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Management Strategies

04:22 PM
Marik Brockman and Jamie Yoder, Diamond Management & Technology Consultants
Marik Brockman and Jamie Yoder, Diamond Management & Technology Consultants
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Visualizing Data For Value

Financial services firms can leverage data visualization tools to better understand their customers and drive more-profitable decisions.

Over the years, we have 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 for IT executives is how to get their business colleagues to truly understand and drive decisions off of the vast amounts of data already collected. Despite compiling numerous spreadsheets, reports and presentations, their business colleagues just do not appear to get it. The real issue is not in the amount or type of data, or even in how it is structured; the real issue is that organizations often lack the skills and tools to visually represent the data in a way that makes it immediately relevant and actionable.

In 2005 humans generated 150 billion gigabytes of data, or about 3 million times the amount of information contained in all the books ever written. This year, we are expected to create almost 10 times as much. With millions of customers and related transactions, banks and insurance companies already struggle with the facts they have, let alone trying to make sense of the deluge of potentially useful data to understand customer behavior and market opportunities.

A new executive challenge is to integrate market intelligence into a clear model of potential market demand and current performance. Due to the confluence of powerful new visualization tools, massive new data sources, and more-sophisticated models, leading financial services companies are beginning to use visualizations to gain an edge.

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. A property/casualty insurer recently overlaid market potential, its agents’ performance and competitive agency locations onto this natural mental structure. This visualization allowed the firm to see very easily if it 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. 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. Organizations can gain significant insight by looking at patterns of price changes, applicant flow and closed business over many reporting periods and locations. Moving beyond looking at past performance, organizations also have started simulating future performance and evaluating different “what if” scenarios.

Developing the Skills

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.

Organizations also need people who specialize in visually representing detailed analytics. This is more than the person who knows graphic arts. 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 organizations perform episodic visualizations to analyze a market or solve a pressing problem. Because of the high quality and open geographic representations offered by the likes of Google Earth, in the coming decade most organizations will move toward “visual management control systems,” in which they create a geographic representation of their customers, the market potential, the performance of the organization and the investments the firm is making.

Those firms that 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 the 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?

Marik Brockman is a principal and Jamie Yoder is a managing partner in Diamond’s insurance practice.

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