METAbits – April 2004

Published in TDAN.com April 2004

Like individuals, businesses at various stages in their life and maturation turn their focus to a different set of needs. These changing needs require a flexible, confluent and evolving set of
analytics to help achieve them.

Just as with individuals, businesses are motivated by needs. Basic individual needs are inborn, having evolved over thousands of years or longer, while enterprise needs are born of an accepted
economic framework having evolved over hundreds of years. Renowned psychologist Abraham Maslow developed the Hierarchy of Needs model through the 1940s and 50s as a means to understand human
motivation for management training. His book, Motivation and Personality, published in 1954, first introduced the definitive five-level needs model which subsequently has been adapted into seven
and eight-stage hierarchies by others. Since Maslow’s human motivation model was conceived initially by observing rhesus monkeys and resulted in management improvement methods, it
shouldn’t be such a stretch to adopt this individual-centered model for an examination of business needs.

Maslow’s hierarchy fits well with the META concept of business performance management (BPM) in which enterprises measure business activity and results with the purpose of satisfying the
business needs corresponding to their current stage in the hierarchy. Consequently, as a business’s needs evolve, so must its measures. This is a simple concept that is not internalized by
most organizations. In fact, our research shows that most organizations first-and-foremost value quality and service, but focus on reporting performance and growth related metrics instead. With
that in mind, let’s consider Maslow’s Hierarchy of Needs as it might be applied to a meaningful focus on the right set of analytics at the right stage in a business’s lifecycle.

Physiological Needs

According to Maslow, the lowest-level needs are the ones that must be satisfied first. As these are satisfied, higher-order (and increasingly less-selfish) needs become the focus. Just as an
individual’s physiological needs include basic sustenance (e.g. air, water, food and sleep), basic businesses needs include financial capital, human capital, raw materials, produced and
delivered goods/services, and customers. These needs drive nearly every organization, particularly nascent businesses, to focus on periodically reporting core business metrics such as budgeting,
forecasting, sales, revenue, staffing, manufacturing/service, delivery, accounts receivables, and expenses. When these business-physiological needs are met with sufficient regularity, an enterprise
should turn its attention to the next order of needs: Safety Needs.

Safety Needs

Safety needs have to do with establishing consistency and stability in a chaotic environment. While, individuals need the security of a home, family, religion and police/military protection, an
enterprise strives to ensure operational consistency, reduce risks and anticipate/respond to market forces. These needs lead an enterprise to measure trends and tendencies in business
activity—for ensuring its regularity, analyzing market changes, and avoiding or detecting undesirable activity (e.g. customer churn, fraud, quality issues, compliance issues). As new
regulations and new threats emerge, and enterprise must be prepared to tap new information sources, generate new measures and ideally infuse business processes with them.

Love Needs

Love may seem to have no place in business (explicitly-affirmed in most HR policies), but broadly interpreted, enterprises too have a need for belonging. Just as fulfilled Love Needs can assure the
ongoing fulfillment of Safety and Physiological Needs for individuals, so can they too for enterprises. For example, a business that participates in an association can benefit by receiving
benchmark data—an asset for measuring and improving its competitive standing. Associations and other forms business relationships (e.g. joint marketing, OEM, referral, supplier, financial)
enable them to explore new markets, improve their capital standing, reduce staffing requirements, balance production, offload delivery, and increase sales. And getting an answer to “How much
do you love me?” in a business sense isn’t too difficult at all. Direct partner performance metrics such as click-through online referrals couldn’t be more straightforward to
measure.

Other Love Needs that enterprises should regularly track include market share, brand recognition, customer satisfaction and employee loyalty. Interestingly, while low-order financial needs may be
most critical they are the most difficult to affect directly. Instead, Love Needs like the aforementioned are more actionable, and satisfying them can result in a none-too-ephemeral affect on the
more basic needs.

Esteem Needs

By Maslow’s definition there are two types of Esteem Needs: 1) self-esteem resulting from the competence or mastery of a task, and 2) the attention or recognition that comes from others.
Business Esteem Needs are the classic needs born of the boardroom and have to do with the desire for admiration and power, rather than “merely” belonging and security. Clearly,
we’re talking about the need to grow the business, expand into new product lines, open new geographies, get into the Fortune 500, and steal market share. While these needs may seem far
removed from basic business nutrition, satisfying them provides grappling hooks against a fall and a gravitational mass that attracts partners and customers.

From an analytic standpoint, businesses attacking these needs require data that directly measures each of the above, but also provides complex analytics such as:

  • relative product performance
  • predictive analysis
  • exploitable unforeseen business correlations
  • M&A analysis
  • competitive assessments, and
  • international opportunity assessments.

Self-Actualization

Albeit that businesses may exist to create a win-win-win among consumers, employees and shareholders, their greater impact is actually on enabling other businesses and lifting societies. Therefore,
one might argue that a business’s greater responsibility is more macro and external. Yet, this highest level, Self-Actualization, is hardly born-out in the corporate landscape because the
vast majority of businesses are still struggling with satisfying lower-order needs.

Maslow defines self-actualization as the desire to become everything one is capable of becoming—seeking knowledge, peace, esthetic experiences, etc. Yet to find examples of organizations
exhibiting a drive to fulfill these needs you have to look at each end of the corporate spectrum: first to behemoth, dominating enterprises concerned about their impact on the world and the future,
and second to small “lifestyle companies” who place the business experience and/or life experience front-and-center.

These kind of enterprises may have more emphasis on measuring and improving their environmental impact (e.g. greenhouse gasses, trash tonnage), cultural impact (e.g. general philanthropy, pro-bono
work, “portion-of-proceeds” donation), and employee health and well-being.

Just as with other levels of needs, it is no surprise how satisfying Self-Actualization Needs can help a business satisfy lower level needs more consistently.

Bottom Line

Enterprises must adopt a framework for determining which types of analytics are applicable to each level of business needs. Measuring and fulfilling basic business needs must be accomplished before
tending to higher-order business needs. Most important, needs and measure must be consistent across the continuum for each part of the business to synchronize and for the business as a whole to
evolve.

Business Impact: Psychological principles may be affectively applied at a macro level to drive business performance.

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About Doug Laney

Doug Laney, Vice President and Service Director of Enterprise Analytics Strategies for META Group is an experienced practitioner and authority on business performance management solutions, information supply chain architecture, decision support system project methodology, consulting practice management, and data warehouse development tools. Prior to joining META Group in February 1999, he held positions with Prism Solutions as a consulting practice director for its Central US and Asia Pacific regions, as a methodology product manager, and as a consultant to clients in Latin America. With data warehouse solution involvement in dozens of projects, his field experience spans most industries. Mr. Laney's career began at Andersen Consulting, where he advanced to managing batch technical architecture design/development projects for multimillion-dollar engagements. He also spent several years in the artificial intelligence field, leading the development of complex knowledgebase and natural language query applications. Mr. Laney holds a B.S. from the University of Illinois.

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