You don’t have to lead the analytics revolution to create value from analytics. This past year, two-thirds of our survey respondents said they are gaining a competitive advantage from their use of analytics. (See Figure 1: Finding Competitive Advantage with Analytics.) This represents a significant jump from our 2011 Global Executive Survey (58%) and an even larger jump from the 2010 survey (37%). Other research supports this trend.11
Figure 1: Finding Competitive Advantage with Analytics
Companies that gain a competitive edge with analytics can be found at all levels of technological sophistication. At one end are traditional companies like Illinois-based Oberweis Dairy, which have older technologies but add new analytics talent. (See the case study.) At the other end are companies like LinkedIn, which include analytics as part of their corporate DNA but still find new ways to capitalize on analytic insights.
In 2006, LinkedIn had 8 million users, but something wasn’t clicking: Users weren’t seeking connections, a key component of success, at the expected rate. Reid Hoffman, the company’s cofounder (and current executive chairman), brought in Jonathan Goldman, who has a background in physics, to test different ways to encourage members to link to one another. Goldman came up with the algorithm that would become the “People You May Know” function on LinkedIn’s homepage — arguably one of the site’s key user benefits today.12
Because the product team initially did not see value in the algorithm, Hoffman suggested Goldman run a test on LinkedIn pages in the form of an advertisement: “Find out what happened to your former colleagues or classmates.” The result was a staggering 30% click-through rate in an industry that views click-through rates of 1% to 3% as a success. LinkedIn raced ahead of its competitors.
Some of the more traditional companies struggling in mature industries are increasingly turning to analytics for insights that provide an edge. A case in point is in the pharmaceutical sector, where companies have found themselves challenged by their payers, the largest managed-care customers or governments.
For example, AstraZeneca Group found that its payers were combining data from the pharmaceutical giant’s clinical trials with proprietary data to conduct comparative-effectiveness studies.