Many a times, I get the question, “How can I have more ‘business sense’ in analyzing my data?” In other words, how does one know the insights gained from data is of value to business or not?
Now it can be very challenging for someone who is so well-versed in mathematics and computer science to know the other world, THE business/domain. Because the business jargon, processes and knowledge that one dealt with, can be less rigid, have more complicated overlays of business rules and processes. That to me is the fun part of doing business.
This blog post serves to help new data scientist to develop business acumen, to understand, to some degree, how much impact can their insights provide.
Business knowledge can be split into three levels.
1 — General Business Knowledge
2 — Industry-Specific Knowledge
3 — Company-Specific Knowledge
Let us look at each one of them.
General Business Knowledge
As the name says, general business knowledge refers to knowledge that are the same across businesses, regardless of industry or company. For instance, accounting standards (GAAP or IAS), knowing what is account receivables, cost-of-goods etc. It can be about general strategic management models such as the balanced scorecard, SWOT analysis. It can be about understanding the general logistics processes, manufacturing etc. Very likely such knowledge and information are found in a typical MBA program, so you can pick them up through courses that are related to business administration and management.
Industry specific knowledge will be dependent on the industry the business is in. For instance, if you are in the financial industry, you have to be concerned with regulations and compliance, the accounting standards and risk management standards such as IFRS, Basel III etc. There is a need to understand local regulations as well, when you are in the financial industry. Rules such as minimum age for credit card applications, the loan quantum for mortgage set by the regulators are industry specific.
If you are in the healthcare business, how human testing of medicine should be conducted, the permissions that are required etc are industry-specific knowledge as well.
To pick up such knowledge, I recommend business weeklies such as Bloomberg BusinessWeek and The Economist. They report the latest trends in industry and has good analysis on the implications to the industry.
Company specific knowledge
Company specific knowledge will be things like what is the competitive advantage, business model, revenue model, target market, business process of the company you are in. Some of these knowledge are “top secrets” and are very different for different companies.
One possible source is the financial statements that are filed and made public. But definitely company-specific knowledge cannot be taught in schools and programs. The knowledge are usually accessible only when you have joined the company rather.
General business knowledge and industry-specific knowledge can be picked up easily through books, business periodicals and MBA program perhaps but it is the company-specific that cannot be taught and has to be picked up when one is working in the specific organization/business.