While most business leaders appreciate the value of data, they may not optimize their data and effectively apply it within their organizations. As depicted in Michael Lewis’s Moneyball: The Art of Winning an Unfair Game, having and understanding the right data can help an enterprise become stronger and more efficient even with limited resources.
The COVID-19 pandemic has accelerated the Fourth Industrial Revolution, rewriting the way we do business with nine digital industrial technologies — advanced robotics, additive manufacturing, augmented reality, simulation, horizontal and vertical integration, industrial internet, cloud, cybersecurity and big data and analytics. Big data and analytics help companies understand how and when to adapt and create the innovation the business needs to stay ahead in a constantly evolving market.
“If companies are not up with the new technologies, they’re going to struggle,” says YPO member Asha Saxena, CEO at Future Technologies and adjunct professor at Columbia University in New York City. “The variety of the data, the volume of the data, become a possibility, a challenge, an opportunity for us to start understanding how our customers and consumers are really processing what we are selling.”
Here are seven insights into how data is changing the way we do business.
Maximize the value of data
Netflix is a great example of how data can be used to break into an industry, create a new business model and continue to disrupt. Launched in 1998, Netflix offered an online subscription DVD rental service to compete against Blockbuster’s retail services. Netflix understood exactly how they would disrupt the market: through online sales, home delivery, and a subscription plan with unlimited rentals, no due dates and no late fees. As an early adopter of data, they sought to understand their customers’ wants and provide them on demand. Through the creation of the algorithm, cinematch, they were able to collect data and offer accurate recommendations based on a customer’s individual behaviors. That data-driven approach has allowed Netflix to learn from its mistakes, change, and come back again and again. And with “the focus on the customer, they knew they were going to give the best solution to their customers,” says Saxena. To remain relevant, they have continued to disrupt their own model, moving from home delivery to streaming services and quality original content.
Improve data effectively
While most companies have access to big data, they don’t always know what to do with it. “The data is only as good as the questions you ask,” says Saxena. “If you don’t ask good questions, the data is not going to give you the right answers.” To mine the data effectively, hone in on the problem you want to solve and align the data with your strategy. The most important questions come from your strategy: how to maximize shareholder value, exceed customer expectations and inspire loyalty; how to create quality partnerships, maximize operational effectiveness and create high-quality products; and how to recruit and retain quality staff. Ultimately, you have to create actionable data, moving from descriptive and diagnostics analysis of what happened and why to predictive and prescriptive analysis of what will happen and how to make it happen.
Achieve high value of data
To turn that data into action, you’ll need to measure your organization’s readiness and capacity to use big data. Assess the efficiency of the existing data sources: the security, ownership, quality and accessibility. To be useful, stakeholders within the organization must be able to engage with the data to make decisions. Engagement extends beyond usage. Your team must become data literate so they can interpret the data. The best way to increase engagement is to build a data-driven culture by educating employees, creating a community for collaboration and incorporating data into every facet of the business from one-on-one meetings to group projects.
If you don’t ask good questions, the data is not going to give you the right answers. ”
— Asha Saxena, CEO Future Technologies share
Know your people
It’s not always about the numbers or the customers. “Don’t forget the employees are the people who make or break the company,” says Saxena. When assessing initiatives that make sense financially and strategically, ensure that they also serve the customers and employees effectively. Bridgewater Associates, a Connecticut-based asset management firm, for example, measures employee feedback to assess employee satisfaction, retention and more so that they can stay on top of employee success. “Your employees are the ones who are your army,” says Saxena. “No matter how good your strategy is, if you don’t have the right people, you’re never going to be able to win the war.”
Better understand your customers
“Do you really know who your customer is today? Because who your customer was two years back is not the customer today,” says Saxena. “And how they were buying five years back, they’re not buying the same way today. So you need to constantly do customer discovery.” Data can help you understand how your customers are behaving and offer insight into how they will behave tomorrow so you can stay ahead of the curve.
Look at what your customers and employees are saying through images, thoughts, likes and words. Sentiment analysis can give you a great deal of insight into how a specific topic impacts your customers at that moment in time. Those feelings can result in improvements in the core business, new products or services or even new business models. Saxena says that once you can visualize the data, you can look for trends and patterns that will help you begin to predict and prescribe. Netflix, for example, armed with the knowledge that its customers liked to binge watch seasons of old shows on its platform, released entire seasons of original content, disrupting the standard model and creating loyalty among its subscribers.
Safeguard your secret sauce
By staying close to your customer, you can better evaluate ways to create lifetime value, improve your business model, produce revenue streams, structure offerings and become profitable. “Really focus on where your business is going and where you are going to create disruption,” says Saxena. “What are the things we’re doing now that we wouldn’t do? What are the things we’re not doing that we ought to be doing? How would we compete to try to put us out of business?”
Knowing who your customer is today can help you refine your value proposition or “secret sauce.” Netflix makes content the way its customers want it. Starbucks sells an experience not coffee. Southwest Airlines treats its customers like stars. CityMD, a New York City-based urgent-care clinic, experienced rapid growth by building its business model and experience around what would deliver the most value to a very specific customer archetype. Make sure you are creating your own secret sauce.
Evolve after COVID-19
“Crisis is a time when you really want to dig deeper into how can you sustain your business by looking at and really focusing on data,” says Saxena. “This is a time for you to understand your new customer, your customer behavior.” Start by looking at the data you have or understanding what data you need. Through social media and sensitive analysis, you can start to understand how your customer has changed as a result of the pandemic. Then as an organization, you can learn about your new customer, reinvent your organization and help your team evolve and stay motivated. “Data is a power need to influence our business to take us to the next level,” says Saxena.
YPO members can view the full discussion, High-Impact Virtual Leadership – Data To Dollars, on the Source.