Analytics Spur Competitive Advantage and Bottom-up Innovation

Before getting to this stage, 44% of organizations say the primary barriers to enterprise-wide analytics adoption are cultural. IBM Institute for Business Value and MIT Sloan Management review released research based on a survey of more than 4,500 business leaders from more than 120 countries and a variety of industries.

The Analytics: The Widening Divide study shows that corporate cultures that embrace analytics to manage their operations have a competitive advantage in the marketplace. The results of this study are in line with the study by McKinsey on the importance of data and its place within the organization.

Actionable insights, evidence (by data) based strategies and change management go hand in hand when it comes to gaining competitive advantages and support bottom-up innovation.

Bottom-up culture determines effect of actionable insights

Analytics: The Widening Divide is a follow up to a 2010 study on how companies are embedding analytics into operations and processes . Organizations were divided in three groups, the  Aspirational, Experienced en Transformed that show the level of integration and usage of analytics:

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(Source: The Analytics:The Widening Divide study)

The image below shows the comparison between 2010 and 2011, percentages increased amongst the Transformed and Experienced organizations, citing competitive advantage using analytics. As more organizations benefit from analytics, the markets themselves will become more competitive, creating a virtuous cycle, accelerating or even forcing the adoption of analytics.

(Source: The Analytics:The Widening Divide study)

The study shows the six areas that distinguished Transformed organizations the most:

  • Ability to analyze data — 78%
  • Ability to capture and aggregate data — 77%
  • Culture open to new ideas — 77%
  • Analytics as a core part of business strategy and operations — 72%
  • Embed predictive analytics into process — 66%
  • Insights available to those who need them — 65%

Transformed organizations are 3.4 times more likely to outperform industry peers, and organizations that use analytics for a competitive advantage are 2.2 times more likely to outperform them.

The important and biggest difference between the Aspirationals and Experienced/Transformed organizations is the bottom-up culture, leaders that support cultures open to new ideas. Innovation can come from an unexpected place, but people and their ideas need to be able to share these insights, in order to make them visible and actionable.

By taking both a top-down and bottom-up approach, the organization goes beyond the validation of certain taken paths and strategies. It takes the organization beyond a pre-set vision of their organization. The study showed that employees are prepared to challenge existing ideas and visions based on new data.

This willingness democratizes data and insights, getting them actionable within the ‘window of opportunity’. The latter doesn’t need to be underestimated. This democratization also needs to be effectuated, an infrastructure that supports cooperative intelligence, policies and processes to flow all this data throughout the organization.

Another research by IBM, “The 2011 IBM Tech Trends Report Tech Trends of today. Skills for tomorrow” shows that employee collaboration, efficiency in locating people and resources, and idea generation and sharing are the top three motivators for internal deployment of social technologies. The three top social technologies that organizations are utilizing are file sharing, blogs and forums.

Outside-in and evidence based strategies

Not only is a bottom-up culture of importance, but also the outside-in perspective. External data, such as social media data, gives a rich and real view on the brand, products, competitors and markets.

Extracted insights from external data enables evidence based strategies, formulated from an outside-in perspective and combined with internal and top-down mission, core competences and so forth.

Limited application of analytics

Analytics are mostly used for financial and operational activities, where other areas are not yet making fully use of their potential.

The next image shows that analytics and data are used the least within the customer-related activities.  This is remarkable to say the least, because the fundamental function of an organization is the creation and retention of a customer.

Aggregation of internal and external customer data enables the ability to put the customer at the heart of everything it does. Especially external data and insights are valuable, giving an unmediated view of opinions that goes beyond the scope of internal –mediated- data.

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(Source: The Analytics:The Widening Divide study)

What it does more is taking out the second-guessing of planning and execution, by using the outside-in view as direction-mechanism.

Three competencies

There are three competencies described in the study that are needed to use analytics and data as efficient and effective as possible:

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(Source: The Analytics:The Widening Divide study)

Also from this perspective, the culture and action are key. Having an infrastructure and right skill- and tool set are not relevant if the culture and support to take action is lacking.

Are you a Transformed organization?

Are you applying evidence-based planning and strategies to excel your business output?

By Gianluigi Cuccureddu

About the author:


Gianluigi CuccuredduGianluigi Cuccureddu, contributing editor, is an experienced writer specializing in innovation, open business, new media and marketing. He is also Managing Partner of the 90:10 Group, a global Open Business consultancy, which helps clients open their activity directly and indirectly to external stakeholders through the use of social media, its data and technologies for the purpose of competitive advantages in marketing, service- and product innovation.

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