This post is part of a series on the 9 Laws of Data Mining from Tom Khabaza applied to analytics. You can find previous posts here.
Law #2: “Business Knowledge Law” – Business knowledge is central to every step of the data mining [market analytics] process
Some might think that the best way to become a better analyst is to learn new data mining techniques using analytics software. While the technical aspects of analytics are certainly important, there is a more fundamental way to become a better analyst. The most effective thing that you can do is to learn about your business and cultivate your thinking skills about your industry.
Simply having the technical knowledge of how to use GIS or analytics software is not enough to produce value for a company. One could also use this distinction to define the difference between a Technician and an Analyst. For example, a GIS Technician may be able to produce maps of high cartographic quality, but if they lack the skills of an analyst with business knowledge, then the map may not be useful. Experience within an industry and a specific understanding of how a particular business operates is what allows an analyst to know what data is useful and how to manipulate that data to produce valuable insight. Without business knowledge, the data mining and market analytics process will be ineffective.
It is important to note that this is not to say that an analyst is better than a technician. In fact, we often need both roles in business. An excellent example is provided by Margaret Heffernan when she recounts the story of the collaboration between Dr. Alice Stewart and George Kneale. George was more of a technician and statistician while Dr. Stewart’s role was that of an analyst. George felt that his job was to prove Dr. Stewart wrong and thereby give her confidence in her findings that childhood cancer was being caused by pregnant women having x-rays. Thus, the number crunching service that technicians provide is often essential to the success of the project. However, my goal here is to help those who want to be analysts, so it is helpful to understand what makes an analyst different and successful.
When Tom Khabaza explains his second law of data mining, he talks about the gap between the data (a representation) and reality. (He notes that Alan Montgomery introduced the idea that business goals refer to the reality of the business, whereas our analysis takes place at the level of data which is only a representation of that reality). Similarly, maps are an abstraction and a representation of reality, but maps and data only have significance when they can be interpreted within their proper context. Thus, business knowledge is vital to the establishment of the initial goals of data mining as well as to every step that we take in the analytical process. Business knowledge provides the context that links the reality of the business to the data that we need to analyze.
Business knowledge identifies the goals, helps us ask questions, guides what data we choose, identifies how the data we choose might be related to the business problem, influences what techniques we use to identify patterns in the data, and then helps us determine whether the results can be used to improve a business process and ultimately increase profitability.
What is business knowledge? In short, it is understanding how things work and why. A business is a system. We need to understand the components (which could be divisions, departments, or teams), their operations (what gets done and how it gets done through activities, tasks, or processes), the roles that individuals play in getting things done, and the relationships among functions, processes, and tasks in different parts of the organization and of course, the data that people use to get things done. Understanding the context of the business, allows you to frame the data mining and analysis exercise.
If you are a technical professional who wants to do market analytics or a seasoned analytics professional, how do you gain and maintain business knowledge? The tips below (in no particular order) may help:
- Get out of your cube and talk to other company personnel. Ask questions. Listen. Gather intelligence. Request a meeting with the marketing manager, the director of sales, a real estate analyst, web guru, operations manager, or logistics professional. Learn about their challenges, concerns, or things that are going well for the organization. Even the lowest paid employee may have insights about a business that can help your analysis.
- Read industry specific publications. Find the monthly publications that cater to your product or service. Some publications are not well known outside industry circles. For example, National Oil & Lube News (NOLN) is essential for anyone working in the car wash, quick lube or automotive repair business, but unless you are in that industry, you are probably unfamiliar with the publication.
- Attend industry conferences. Even beyond learning from presentations, meet people and ask them what has made them successful. For retailers, the annual ICSC RECon show provides an excellent opportunity to network with industry leaders and hear their views on a wide variety of topics that are specific to retail and real estate.
- Read blogs of industry leaders or do other research online. Some industries may have daily newsletters, RSS feeds or Twitter posts that can help you improve your business knowledge in small bites, which may be easier to accomplish given travel budgets or resource scheduling issues. I appreciate the work of the Smart Data Collective as one source for consolidated information on big data and analytics.
- Subscribe to general business publications or newspapers (or read at your local library). Publications like Forbes, The Economist, BusinessWeek, the Wall Street Journal or the NY Times can provide general knowledge and insight about future trends.
- Take a business course or read academic journals. The Harvard Business Review is one excellent source of business knowledge.
- Watch TED Talks videos. There are so many smart people. TED makes them available online to teach us about design, innovation, leadership, and life.