Welcome back to the second installment of our series on overcoming cognitive biases in analytics implementation. In part one, we peeled back the layers of illusion surrounding analytics ROI, shedding light on the cognitive biases that thwart progress in distribution. 

Unmasking the Illusions: A Cognitive Perspective 

In our exploration of cognitive biases, we unearthed the impact of illusory progress, the Dunning-Kruger effect, and the checklist mentality, among others. These biases not only obscure the path to ROI but also erode the foundation of data-driven decision-making, trapping distributors in a cycle of unfulfilled potential. 

Empowering Action: Strategies for Success 

Armed with insights from our journey thus far, we now turn our attention to practical strategies for transcending cognitive barriers and realizing the full potential of analytics. From recalibrating your approach to analytics to deploying internal resources strategically, we offer a roadmap for navigating the complexities of analytics implementation with clarity and purpose. 

Rethinking Your Analytics Approach? Regardless of which cognitive bias resonated with you, the remedies are multifold:  

1. Build a strong foundation:  

Often, distribution executives appreciate the value of data but get overwhelmed by technology offerings and wonder where to start the analytics journey. Group all your data-driven or analytics needs into two groups: 1) must-have core analytics (such as inventory optimization, pricing optimization, customer stratification, and supplier stratification) and 2) other supporting analytics. This will help you start on the right foot. When asked how one successful distribution CEO leverages data and adopts new technologies, he responded: “Clean your house before decorating.”  

 2. Map out your ROI journey:  

Recognize the dual aspects of analytics implementation – the first mile (analytics development) and the last mile (analytics usage or adoption) – and their impact on ROI. Understanding these two components will help you learn what it takes and set the right ROI expectations. Without these best practices, distributors become more susceptible to cognitive biases, leading to sub-optimal decision-making. 

3. Refine your analytics strategy: 

We extend an invitation for a cognitive reappraisal—a deliberate reevaluation of how you view and use must-have analytics such as customer stratification, inventory stratification, or vendor stratification. Perform a deliberate reevaluation of core analytics in the first mile (analytics development) vs the last mile (analytics usage or adoption). Have you traveled the last mile in customer, inventory, pricing, or supplier analytics? If not, get out, research, and witness the transformative power of integrated analytics that goes beyond the superficiality of spreadsheets. 

4. Optimize resource allocation: 

Plan your scarce internal resources wisely by deploying them where they matter – the last mile. The accessibility and affordability of technology or analytics tools have significantly improved in the last decade. Distributors don’t have to reinvent the wheel by manually creating core analytics from scratch in spreadsheets. Instead, collaborate with external resources or tools to expedite the first mile while actively preserving your stretched internal resources for the last mile. For instance, a distribution executive deployed one of their emerging leaders to lead the last-mile journey while collaborating with the service provider for the first-mile journey. This became a win-win move for the distributor. While getting the ROI from analytics initiatives, the emerging leader has learned what it takes to travel the last mile.  

Navigating the Path to Data-Driven Success

As we conclude our exploration of cognitive biases in analytics, we invite you to join us in embracing the analytics revolution.  

Understanding and overcoming cognitive biases is the first step towards truly mastering must-have analytics such as customer stratification. By embracing a dual approach (first and last miles) to advanced analytics, you will refine your view of your business (across customer, supplier, and inventory insights) and supercharge all aspects of business strategy. 

Are you ready to challenge your perceptions and unleash the true potential of your data? 
Get in touch with us today to find out how we can help you embrace and adopt analytics in your organization. 

*This article was originally written for and published under the title, Mind Over Metrics: How Cognitive Biases Hinder Analytics ROI, by Modern Distribution Management, the leading research, analytical and educational provider in wholesale distribution.