Twitter can produce relevant results in marketing, sales, operations and finance. Because, compared to politics, these disciplines deliver far more predictable data as they can combine external sources like social media with customer, production, logistics and financial data. And the social media actors and opinion leaders certainly produce less bias in these areas than is the -case in political statements. All this can be done on a continuous basis supporting day-to-day management in communication, supply chain, sales, etc...

If you want to know more about Data2Action, the platform that made this possible, drop me a line: contact@linguafrancaconsulting.eu 

Get ready for fact based decision making 

on all levels of your organisation

Relevance Lost 2.0

When Robert Kaplan and Thomas Johnson wrote about the fall of management accounting systems and pleaded for new perspectives and approaches to strategic process control they wrote a most relevant statement that still stands today. But as organisations are implementing performance measurement systems as applications of their business intelligence infrastructure, news risks of losing the most relevant part of strategic management arise. There is a clear need for a new, extended approach to the balanced scorecard (BSC). If you wonder what this may be, then read more.
In this article I describe the generic strategy process, compare this with the performance management process, how it is implemented in some organisations and analyze the aspects of this process related to the organization’s leadership style and thus the consequences for the balanced scorecard’s effectiveness.

Read the full article here