In 1943, the US Army Air Corps had a problem. 20% of missions ended in aborts, apparently for technical reasons. The USAAC could not find the source of the problems. Commanders brought in Robert McNamara, a young professor from the Harvard School of Business, to pinpoint the cause of the failures.
McNamara spent months analyzing mission data. The conclusion he came to was uncomfortable and controversial. There was nothing wrong with the planes. Crews were aborting because they were frightened. Even when they didn’t abort, they often flew too high to properly aim their bombs.
Curtis LeMay, the general in charge of operations, announced that any crew that didn’t reach its target would be court-martialed. He also joined the crew leading the next mission, braving a low-level bombing run over heavily defended German cities: just what he was asking his men to do.
The story holds clear lessons for anyone using data analysis to advise business, government or third-sector leaders today. McNamara refused to allow others to frame the problem for him. He insisted on analyzing all variables. And he didn’t shy away from an unpopular conclusion.
After the war, McNamara joined the Ford Motor Company and used his analytical skills to help the automaker increase sales by concentrating on safety features when rivals scoffed at the idea of safety as a selling feature. He was in at the start of a discipline that would become known as business analytics (BA).
Business analytics is the discipline of taking aggregated data from an organization’s operations or other sources and using it to understand what impact specific decisions might have. Business analysts help companies, and other organizations, make better decisions faster, so that they can allocate resources more efficiently and respond quicker to rapidly changing markets and societies.
Today, the discipline of business analytics is ubiquitous. When, Netflix uses data to discover customer preferences and increase its sales so much that it overtakes Disney, that’s a victory for business analytics.
Nor is BA the preserve of the kind of fast-changing, digital consumer business models we all know which use a lot of their customers’ data. As far as business goes, you don’t get much more physical than the road cargo sector. Yet business analytics is playing a key role in helping the sector reduce its carbon footprint. By doing things such as using data to optimise routes, loading patterns and vehicle utilisation, data analysis can help companies transport more goods using less fuel. In some scenarios, this can cut emissions by as much as 60%.
But it would be a mistake to think that business analytics are only useful, or used, in the for-profit sector. Many charities and Non-Governmental Organisations (NGOs) make extensive use of business analytics to understand their mission better, make better use of resources and have a bigger positive impact on the lives of those they serve.
In 2020, for instance, UNICEF used data analysis to find areas in which school closures were having the biggest impact on children’s educational attainment, so that authorities could take remedial action.
The renewables sector has also used data analytics to help balance supply and demand, something that is crucial if intermittent energy sources such as wind are going to help us meet our climate targets. And in the UK’s National Health Service (NHS), business analytics is helping healthcare providers to better identify patients at risk of severe pulmonary disease, so that they can intervene sooner and help them stay healthy for longer.
Whether it’s the products we buy, the entertainment we consume, the energy that powers our homes or the services that keep us healthy, business analytics is in the process of transforming every aspect of our lives. Paradoxically, however, all the good the discipline can do is constrained by a shortage of business analysts.
In the UK, 71% of businesses say their inability to recruit enough analytics professionals is a risk to their business model. This is despite the fact that the average salary for a business analyst in the UK is £42,828 a year.
The world is changing rapidly; states, international organisations and businesses are evolving rapidly to take account for changing demographics, the energy transition, climate change, shifting global politics and more. To this they need business analysts with the insight of McNamara but also with the courage to deliver those insights, no matter how they might challenge the status quo.
Find out more about doing a Business Analytics online MSc at the University of Bath by requesting information and a member of our team will be in touch.