Share with your friends


Analytics Magazine

Keys to unlocking innovation in organizations

Scott Stepheson data analytics innovation organizationsBy Scott G. Stephenson

“Drive thy business or it will drive thee.”

Benjamin Franklin offered this sage advice in the 18th century, but he left one key question unanswered: How? How do you successfully drive a business? More specifically, how do you develop the business strategy drivers that incite a business to grow and thrive?

The 21st-century solution has proven to be data and analytics – from which emerge ideas large and small that can be the springboard to success. That solution begs yet another question: Where does an idea begin? And how can a concept be nursed through a promising infancy into reality and then guided to adulthood as a profitable innovation?

As a leading provider of data and analytics, we at Verisk Analytics spend our time developing answer keys to such questions – keys that unlock innovation within an organization.

The C-suite Vision

Lasting innovations often take root from evolutions in thinking. Data analytics is not a program or bolt-on accessory for business operations; it’s a strategy that should be embraced as sinew and fiber through the body of an organization. Instead of an afterthought, analytics must stand at the forefront of business strategy and be embraced throughout the organization – and not just by a data analytic “elite.” A business so tooled for the 21st century will seamlessly use data from within and outside the enterprise to generate new and unique insights.

To realize this vision, corporate leadership should ask: Are line managers thinking, behaving and sounding more like data analysts? And are data scientists and data engineers sounding more like line managers?

Ideally, both the business mindset and the data analytic mindset should reside between the ears of the same individual. But even short of the ideal, the goal is to assimilate the notion of using data to create meaningful information and not merely to warehouse it.

Companies need – and can achieve – continuous, agile improvements propelled by the skillful use of data analytics. If C-suite executives can harness the power and fluidity of data analytic methods, they should insist that projects deliver results within nine months. A monolithic plan or “Manhattan Project” isn’t necessary to derive substantial benefits.

Looking ahead, risk decisions will become more targeted and in real time with the advent of remote imagery, textual analyses, connected homes and the Internet of Things. Analysts estimate that current North American smart-home penetration may reach 25 percent to 30 percent by 2020. What this all means is that new technology is providing us with different kinds of data points, in greater volumes and with faster speed. That information will enhance analytic models to improve risk selection and assessment.

The Choice to Be Innovative

Two things about innovation are true: It’s sometimes expensive, and it’s never without risk. That’s the trade-off. And because of the trade-off, a company has to make a conscious decision to become a leader in innovation.

That said, if you look across any industry in the world with a technological basis, the reward for being innovative, and the penalty for not, are both greater than they ever were. In almost any industry, the differential in performance based on innovation has spread – it’s bigger than it used to be.

In the pursuit of innovation, businesses first need to determine what innovation means for them. Will the innovation address process or product, service, pricing or any number of value propositions? How deeply entrenched will innovation be in the organization’s thought processes? How much will the organization commit? How will the business demonstrate an innovative process or product as one of its distinguishing characteristics as it goes to market?

The next choice is how to sequence the innovations. There’s no single correct path. What needs to be done first or third may be based on what’s important to the customer or simply what appears to be the logical progression – that is, what needs to be built first, which is then built on and built on again.

For every company, the sequence will be different. And that’s what makes innovation interesting. Those are the decisions we make at Verisk every day.

Data’s Competitive Edge

Today, to be competitive, companies must strive for something Verisk has dubbed “the n+1 data set.” If a company’s data set has a certain number of elements (n), that set should be stretched to include one more. Elements must continually be added, advancing toward the next layer and adding richness to the analysis.

Although this process requires investment in data resources, analytics, technology and people, the return on investment can mean thriving, rather than merely surviving or even failing. While it’s true for all industries, it’s especially relevant in data-driven industries such as insurance, energy and financial services.

Let’s consider two examples of how to apply n+1:

Example 1: In the traditional approach, fraud investigators start with single-suspect data points, such as a name or address. Then they build a network with the associated data. However, a newer, more proactive approach scans data sets to detect fraudulent networks, uses advanced analytics to identify network attributes, and then scores and prioritizes those networks based on their fraud potential. Finally, when we overlay data from social media or data derived from unstructured data, such as mining the text of claims adjusters’ notes, and then apply the new data-enhanced analytics, we have a more comprehensive toolbox to use in fighting fraud.

Example 2: Relentless pressure to lower coal consumption will intensify competition among producers for the remaining coal market. Some producers will meet this challenge using a conservative approach and focus on mining coal, which is what they do best. As market opportunities fade, only low-cost suppliers with access to prime-quality coal and superior market knowledge will succeed. Ultimately, it will become a survival-of-the-fittest contest. However, diversification is another strategy, and that would rely on the latest data and analytics.

Diversification for coal producers is a “stretch” strategy aimed at participating in a wider, non-coal energy market that’s growing, not declining. So again, here we clearly see the value of the n+1 mindset.

At Verisk, the seed of innovation began with a question that prompted more questions and created a company culture that finds solutions. As Ben Franklin also once said, “An investment in knowledge always pays the best interest.”

Scott G. Stephenson is chairman and chief executive officer of Verisk Analytics. Verisk’s mission is to help customers understand and manage the risks they face every day. On Oct. 7, 2009, Verisk Analytics debuted on the NASDAQ Global Select Market as the largest domestic IPO of the year. Four decades of continuous innovation were recognized in 2015 and 2016 when Verisk Analytics was named to the Forbes list of the World’s Most Innovative Companies.

Related Posts

  • 100
    “Drive thy business or it will drive thee.” Benjamin Franklin offered this sage advice in the 18th century, but he left one key question unanswered: How? How do you successfully drive a business? More specifically, how do you develop the business strategy drivers that incite a business to grow and…
    Tags: data, innovation, will, business, analytics, verisk
  • 92
    The CUNY School of Professional Studies is offering a new online master of science degree in data analytics. The program prepares its graduates for high-demand and fast-growing careers as data analysts, data specialists, business intelligence analysts, information analysts and data engineers in such fields as business, operations, marketing, social media,…
    Tags: data, analytics, business
  • 89
    January/February 2018 Forum: Anxiety over Artificial Intelligence The rise of self-service analytics Advanced analytics at Kroger Deep dive into edge IoT analytics Get to know your data November/December 2017 Eyes on the road, not dashboards Basic Sales Analysis Survey sampling Healthcare and data governance Simulation Software Survey September/October 2017 Visualizing…
    Tags: analytics, data
  • 87
    Deep within the astonishing volumes of raw information generated by business transactions, social media, search engines, IoT and countless other sources, valuable intelligence about customers, markets and organizations, lies waiting to be discovered. Leveraging advanced technologies to explore this expansive universe of unstructured and “dark” data reveals hidden insights to…
    Tags: data, analytics, business
  • 85
    While techies debate the state of the Internet of Things and its potential to transform the way we interact with almost everything, there’s little doubt that the IoT will continue to be a topic of great interest throughout the worldwide analytics community and beyond for many years to come.
    Tags: analytics, will, data, business


Study: The magic of animated movies not tied to latest technology

In the nearly 60 years between the 1939 release of Hollywood’s first full-length animated movie, “Snow White and the Seven Dwarfs” and modern hits like “Toy Story,” “Shrek” and more, advances in animation technology have revolutionized not only animation techniques, but moviemaking as a whole. However, a new study in the INFORMS journal Organization Science found that employing the latest technology doesn’t always ensure creative success for a film. Read more →

Six finalists named for Edelman Award

INFORMS selected a diverse group of six finalists for the 47th annual Franz Edelman Award for Achievements in Operations Research and Management Science, the world’s most prestigious award for achievement in the practice of analytics and O.R. The 2018 finalists, who will present their work before a panel of judges at the INFORMS Conference on Analytics & Operations Research in Baltimore on April 15-17, included innovative applications in broadcasting, healthcare, communication, inventory management, vehicle fleet management and alternative energy. Read more →

Are Super Bowl ads worth it? New research suggests benefits persist

On Feb. 4, more than 40 percent of U.S. households will watch the 2018 Super Bowl game on TV. Advertisers will pay up to $4 million for a 30-second spot during the telecast. Is the high cost of advertising worth it? A new study finds that the benefits from Super Bowl ads persist well into the year with increased sales during other sporting events. Further, the research finds that the gains in sales are much more substantial when the advertiser is the sole advertiser from its market category or niche in a particular event. Read more →



2018 INFORMS Conference on Business Analytics and Operations Research
April 15-17, 2018, Baltimore


CAP® Exam computer-based testing sites are available in 700 locations worldwide. Take the exam close to home and on your schedule:

For more information, go to