The Analytic Value Chain - Understand the relationships in your data

One the dataset is together and the data is QA'ed, New analysts want to dive right in and start mining the data or building statistical models . More experienced hands just putter. The run descriptives, they check to see relationships that they thought they would see actually exist (age and income are positively related, for example), creating some histograms to look at the frequency distribution of the variables.

Why all the putterage? An effective analyst needs to develop an intuition about the data. Without that intuition, they won't have the common sense required to make some of the judgment calls they are going to need to make when they get down to modeling. Data analysis requires judgement (which is why you hire experts to do it) and without a good intuitive understanding of how the data behaves, the judgement calls to come are going to be on an unstable foundation. And you get to understand the business dynamics (by understanding what variables drive outcomes) in a way that the people who are running the business can not.

Another point, you are going to find relationships that were unexpected. These unexpected relationships are things you should take note of, you are going to want to follow-up on them and understand if they are real. These unexpected relationships are the beginning of finding what I call "Game Changing Analyses", the home run of data analytics. What do I mean by game changing? Analyses that lead your business partners into changing their business strategy, that indicate that activities that are fundamental to the business need to be reassessed. A good analyst should be able to have this kind of impact multiple times a year.

For those data analysts who read the blog, developing the intuition is critical for your ability to have impact and your reputation. Imagine that you are presenting some work to a senior executive and they ask a question that you can't answer based on your analysis. If you have a good understanding of the data you can say "I can't answer your question definitively, but given what I know of the data, I believe this to be the answer to your question. Of course, I will check the answer as soon as I get back to my desk." To the extent that you consistently get these kinds of questions right, you be come a trusted resource for the executive. I know more than one analyst whose job was saved because they proved over and over again that they were an expert in the dynamics of a business unit.

Upshot, spend the time getting to know your data . If you are a manager, build time to explore data into your project plans. Understanding the relationships in the data is a critical part of the data analysts and managers job.