Introduction

Big Idea: Data & Analytics
David Kiron, Renee Boucher Ferguson and Pamela Kirk Prentice

This is part 1 of 10 from the 2013 Data & Analytics Global Executive Study and Research Project.

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How organizations capture, create and use data is changing the way we work and live. This big idea, which is gaining currency among executives, academics and business analysts, reflects a growing belief that we are on the cusp of an analytics revolution that may well transform how organizations are managed, and also transform the economies and societies in which they operate.

Among companies, this revolution has several dimensions. First, companies have more data to use than ever before, at a volume and with a variety that are unparalleled in human history. Second, by using internal and external data, companies are beginning to understand patterns of consumer activity that had once been impossible to perceive or act upon. And third, companies are using new analytic tools and services to understand their own operations and behavior at a much finer level of detail, enabling new questions to be asked and answered.

At the vanguard of this revolution are companies that are using analytics to compete and to innovate. Understanding these companies gives insight into both the direction and the pace of the analytics revolution. Lessons about what hurdles these companies face and how they are addressing them suggest a path forward for many other companies.

As part of a multiyear research initiative, MIT Sloan Management Review is partnering with SAS Institute Inc. to better understand companies that are shaping, and are being shaped by, this analytics revolution. In 2012, we conducted a survey of more than 2,500 respondents in two dozen industries. Fifty-five percent of the respondents were executives at the vice president/director level or above. The survey included over 30 detailed questions about how organizations are using data to advance their business objectives. We also interviewed 29 academics and senior information technology executives at a diverse group of companies, including eBay, Inc., Kaiser Permanente, LinkedIn Corporation, Neiman Marcus, Inc., PayPal, Inc., PepsiCo, and Southern California Edison Company.

Fully 67% of survey respondents report that their companies are gaining a competitive edge from their use of analytics. Among this group, we identified a set of companies that are relying on analytics both to gain a competitive advantage and to innovate. These Analytical Innovators constitute leaders of the analytics revolution. They exist across industries, vary in size and employ a variety of business models. They also share a distinctive orientation toward data and analytics that includes three key characteristics:

  1. A widely shared belief that data is a core asset that can be used to enhance operations, customer service, marketing and strategy
  2. More effective use of more data for faster results
  3. Support for analytics by senior managers who embrace new ideas and are willing to shift power and resources to those who make data-driven decisions

This report provides an in-depth look at Analytical Innovators, including their beliefs, practices and outcomes. Our profile of this group provides insights into what success factors are currently required to excel in today’s analytics revolution. In addition, we offer a framework that shows how other companies — regardless of their analytical sophistication — can become more like Analytical Innovators.

References

1. “The New Initiative on the Digital Economy,” press release, MIT Sloan School of Management, n.d.

2. P.C. Evans and M. Annunziata, “Industrial Internet: Pushing the Boundaries of Minds and Machines,” GE Reports, November 26, 2012.

3. Evans, “Industrial Internet.”

4. R. Bean and D. Kiron, “Organizational Alignment Is Key to Big Data Success,” January 28, 2013.

5. “Governor Patrick Announces New Initiative to Strengthen Massachusetts’ Position as a World Leader in Big Data,” press release, Commonwealth of Massachusetts, May 30, 2012.

6. ”Governor Patrick Announces New Initiative.”

7. A. Pentland, “Reinventing Society in the Wake of Big Data,” August 30, 2012.

8. Tweeted by Joel Cherkis on 10/21/12.

9. J. Manyika, M. Chui, et. al, “Big Data: The Next Frontier for Innovation, Competition and Productivity,” May 2011.

10. Capgemini Consulting and MIT Center for Digital Business, “The Digital Advantage: How Digital Leaders Outperform Their Peers in Every Industry,” November 5, 2012.

11. E. Brynjolfsson and A. McAfee,“Big Data, The Management Revolution,” Harvard Business Review 90 (October 2012): 61-67.

12. T.H. Davenport and J.G. Harris, “Competing on Analytics: The New Science of Winning” (Cambridge, MA: Harvard Business School Press, 2007).

13. M. Lewis, “Moneyball: The Art of Winning an Unfair Game” (New York: W.W. Norton, 2004).

14. L. Melnick, "Moneyball Strikes Again: How to Use Analytics for Sustained Competitive Advantage,” October 3, 2012.

15. The two questions were:

(a) To what extent does information and business analytics create a competitive advantage for your organization within its industry or markets?

(b) To what extent do you agree with the following statement? Analytics has helped improve my organization’s ability to innovate.

Managers that checked “great extent” for both questions were placed in the Analytical Innovators category.

16. T.H. Davenport and D.J. Patil, “Data Scientist: The Sexiest Job of the 21st Century,” Harvard Business Review 90 (October 2012): 70-76.

17. “Chief Consumer Advocate: How Social Data Elevates CMOs,” white paper, Bazaarvoice and the CMO Club, Austin, TX, July 25, 2012.

18. Respondents in Analytically Challenged companies differ demographically in subtle but important ways from other survey participants. They tend to be in less senior management positions and have a slightly higher likelihood than other survey participants to work in operational functions. These demographic differences might be a contributing factor to their evaluations of their organizations as less analytically mature.

19. The prisoner’s dilemma refers to a non-zero-sum game that shows why two people may choose to betray each other even if cooperation is in their best interest. It’s based on the premise that two isolated prisoners involved in the same crime have the independent opportunity to either collaborate with each other by remaining silent or sell the other prisoner out. Each combination of possibilities results in a different outcome, with the best for both stemming from cooperation. The sucker’s side is the prisoner who remains silent but is betrayed by the other prisoner.

i. K.T. Greenfeld, “Loveman Plays ‘Purely Empirical’ Game as Harrah’s CEO,” August 6, 2010.

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