In the age of rapid advances in data science and artificial intelligence, many organizations still struggle to incorporate advanced Analytics capabilities into their business models. True incorporation requires bold decisions about reorganizing the business to make analytics a key component of strategy. Here we present the case of Grupo Financiero Banorte (GFNorte), a large Mexican financial group, where the analytics transformation has been a success story. This case came to light when one of us, Jose Murillo, GFNorte’s chief analytics officer, presented it to a graduating class of the Queen’s College analytics program, where the rest of us learned about it. (Disclosure: Jose is long GFNorte; the rest of us do not have GFNorte holdings.)

GFNorte recently established a Central Analytics Business Unit (ABU) with the mandate to convert information into profits at a rate of 10X cost and to lead the adoption of a customer-centric approach within the organization. The results significantly exceeded expectations: In its first year the ABU yielded profits 46X its costs, in the second year 106X (equivalent to $275 million of net income), and during its third year it is on course to produce 200X. These results, along with other transformational initiatives, have contributed to GFNorte leapfrogging its competitors within three years to attain second place in Profit generation (up from fourth) in the Mexican financial system.

Why did GFNorte’s analytics investment pay off when so many others’ do not? We believe GFNorte did at least six things right that enabled its transformation into an analytically enhanced organization.

Targets and accountability. The ABU was set up as a centralized profit center with ambitious targets and with direct reporting to the chief operations officer; most often, similar units are organized as cost centers with no specific targets. This setup fosters focus on high-yield projects, actionable analytics, and speed of execution.

Support from the top. GFNorte’s ABU was established with the sponsorship of top management that empowered it to start working with some business lines of the financial group and offered it strong backing from support departments. Furthermore, the delivery of extraordinary short-term results provided credibility to the ABU, giving it legitimacy and encouraging other business lines to explore the analytics potential to deliver profits and overcome hurdles.

Incentive scheme alignment. Two main traits distinguish GFNorte’s ABU incentive scheme. First, it fosters a partnership with the business lines. The returns generated by ABU’s analytics projects accrue to the departments, who do not contribute to the cost of the ABU. That way, if ABU projects have high profits relative to the costs, the departments they work with have an easier time meeting annual targets. Second, the ABU team is paid using variable compensation, based on projects that have been fully implemented and based on their ROI.

Rigorous assessment of results. The contribution of analytics is always measured and in some cases is reviewed by the accounting department since the profits derived from ABU projects sustain the company’s transformative investments in IT and data. There are two types of analytics projects: (1) income generating, and (2) cost-abating. The first type is measured according to its impact on customer lifetime value, as measured by the incremental income on treatment relative to control groups and the duration of effect. The value generated by risk- and operational cost-abating analytics initiatives is measured by their impact on the bottom line. The rigorous assessment of analytics projects has reinforced ABU’s credibility and legitimacy while expanding its operating budget and remit considerably.

Communicating with strategic goals in mind. The ABU’s mandate to translate information into profits required the alignment of multiple stakeholders. In order to coordinate effectively and break through the inertia, the ABU emphasized communication with the aim of: (1) building consensus around its analytic initiatives; (2) sharing results with business partners in order to encourage repeated collaboration; (3) keeping the C-Suite well-informed to increase sponsorship and scope of action; and (4) attracting the best talent in the industry. Every time an analytics project is implemented and results are measured, a detailed report is presented to the stakeholders and distributed to the C-suite. The most relevant initiatives are presented to the president of the board and the CEO — and in several cases communicated to GFNorte’s 27,000 employees. An annual report that summarizes every profit-generating analytics project is compiled and distributed to the C-suite. Finally, the results have been presented at industry forums and recognized in international contests. The ability to effectively communicate the power of analytics to unleash productivity has contributed to the rapid expansion of the analytics practice at GFNorte, and as a result the ABU has been given control of the database marketing efforts and sales offers in the distribution channels.

The right people. Recruited employees had: (1) significant quantitative strength; (2) negotiating skills and diplomacy; (3) the ability to communicate with the business lines; and (4) entrepreneurial instincts. Recruiting this high-demand skill set was not easy. Most of the initial ABU recruits were external hires, and several of them had little knowledge of the banking industry. However, most of them had previously worked with the chief analytics officer and proved to be fast learners. Building a team that can transform a traditional business into a data-enhanced organization is a very difficult task. The best advice is that if you err in recruiting, adjust swiftly.

These elements of GFNorte’s analytics strategy are principles that other organizations, even beyond financial services, can institute. From an organizational standpoint, the most innovative aspect of the strategy is in treating the analytics unit as a profit center with the corresponding rigorous benchmarking and performance incentives. This, in conjunction with the executive support at the highest level and effective communication, creates a path for analytics transformation.