Competing on Analytics

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Competing on Analytics could be seen as the more serious partner book to the recently reviewed Hard Facts, Dangerous Half-Truths and Total Nonsense. As with other books from Harvard Business School Press, such as Blue Ocean Strategy, this book is split in two parts. The first portion deals with the what and why of analytical competition, whilst the second half is focussed on helping you build an organisation that competes with analytics.

By analytics, the authors mean “the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions”. This information can then either be acted on by humans, or can be used by a fully automated system. This then helps you to make the most efficient and effective decisions possible.

There are four key pillars to succeed in being a “full-bore” analytical competitor: analytics supports a strategic, distinctive capability; enterprise-wide management of analytics – it’s not just constrained to one department; commitment of senior management to analytics; and the company has made a significant strategic bet on competing with analytics – in other words, the whole existence of the organisation is centred around analytics. Examples of distinctive capabilities include Netflix ability to predict customer movie preferences and Wal-Mart’s focus on supply chains. Interestingly, professional sports (at least in North America) seems to be the “industry” that this method of competing is most prevalent. Here, of course, teams focus on selecting the right players for the teams.

The case for analytical competition is eloquently made, and very well thought out. Best of all (for me, at least!) are all the stories about how companies are succeeding with this strategy. This provides more of a framework for designing your organisation around analytics, and as a result if you’re at all serious about using analytics, I suggest you read this as soon as you can. Even if you’re only interested in analytics, you should at least read the first part of the book!

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