Many brand-name businesses are failing in today's dynamic economy because they're unable to adapt to change fast enough. Operating the same old way doesn't cut it in an era when innovators are constantly adapting their business models to suit the ever-evolving needs of their customers.
Amazon Prime same-day delivery is a great example and so is 1-800-Flowers which now accepts orders via Facebook Messenger and Amazon Alexa.
Speed and nimbleness are just two characteristics of today's contenders. A third is the strategic use of data analytics, which is what more companies - even the nimble ones - need to succeed today.
The Latest Numbers About Numbers
Big professional consulting firms, industry associations, research firms, and vendors are all studying the data-driven phenomenon in an effort to understand the difference between leaders and laggards.
Professional services company EY and Forbes Insights just released a 60-page report that explains how and why businesses in different industry sectors are succeeding or failing.
In 2016, the International Institute for Analytics (IIA) published a similar report that is considerably shorter in length and considerably smaller in scope. Not surprisingly, some of its findings were similar to the EY/Forbes Insights report and some were different.
The similarities had to do with the characteristics of leaders and laggards. The most notable difference is how industry sectors compare to one another in regard to analytical maturity.
If you want to get some insight into where your company stands, consider reading the reports.
Characteristics of Leaders and Laggards
The companies most adept at using data strategically are those that use analytics across the business. Those organizations - the leaders - align their use of data and performance metrics with business objectives. Leaders are also the most likely to be able to measure the value and business impact of analytics.
In addition, leaders have made a point of weaving the use of analytics into the very fabric of the company, including the business strategy, operations, business processes, organizational structure, and thinking. Unlike less-mature companies, they are relying on analytics to identify and create new business opportunities and improve their risk profiles.
Conversely, laggards may not be using data at all, or if they are, whatever the data says is at risk of being usurped by gut instinct.
In the middle of the leaders and laggards are two or three categories of companies that are able to use data tactically, but not strategically, or as strategically as the leaders. Their biggest obstacle is cultural change, which is a non-trivial undertaking.
Culturally speaking, companies at the middle levels of maturity need to solidify support from the top ranks of their organizations and improve cross-functional collaboration around data to move to the next level. These organizations are using data to improve individual functions within the business, but they're not able to leverage data across the business, at least as effectively as the leaders.
The business-wide use of analytics is important because higher-level views across functions yield insights you just can't get when you have islands of data trapped in systems designed for a particular function such as HR or marketing.
Moreover, it's easier to use data strategically when analytics are aligned with business goals.
Analytics should be part of your core competency.
Who The Winners and Losers Are
The EY/Forbes Insight report and the IIA report both ranked 11 and 12 industry sectors, respectively, in terms of their analytical maturity. Some industry categories are the same, and some are different which makes an exact comparison impossible.
Of the overlapping industry sectors, financial services ranks highest according to IIA and just above the middle in the EY/Forbes Insight report. In the EY/Forbes Insight report, telecom ranked highest but in the IIA report, telecom was deemed one of the least mature sectors, presumably because IIA included the utilities sector with telecom.
Also, IIA ranks consumer brands and retail near the top, but in the EY/Forbes Insights report, consumer brands share the lowest score with automotive (an industry sector not addressed by IIA).
Both reports agree that pharmaceuticals and and manufacturing rank somewhere in the middle.
Why do rankings differ between the reports? It depends on whom you survey, how many people are surveyed, and what the ranking criteria are.
The message you should receive from reading either report is don't get complacent, because if you do, a disrupter or competitor is going to eat your lunch before you realize it. That's not sensationalism, it's the reality of modern business.
If your company isn't measuring what it does and paying attention to how its value proposition is changing or should change, you're likely to fall behind your competitors. Macy's and Sears are evidence of this very shift.
Macy's and Sears been been using big data analytics to improve their businesses and yet Macy's is closing 68 stores in 2017. Sears is closing 42 stores and its sister company, Kmart is closing 108 stores this year.
Becoming an insights-driven company is far harder to do than being one from the beginning, which is one reason disruption is happening across industries and why a small company can up-end a big brand company and sometimes change the direction of an entire industry.
For most companies, becoming truly insights-driven - a leader - is a journey that requires significant transformation.
Be honest about how mature your company is so you better understand what it needs to do to advance to the next level.