The Value of Business Analytics: Identifying the Path to Profitability

ADVANCED MEASUREMENT CONCEPTS

Creating an effective measurement framework is relatively straightforward. It simply requires a fair amount of forethought, planning, and focus on execution. Beyond that, it also requires an appropriate supporting toolset, designed to facilitate standardized reporting and management by exception. For many teams, creating this platform forms a substantial enabling initiative in its own right.

However, good measurement frameworks need not end there. Similar to how leveraging simulation techniques can provide greater insight within a business case, there are a variety of advanced concepts that, when applied, expand the scope of a measurement framework’s coverage to deal with various other business issues.

Two of these extensions are often of serious interest once the groundwork has been laid:

1. The creation of test-and-learn strategies

2. Dealing with information that resists being directly measured

Thus far, we have focused primarily on internal and outcomes-based measures. There also exists another class of measures that can be extremely valuable to an organization: testing measures. Testing measures are heavily related to outcomes-based measures; the key difference is that whereas an outcomes-based measure focuses on the final results, testing measures leverage a variety of techniques to provide an indication of what the outcomes are likely to be prior to applying them.

They often form a key input into optimizing execution strategies. Because ...