Three Keys To Building A Data Driven Strategy
Three Keys To Building A Data Driven Strategy
Big data and analytics have climbed to the top of the corporate agenda. Together, they
promise to transform the way companies do business, delivering the kind of performance
gains last seen in the 1990s, when organizations redesigned their core processes. And
as data-driven strategies take hold, they will become an increasingly important point of
competitive differentiation.
In our work with dozens of companies in six data-rich industries, we have found that
fully exploiting data and analytics requires three mutually supportive capabilities. First,
companies must be able to identify, combine, and manage multiple sources of data. Second,
they need the capability to build advanced-analytics models for predicting and optimizing
outcomes. Third, and most critical, management must possess the muscle to transform the
organization so that the data and models actually yield better decisions. Two important
features underpin those competencies: a clear strategy for how to use data and analytics to
compete and the deployment of the right technology architecture and capabilities.
Just as important, a clear vision of the desired business impact must shape the integrated
approach to data sourcing, model building, and organizational transformation. That helps
you avoid the common trap of starting by asking what the data can do for you. Leaders
should invest sufficient time and energy in aligning managers across the organization in
support of the mission.
Managers also need to get creative about the potential of external and new sources of
data. Social media generates terabytes of nontraditional, unstructured data in the form of
conversations, photos, and video. Add to that the streams of data flowing in from sensors,
monitored processes, and external sources ranging from local demographics to weather
forecasts. One way to prompt broader thinking about potential data is to ask, “What
decisions could we make if we had all the information we need?”
Remember, too, that any modeling exercise has inherent risk. Although advanced
statistical methods indisputably make for better models, statistics experts sometimes
design models that are too complex to be practical and may exhaust most organizations’
capabilities. Companies should repeatedly ask, “What’s the least complex model that would
improve our performance?”
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Our experience suggests that executives should act now to implement big data and
analytics. But rather than undertaking massive change, executives should concentrate
on targeted efforts to source data, build models, and transform the organizational
culture. Such efforts help maintain flexibility. That’s essential, since the information
itself—along with the technology for managing and analyzing it—will continue to grow
and change, yielding new opportunities. As more companies learn the core skills of
using big data, building superior capabilities will become a decisive competitive asset.
For more, see the full Harvard Business Review article, “Making advanced analytics
work for you,” from which this summary is drawn (registration required).
Dominic Barton, based in McKinsey’s London office, is the firm’s global managing director.
David Court, based in the Dallas office, leads the firm’s advanced-analytics practice.