Management opportunities report: Accenture
Out-thinking and out-executing the competition is possible with analytics, writes Brian McCarthy, senior executive with Accenture's Analytics practice.
In 2008 when Ireland lost to Wales in the Six Nations many fans blamed the sub-optimal performance of the Irish team on the dying days of the then team coach. Other astute observers credited the victory for Wales to something far more subtle: the sophisticated analysis of data by the Welsh coach.
In advance Warren Gatland the Welsh coach had analysed the tries the Irish team had scored in previous games, and discovered that 50% of those tries were as a direct result of possession gained from the Irish line out. In response to this, he built his team's strategy around removing that element from the Irish game. This strategy changed the nature of the game and victory to Wales who ended up kicking the ball to touch only once throughout the entire game. The Welsh team, as a result of Gatland's strategy, also conceded the least amount of tries in the history of the Six Nations competition - two tries across five games that year.
Analytics information was considered a key competitive advantage by Gatland. It helped him create a Six Nations Grand Slam winning team by investing wisely in information. It's not, however, just professional sports teams that use analytics to beat the competition. Diverse businesses in Ireland and across the globe are now out-thinking and out-executing their competition with analytics.
Why the emphasis on analytics?
Traditional bases of competition are eroding fast. Innovation in products and services is more challenging by the day. Companies that come up with innovative features often find these easily and quickly replicated by others. Product lifecycles keep shrinking, yet customer expectations keep climbing. To continue to drive growth in this tough increasingly volatile environment, (be it from new markets, new customer segments and new products and services) companies must have the right information with the right people at the right time - equipping executives to understand their organisations' current health and see its future potential.
This fact is underlined by recent Accenture research. In a 2009 survey of 600 Ireland, UK and US blue-chip organisations, two-thirds of all respondents cited ‘getting their data in order' as an immediate priority. Longer term, the top objective for between two-thirds and three-quarters of executives is to develop the ability to model and predict behaviors and actions to the point where individual decisions can be made in real time, based on the analysis at hand. If they are to realise this objective, organisations must move fast.
So what next?
Accenture research has compared companies across industries and found that companies that have invested in advanced analytics capabilities significantly outperform competitors, and recover faster from economic downturns using analytics to create their own upturn. There are a couple of key steps for organisations to consider as they move towards more sophisticated analytics capabilities.
- Understand what analytics really is: Analytics is about much more than the collection and storage of data and should be associated with an integrated framework that employs quantitative methods to derive actionable insights from data - using those insights to shape business decisions and, ultimately, improve outcomes.
- Possess the right data and ask the right questions: All too often, organisations that make analytics-based decisions are making choices often based on flawed data. Issues of accuracy and format, as well as data security concerns, are conspiring to undermine what should be a powerful decision-making capability.
- All data is not created equal: It is important to also recognise that focused efforts around improving data quality should be targeted at the right data to answer the questions that are of most value.
- Data must be ‘clean': Organisations should move fast to develop a deeper understanding of customers, markets and competitors based on clean and accurate data only combining the right internal and external data to inform key resource allocation decisions focus of sales force, promotion spend, pricing, product availability etc).
- Cultural change is crucial:
To deliver value throughout the business, internal support for and use of predictive analytics must be driven from the top down. But with so much senior decision-making grounded in gut instinct, moving to more of a fact-based decision making culture can be a challenge for many organisations.
Competitive advantage
Those companies that thrived in the wake of previous recessions were those that used data-derived insights, made by informed decision-makers, to generate lasting competitive advantage. This time around, while the challenge of recovery is stiffer, companies can use advances in technology to tame the deluge of data and enable rapid, fact-based decision-making. Within every organisation, information, management processes, analytical talent and systems can be integrated to fully support organisation-wide performance management initiatives. Crucially too, IT applications have matured to a point where they can be used to automate some decisions and integrate directly into processes.
These developments in analytics have occurred not a moment too soon. Organisations today must compete on a "now what?" action-oriented level and looking back and learning from experiences is no longer enough.
The next generation of competitive strategy and management science has arrived and only by competing on analytics can businesses achieve sustainable success via the most important business imperatives managers face today such as driving growth, enhancing cost and cash advantage, restructuring the business at scale and winning the war for talent.
Brian McCarthy is a senior executive responsible for strategy in Accenture's Analytics practice.
