Prescriptive Analytics: Using Data to Make Great Decisions

Does analysis matter?

The world of data analysis is filled with swirling information from countless directions, as well as complex nomenclature and acronyms. But at the end of the day, what really matters to your mission is action and results.

Let’s face it… the less fortunate in your community don’t really care about algorithms and formulas and technology. They just need a hot meal and a place to sleep.

However, that is precisely why fast, accurate, meaningful analysis is more critical now than ever.

We must use the information we have in order to inform our strategic, tactical, and operational performance, thereby ensuring our capacity to deliver on mission today while building security and stability for the future.

Yes, analysis matters.

Clay tablets recounting the observation of Haley's comet in ancient Mesopotamia.

Ancient Babylonian Clay Tablet

Tomorrow’s success starts with yesterday’s results

Since the beginning, people have documented results.

Even prehistoric cave paintings are a record of the hunt, the gathering, the defense against nature and other humans: it is a record of survival for the family and community.

Before there were clocks, astronomers could count the days in a year and mark the seasons for planting and animal migration with amazing accuracy.

Over the years, archaeologists have unearthed amazing artifacts from antiquity documenting early record-keeping about crop yields, census data, and planning for the future.

Times change, but some things remain

These days, our tablets made of silicon, plastic, and glass rather than clay. But the desire to record, understand, and use information to document yesterday and create a better tomorrow is as natural as ever.

In very personal ways, we ask ourselves: do we have enough money coming in this month to repair the car and make the rent payment? Have we saved enough for retirement? Can we reach more people in our volunteer work?

In nonprofit fundraising and donor management, we ask questions of a similar nature:

  • What is the right strategic direction?
  • What are the tactical initiatives that can get us where we want to be?
  • What are the specific operational decisions we should make from day to day related to how we reach the right people with the right message at the right time?

Interestingly, while data analysis itself is straightforward, ways to achieve more predictable end results have never been less clear—proving to be an elusive goal.

That’s why the same old ideas that worked in the past are no longer enough.

We have to ensure tomorrow’s success. We have to create the capacity to move from having information to making faster, higher quality decisions about specific next steps. To get there, we have to change.

We must to move beyond descriptive analytics to prescriptive analytics.

Taking a play from the commercial world

I’ve been working in and for nonprofit organizations for decades, so it has been exciting in recent years to see the nonprofit community embracing proven best practices from the commercial world.

One of those best practices is a leadership paradigm shift as it relates to more clear understanding of strategic, tactical, and operational goals, activities, and measurements.

There are rarely hard fast lines, but in general, most leaders think of it like this:

  • Strategy is about top level leadership setting the tone for high-level, long-term organizational goals.
  • Tactics are about mid-range initiatives designed to guide direction and provide framework, methods, and approaches within leadership’s guidance, and
  • Operations are about the daily decisions and actions taken by all levels of employees across the organization to accomplish the tasks and goals within their level of responsibility.

The intersection between the second and third levels — tactical and operational activities — is where prescriptive analytics lives and empowers people to create direct and lasting results.

So what is “prescriptive analytics?”

In short, prescriptive analytics is the use of data to make the most well-informed, high-quality decisions possible and prescribe the next steps toward achieving each goal.

In understanding information, we have found the following model useful:

  • Descriptive = what happened?
  • Diagnostic = why did it happen?
  • Predictive = what will happen?
  • Prescriptive = what should I do?

Getting to that place of “prescriptive analytics” should be the goal of every organization: discovering our best next steps to achieve maximum results, maximum return on investment, and maximum delivery of our mission into the communities we serve.

The next phase of analysis is decision making & action

The chart below from the Gartner article, How to Get Started With Prescriptive Analytics, describes this concept amazingly well and it’s right in line with how we have built the prescriptive analytics capabilities in StratusLIVE’s  Analytical Marketing software.

According to Gartner analyst , “Traditional business intelligence and analytics tools that use descriptive, diagnostic and predictive analytics provide insights, but do not explicitly recommend a decision or action.”

Research image courtesy of Gartner, Inc.

The machines are taking over!

Sorry, sci-fi fans but… just kidding. The machines are not taking over.

In fact, computers don’t really even think at all. Machines can only process information in the way that amazingly smart programmers, developers, and engineers I get to work with everyday design them to.

In reality, there are some things computers are very good at. Number crunching is one of them. A computer can search through millions of data points in a fraction of a second with perfect results. We have clocked our Nonprofit BI software searching hundreds of millions of rows of information (that is billions of data points) and providing zero-error results in sub-second response times. This is something a human simply cannot do.

However, this is not really where the value is. What I mean is that overall, humans still remain superior.

A computer can show you a picture of a sunset, but it can’t replicate that moment when time stood still as you watched the blue sky turn to orange, to red, and then to black as the light disappeared over the horizon and the cool of the evening settled in.

Computers can’t ascribe meaning or look at an answer and know, immediately and instinctively, whether the answer is right or wrong.

All the technology in the world can’t build relationships for you.

Computers also can’t be subject matter experts – and this is what’s great about the emerging practice of prescriptive analytics: it capitalizes on the power of human intelligence to produce clear, accurate decisions.

It really is a sea change, but leading organizations have to find a way to harness the growing surge of available information and convert that power into specific, prescriptive, actionable next steps.

That happens best when we use human intelligence coupled with business intelligence.

So what are your next steps?

How can we help?

Contact us today to see if our Business Intelligence and Analytical Marketing software is right for you.

One Response to Prescriptive Analytics: Using Data to Make Great Decisions

  1. Mike Hartsfield says:

    Great information Chris. This goes beyond best practices that tell us what worked for someone else at some point in time to finding what works best for a specific entity in a specific situation. You are proposing powerful application of analytics.

Leave a Reply

Your email address will not be published. Required fields are marked *