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The Analytical Catalyst

Cornelius KaestnerPrincipal The Boston Consulting Group

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Introductions

Global management consulting firm and the world's leading advisor on business strategy

Our ambition is to drive lasting competitive advantage for our clients

50 years of leading business thinking, e.g., • Applying experience curves to

business• Growth share matrix (2x2)• Trading up / trading own

9,700 staff in 81 offices

About About About meAbout me

Expert Principal at BCG focused on Big Data and Advanced Analytics

Example engagements used to drive BCG's Big Data an Advanced analytical capabilities:• Enhancing promo effectiveness in

retail• Applying predictive analytics to target

airline, cruise line, and banking customers

Educational background• Yale: BA App. Math (hons) & BA Econ

(hons)• IMD: MBA (president's award)

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Many questions, few answers

At the beginning of our unexpected journey

• What should be our ambitions in analytics?–And when do we know if we've achieved them?

• What is possible to do in house? Where should we partner?–When will analytics be a driver of competitive advantage for BCG?

• What capability gaps do we face?– Tools? People and skills? Infrastructure?

• How do we get started?• How do we get the rest of BCG excited about analytics?

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Since then: tremendous strides

Little senior-level exposure to Big Data and Advanced Analytics efforts

No view on the role of analytics at BCG

Few, disjointed teams delivering targeted analytical solutions

Little effort to enhance skills of broader consulting organization

Limited understanding of how to use tools and infrastructure to drive value

Where we started Where we are now

Big Data and Advanced Analytics a top priority for BCG leadership

Significant investment and development focus

BCG Advanced Analytical teams aligned and coordinated across the company

Alteryx and Tableau available to all consultants for regular case work

Step change in tools and infrastructure capabilities within the firm

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4 components to catalyzing analytics

What we've learned

• Democratize the analytical opportunity

• Introduce the art of the possible

• Focus on value delivered

• Keep building

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We made Alteryx available to everybody...

Democratize the analytical opportunity (I)

1,291

0

500

1,000

1,500

3/1/13 11/1/139/1/137/1/13 3/1/141/1/145/1/13

Unique installations

Functionality

Ease of use

Commercial flexibility

Dedicated support

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...and provided fundamentals to make adoption easier

Democratize the analytical opportunity (II)

• One-on-one training when first users adopted the tool

• Tracking of internal experts to create a user community

• Introductory training to share basics of the Alteryx tool

• Detailed support from Alteryx to help crack more challenging use cases

• Infrastructure available for larger scale data cases

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We embraced distributed innovation: no limits on use cases...

Democratize the analytical opportunity (III)

Simple problemsLarge data sets

Large data setsMany data sources

Complex data setsPredictive analytics

Identify trends based on transaction data

Analyze promotional events for effectiveness

Predictive behavioral segmentations

We made no effort to control the use of analytics, rather we trusted our colleagues to validate

quality

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...and invested in cool projects to ensure success

Democratize the analytical opportunity (IV)

• Building a model to calculate the effectiveness of promotions that could quickly be deployed across retailers

• Designing a customer segmentation for a hotel chain that allowed valuable customers to be prioritized, independent of their stay history

• Building a real estate planning model that enables retailers to manage their footprint much more effectively

• Predicting server failures based on equipment event logs and launching preventive maintenance to avoid equipment failure

• etc.

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• Raise awareness in important forums

• Use practitioners to share the work

• Articulate why this is not business as usual

• Visualization > Algorithms

Share new and exciting work with senior management

Introduce the art of the possible (I)

Bring out the inner "geek"

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Cool algorithms show what you've done...

Introduce the art of the possible (II)

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...but visualization shows why it matters

Introduce the art of the possible (III)

Ex: 2For offers beat price cuts...

Ex: 2For offers beat price cuts... ... every time... every time

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Numerous paths to value

Focus on Value Delivered (I)

• Savings for the company• Improvements to current products• Development of new products• New business models• etc.

Need to find what resonates with your organization

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We built a new promo effectiveness offering for our clients

Focus on Value Delivered (II)

Pre

-pro

cess

ing

Client dataProduct

Hierarchy

Sales

COGS

Vendor funding

Promo Calendar

Opex rules

Promo ID / SKU

aggregation

Seasonality

Core economic calculations

Cannibalization, Halo, Pull

Forward

Baseline

P&L by promo ID by SKU

Custom Standardized

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What it looks like in Alteryx

Focus on Value Delivered (III)

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Standardized offer dramatically improves value proposition...

Focus on Value Delivered (IV)

Old approachOld approach New approachNew approach

Custom promo model built for each client

Development time to first economic model output: ~12 weeks

Initial analysis focused on pilot categories

Analyses executed by standard case teams; need to ensure skill set is available

Only custom piece is data aggregation

Economic model can be run in one day once data aggregated

Model fully scalable: all categories can be analyzed at once

Analyses executed by BCG Strategic Analytics team – skill set is already confirmedMost importantly: $300M+ client value, $10M+

client revenue and dozens of live client discussions

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Ambition is to continue to expand what we can deliver

Keep building (I)

Analytical complexity

Scale of data

Delivery approach

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Delivery will require continued capabilities investment

Keep building (II)

People & teamsPeople & teams InfrastructureInfrastructureToolsTools

Aggressively pursue talent – especially those who can speak business and analytics

Identify key gaps in people model – roles, incentives, career progression, etc.

Accelerate deployment of existing tools within BCG

Test and deploy new tools with complementary capabilities

Expand use of cloud and Hadoop

Expand availability and use of AWS

Continuous effort to transform "advanced analytics" offerings to "business as usual"

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4 components to catalyzing analytics

Recap: What we've learned

• Democratize the analytical opportunity

• Introduce the art of the possible

• Focus on value delivered

• Keep building

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THANK YOU!