February 27, 2014
Don't Expect Analytics Alone to Change Outcomes
by Karen Wolfe
Analytic results are shared at board meetings and lavishly portrayed at marketing shindigs, but there is little impact on decisions made by middle managers and front-line workers.
Research suggests 40% of major business decisions are based not on facts but on the manager’s gut. In workers’ compensation, critical decisions are made not only by managers but by front-line workers. How accurate and timely are the decisions that claims adjusters make? What about the decisions made to ignore information and avoid taking action? How are outcomes traced back to the decisions made and not made? What accountability is built into the process? What kind of decision support is available? Are decisions based on objective data?
Business intelligence, derived from analytics, can inform business decisions throughout the organization. But the data analysis must be infused into operations to lead to action. Only analytics that are linked to operations can consistently and positively provide decision support that creates positive outcomes.
Both garden-variety analytics and highly sophisticated predictive modeling are common now in many organizations. But few apply the analytics to their operational processes effectively to make a significant impact on outcomes and profitability. In workers’ compensation, applied analytics, particularly those relating to the medical aspect of claims, are rare.
In workers’ compensation, analytics are most often sequestered in the executive suite. Analytic results are shared at board meetings and are lavishly portrayed at marketing shindigs or annual reports. They are represented in colorful graphics while decision-makers ponder their meaning. But there is little impact on decisions made by middle managers and front-line workers.
Analytics must be linked to operations to allow for action.
Dashboards are not actionable
Dashboards have become a fashionable way to display analytic results, but they don’t link the analytics to operations. They do not change behavior. They are designed to portray conditions in the organization across a broad swath of indicators in one view.
An example is a hospital where a dashboard displays vital operational statistics including admissions and discharges for the period, average lengths of stay and acuity rates. Dashboards are interesting and informative. But who should do what to incorporate the knowledge? What should be done operationally to affect the indicators going forward?
Basically, dashboards are for viewing only, and unless the organization has designed response procedures for assigned persons, the impact is negligible. Dashboards have no direct relationship with operations and no mechanism for tracking responses to the information. Changes in process are anecdotal only.
Corporate communications, regardless of how sophisticated, do not effectively translate analytic knowledge into action on the front line.
For analytics to lead to action they must be linked to, and fused into, operations automatically. Front-line workers must be led by the information process to take appropriate action.
The best way to do this in workers’ compensation is to electronically monitor the data, execute the analytics in real time and initiate the desired actions among workers by means of an automated electronic message. This approach hurdles the communication log jam by sending immediate, specific information directly to the person who can best act on it.
Infusing analytics into operations requires a computerized system specifically designed to monitor and analyze all transactions and to automatically send alerts.
When the computer system identifies a high-risk situation in a claim, the appropriate person is automatically notified electronically. At the same time, the system should also keep an audit trail noting all claims identified, the reason and to whom the alert was sent. The end-to-end process will infuse analytics into the process, render the process more efficient and establish accountability.
When a person is alerted of a high-risk claim, action is expected. Some organizations have formal procedures for the actions required under a specific set of circumstances. Such actions are documented so that outcomes can be traced back to the claim conditions, initiatives taken and the persons involved. The results are exponentially improved while the data gathered in the process enhances organizational performance intelligence.
Analytics by themselves cannot and will not change outcomes. But analytics linked to operations through specifically designed systems will affect both the process and outcome. Only actionable analytics create value.
 Davenport, T. Harris, J., and Morison, R. Analytics at Work, Smarter Decisions, Better Results. Harvard Business School Publishing Corporation. 2010.