by Marik Brockman, Diamond Management & Technology Consultants
Over the years, we've conducted numerous data work-sessions with IT executives and one the biggest frustrations they share is not in the collecting, warehousing, or management of data. While those areas clearly have their challenges, a bigger frustration IT has is how to get their business colleagues to truly understand and drive decisions off of the vast amount data already collected. Despite compiling numerous spreadsheets, reports, and presentations, their business colleagues just do not appear to get it.We have found the real issue is not in the amount or type of data, or even in how it is structured, but it is in the fact that organizations often lack the skills and tools to visually represent the data in a way that makes it immediately relevant and actionable.
How firms use visualization to find value In 2005 humans generated 150 billion gigabytes of data, or about three million times the amount of information contained in all the books ever written. This year, we are expected to create almost ten times as much. With millions of policies and related transactions, insurance companies already struggle with the facts they have, let alone trying to make sense of the deluge of potentially useful external data.
A new executive challenge is to integrate market intelligence into a clear model of potential market demand and current performance. We believe that due to the confluence of powerful new visualization tools, massive new data sources, and more sophisticated models, leading insurers are beginning to use visualizations to gain an edge. Great visualization delivers three types of value:
1. They are efficient, because our brains are wired to see patterns and can consume much more data in visual form; 2. They are effective, because they can help people find new insights from the data; 3. They enable a shared understanding of the situation, which sets the stage for collaborative problem solving and focused action.
One easy place to begin reorienting your firm toward better visual use of data is to tap into "natural" representations. Maps are a mental model we all share, and a property casualty insurer recently overlaid market potential, their own agents' performance, and competitive agency locations onto this natural mental structure. (See Figure 1.) This visualization allowed the firm to see very easily if they had a good agency in a bad market, or a bad agency in a good market, while simultaneously understanding where the competition was deploying its assets.
This easily understood illustration combines internal data on agency performance with external data on market potential and competitors. The map representation is efficient, effective, and helps the finance, underwriting and sales personnel all get on the same page-and quickly.
The next "natural" thing to do is to animate the illustration with performance over time. We have found that organizations can gain significant insight by looking at patterns of price changes, applicant flow, and closed business over many reporting period and locations. Again, this approach taps into our natural propensity to see movement and patterns. Moving beyond looking at 'past' performance, organizations have also started simulating 'future' performance and evaluating different 'what if' scenarios.
For example, the visualization depicted below (Figure 2) shows how customers 'virtually' travel through the marketing funnel. Each of the large circles (labeled Prospects, Waiting for Quotes, Underwriting, Policy Issued) illustrates the different stages of the marketing funnel. Each small dot illustrates an individual consumer 'flowing' through the funnel. By changing the advertisement spend, sales force effectiveness, and underwriting effectiveness, the 'flow' of consumers through the funnel can be controlled and visualized. This visualization, coupled with a market share or revenue graph, can show how variables change over time in the future.
In order to take advantage of this new opportunity you need to create three types of skills in your organization. First, you need excellent data management and analytics so you have a solid base to build from. One critical part is to "layer enable" different types of data. For example, in the analysis we performed above a number of the internal investments such as training needed to be "geo-coded" so they could be accurately placed on the map.
Organizations also need people who specialize in visually representing detailed analytics. This is more than the person that knows graphics arts or how to put together 'really cool' charts. This person must be skilled in both data analytics and in creating alternative ways of visualizing information so that it quickly resonates with the audience and drives decision-making. The third and most rare skill is the ability to tell a story with data to senior executives. Striking the right balance of showing enough data without losing the story in the details is a skill, which can be taught with time and repetition.
Today, most insurers perform episodic visualizations to analyze a market or solve a pressing problem. Because of the high quality and open geographic representations like Google Earth we believe that in the coming decade most organizations will move toward "visual management control systems" where they create a geographic representation of their customers, the market potential, the performance of the organization, and the investments the firm is making. The military uses visualization for battle planning and management, and we expect more organizations will do the same.
Those firms who invest early in these visualization capabilities will have a more robust, detailed, and facile view of their markets. It takes time to drive this new approach into the culture, especially when you have to cross the organizational chasms that sometimes exist between Business and IT. With this, however, superior visualization provides business and IT not only with the power to work together to understand the most compelling insights of the data. It means that, together, they can use visualization to create a defensible competitive advantage."What do you have to lose but your boring old reports?"
About the Author: Marik Brockman, a Principal in Diamond's Insurance practice, has fourteen years of experience in marketing and strategic planning roles.The real issue is not in the amount or type of data, or even in how it is structured, but it is in the fact that organizations often lack the skills and tools to visually represent the data in a way that makes it immediately relevant and actionable.