Using Analytics to Outsmart Your Competitors

Competing on Analytics

By Thomas Davenport & Jeanne Harris

Tom Davenport may be a business strategy guru, but he’s also a fierce Boston Red Sox fan. In his new book, Competing on Analytics: The New Science of Winning, written with Jeanne Harris, he notes that the numbers prove pitcher Pedro Martinez should have been pulled earlier from the ill-fated game 7 of the 2003 American League Championship Series. The current Red Sox organization’s ability to crunch numbers—and create new recruiting metrics—fueled its 2004 World Series victory, he says. Could your business do the same—use analytics to outsmart competitors, strengthen staff and optimize key business processes? You not only can, but you must, Davenport argues.

Better business processes are one of the last ways to differentiate yourself from close competitors in today’s global economy, he states. Firms that are successful analytical competitors select one or two distinct capabilities—attributes where they outshine rivals—and then apply extensive data and systematic analysis to bolster those capabilities, Davenport says. Companies like Anheuser-Busch (which uses a mobile workforce to feed data into a closely held analytics system called BudNet to optimize beer sales across geographies) are proving the approach’s value, he says.

Davenport shares satisfying examples of how companies like Capital One, Harrah’s Entertainment, E.&J. Gallo Winery and American Express use analytics to create advantage. The second half of the book, a how-to guide, details getting started and executing. A concise discussion of the architecture of business intelligence explains key technology issues.

As Davenport notes, CIOs will shape the analytical future. Without a consistent, enterprisewide approach to data management and a flexible BI architecture, a company can’t become an analytics champ.