Introduction

In 1997, a computer named Deep Blue defeated Garry Kasparov, the world chess champion at the time. In 2011, another computer, Watson, competed and won against former champions of Jeopardy!, the popular U.S. television quiz show. Both events changed perceptions about what computers could do. Deep Blue demonstrated the power of new parallel processing technology, and Watson showed that computers can understand ordinary language to meet the challenges of the “real world.” In computer science terms, Jeopardy! is much harder than chess. Whereas Deep Blue used specialized computer chips to calculate outcomes of possible chess moves, Watson answered unpredictable questions put forward in peculiarly human speech patterns. Today, almost any computer can scan a database to match structured queries with answers. In contrast, Watson was able to “read” through a massive body of human knowledge in the form of encyclopedias, reports, newspapers, books and more. It evaluated evidence analytically, hypothesized responses and calculated confidence levels for each possibility. It offered up, in a matter of seconds, the one response with the highest probability of being correct. And it did all that faster and more accurately than its world-class human opponents. New analytical tools for making decisions, such as Watson, are bringing about entirely new opportunities. With the digitization of world commerce, the emergence of big data and the advance of analytical technologies, organizations have extraordinary opportunities to differentiate themselves through analytics. The majority of organizations have seized these opportunities, according to this study, “Analytics: The Widening Divide,” by the MIT Sloan Management Review and the IBM Institute for Business Value. Fifty-eight percent of organizations now apply analytics to create a competitive advantage within their markets or industries, up from 37% just one year ago (see Figure 1).1 Significantly, these same organizations are more than twice as likely to substantially outperform their peers. To understand how organizations are using analytics today, we surveyed more than 4,500 executives, managers and analysts from more than 120 countries.

FIGURE 1: Creating a Competitive Advantage


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References

1. Organizational performance is a self-assessed measure that delves into the organization’s competitive position relative to its industry peers. Respondents are asked to select one option from five choices: substantially outperforming competitive peers, significantly outperforming competitive peers, on par with competitive peers, slightly underperforming competitive peers, or significantly underperforming competitive peers.

2. LaValle, Steve, et al. “Analytics: The New Path to Value.” MIT Sloan Management Review and IBM Institute for Business Value knowledge partnership. October 2010.

3. ibid.

4. IBM Institute for Business Value. “Capitalizing on complexity: Insights from the 2010 IBM Global CEO Study.” May 2010.

5. Corporate Executive Board, “Internal Audit’s Role in ERM,” referenced 21 October 2011.

6. Torok, Robert. “Improving enterprise risk management outcomes.” APQC. 2011.

7. Clanton, Brett. “Chevron stayed busy while idling in deep water: Staying busy while idle – Confronting a deep-water slowdown in the Gulf, Chevron worked to get more from its data.” Houston Chronicle. July 11, 2011.

8. ibid.

9. Teerlink, Dr. Marc and Dr. Michael Haydock. “Customer analytics pay off: Driving top-line growth by bringing science to the art of marketing.” IBM Institute for Business Value. September 2011.

10. Our findings on the two paths are based on response patterns from a representative sample of Experienced organizations using a subset of key questions from our survey.

i.Looking at Robert Bruce’s Two Huge Healthcare Bets,” Guru.com. September 6, 2011. Accessed on October 17, 2011.