The New Know - Book Review

"The New Know: Innovation Powered by Analytics," authored by Thornton May in 2009 and co-published with SAS, defies conventional norms as it transcends the typical boundaries of a book. While it addresses business analytics technology, its scope extends beyond technology to encompass people, organizations, and markets.

The book conveys a clear message: the world is undergoing significant changes, and analytical analysis is integral to this transformation. Organizations aspiring to succeed must embrace analytical study in the future and the present reality across various life domains.

This document serves as a concise summary, primarily focusing on aspects related to analytical analysis. It does not delve into the core concepts of management and new organizational ideas found in other books, which are the primary emphasis of "The New Know."

The covered topics include:

• The New Knowledge

• The changing business landscape through analytics

• Analytical analysis – fostering new thinking

• Support for strategic decision-making

• Facilitating innovation

• Bottom Line

Despite a subjective tone regarding the author's perspective on the place and significance of analytical analysis, the book offers valuable insights and lessons. Reading for those looking to expand their understanding in this field is recommended.

The New Knowledge

We stand on the threshold of a new era, witnessing a historical turnaround and entering a reality marked by profound shifts in knowledge. This new reality unfolds through ten essential meanings:

1. Organizations, managers, and individuals now expect action based on available information. Utilizing this knowledge becomes a competitive advantage and a catalyst for organizational success.

2. Prevailing is the recognition that there is always more to learn. Organizations acknowledge their limitations in knowing everything and grapple with how to bridge this knowledge gap.

3. Knowledge extends beyond the bottom line; it involves understanding the processes and tools that lead to the desired outcomes.

4. Neuroscience (physiological) and decision-making science (psychological) are converging into a unified science. The boundaries blur, emphasizing the importance of integration for a comprehensive understanding of the field.

5. Technological development serves us and shapes our progress, illustrating how the environment influences us.

6. Information management becomes the core of leadership. Leaders adept at navigating the vast influx of information, discerning priorities, and promoting focus are essential. Knowledgeable leaders, guided by thinking models like Peter Senge's learning organization, form the foundation for business models.

7. The world is more interconnected, emphasizing the significance of managing data and information and the connections between them and the broader world.

8. Mathematics assumes a crucial role, serving as the foundation for comprehending diverse data across various fields.

9. Ignorance incurs costs from possessing and acting on incorrect knowledge, neglecting existing information, missing opportunities, or making suboptimal decisions.

10. Knowledge has the power to change the world, as evidenced by numerous cases where presenting knowledge induces behavioral changes in individuals.

The changing business landscape through analytics

May provides a comprehensive overview of various sectors of the economy and illustrates the impact of business intelligence and analytics through examples. Here are some instances:

• Healthcare: Implementing Intel "magic" rugs that monitor weight changes and alert individuals to changes and absences in the kitchen, precious for tracking adolescent parents. Additionally, a case involves the medical diagnosis of a rare disease using Google, where symptoms were entered as search words, and the search results provided relevant research and the correct diagnosis.

• Retail: Utilization of analytics for planning product placements on shelves, managing product quantities, and overall inventory planning. Adaptation to market variability is a recurring theme. An example includes targeted marketing, as demonstrated by Coca-Cola.

• Advertising: Analyzing the audience of a specific page to display the most suitable advertisement. A significant portion of advertising takes place online, pre-discounting. Changes in customer knowledge and evolving business models are particularly notable in companies like Amazon, Google, and eBay.

• Logistics: Monitoring and analyzing the supply chain at every stage. The analytical capabilities of UPS, particularly package tracking, have significantly transformed the organization's service level.

• Military: Identification, understanding, and analysis of strategic threats, along with optimal planning of flight routes in university activities.

• Science: Analytical analysis serves as a valuable tool in various studies, facilitating the examination of findings that were challenging to discover in the past.

• Agriculture and Food: Development of new recipes based on modeling and analytical analysis.

• Transportation: Enhance flight operation and maintenance planning through analytical aircraft and activity data analysis.

The surprising revelation, as shared by the author, is that technology companies are likely the last to adopt analytical tools, prompting thoughtful consideration.

Analytical analysis – fostering new thinking

About the New Analytical Analyst:

• The role of an analyst has evolved significantly from its past form, with a notable emphasis on understanding customers.

• Only some academic institutions offer training for analytical analysts.

• In some organizations, analytical analysts have advanced to managing the entire organization.

• The motivation driving analytical analysts lies in their ability to pose pertinent questions.

• Analytical analysis encompasses four areas of expertise:

  - Statistics

  - Prediction

  - Operational research

  - Data mining

• In resource-constrained situations, it is advisable to focus on a strategic level and exert influence, descending to operational/tactical analytical analysis in the subsequent stage.

• Effective analytical analysis thrives on close relationships between analysts and their organizational colleagues—relationships grounded in extensive dialogue, a fundamental change shaping the field.

• Specializing in relationship-building in favor of analytical analysis involves several layers:

  - Observing connections within the organization: gaining a deep understanding of the nature of connections and paying attention to what captures the organization's focus.

  - Managing relationships with organization employees: determining the appropriateness of maintaining contacts and ongoing, close relationship management.

  - Managing relationships with colleagues in the same field at other organizations.

  - Analyzing data relationships: Social Network Analysis (SNA) learning.

• Analytical tools are experiencing a constant evolution and revolution. Developments in robotics, gaming, sensors, 3D printing, and more are propelled by analytical analysis and its derivative capabilities. Key trends include:

  - Continued integration of analytical analysis into additional concrete business processes.

  - The transition from a centralized approach to a perception that supports decision-making.

Support for strategic decision-making

Analytics can underpin various levels of activity within an organization by leveraging data. The author suggests focusing on strategy and innovation (discussed in the subsequent chapter) without compromising other areas, advocating investment where it can yield the most significant impact.

The imperative for strategy support arises from the profound changes we are undergoing, with analytical capabilities assisting in navigating the uncertainties we anticipate.

Analytical analysis proves beneficial at the strategic level across various areas. Examples include:

Marketing:

• Understanding dynamic market changes.

• Making informed choices regarding partners.

• Evaluating alternative transaction structures.

• Grasping the necessary steps for the successful implementation of proposals.

Mergers and Acquisitions:

• Developing a market review assessing market activities.

• Studying the landscape of market-relevant players.

• Creating a deal database for the market.

• Revealing transaction rationale through transaction analysis.

• Establishing a transaction strategy supporting the organization's business model costs.

• Selecting supportive partners for each activity.

• Successfully executing a transaction.

Dynamic Price Setting:

• Comprehending ongoing changes.

• Identifying sources of problems.

• Deciding on necessary actions.

A prerequisite for all these applications is the willingness to utilize the information processed by managers.

Facilitating innovation

Analytical analysis plays a crucial role in fostering innovation and assisting organizations in becoming more innovative. Renowned companies that leverage analytics for innovation include UPS, Continental Airlines, P&G, McDonald's, NetJets, and others.

At a macro level, analytical analysis contributes to innovation by:

• Identifying where to focus attention.

• Guiding the formulation of pertinent questions.

• Providing insights into the received answers.

This facilitates the organization in selecting the most promising direction for innovation.

On an individual level, analytical analysis supports innovation by:

• Conducting in-depth analyses of the current usage status.

• Testing hypotheses related to behavior changes, including what changes and how they occur.

• Examining product and service dimensions to identify areas of oversupply or undersupply.

It is important to note that analytical analysis cannot replace innovation. Innovation is a dynamic process, and while analytical analysis can support this process, it cannot substitute for innovation's creative and dynamic nature.

Bottom Line

Analytical analysis has made significant progress, but the most significant breakthrough is still on the horizon:

• Analytical analysts must transcend the confines of statistics, forecasting, operational research, and data mining. Their impact should extend throughout the organization, reaching all levels.

• Leaders are tasked with determining strategic investment areas and reevaluating the information that underpins their decision-making process.

• Managers and employees must genuinely desire to acquire knowledge and actively engage with analytical analysts.

Only then can we transition from merely entering an age of new knowledge to achieving success on a new scale.