Investments in data are no longer a suggestion, but a requirement for companies wanting to grow and compete in very aggressive markets. A survey by New Vantage Partners recently discovered that 98.8% of companies are actively investing in big data and artificial intelligence (IDC). Companies know there’s a need for data investment, but it’s difficult to define the best way to realize the investment.
Many companies are challenged with defining the return on their data investment. 73.4% of firms struggle with business adoption of big data and 90.9% cite people and process challenges as the biggest barriers to becoming data-driven organizations (IDC). Business value cannot be achieved when the business, resources, and processes are incapable of ingesting, processing, or analyzing data. Companies who overcome these challenges will survive and thrive in this new age where data is the foundation.
Companies that use data to drive innovation will capitalize on their investments and capture greater market share due to their ability to quickly take action on data insights. Data driven innovation provides companies with the ability to improve internal efficiencies, enrich current market offerings, and even monetize their data directly.
Improve Internal Efficiencies
As organizations invest in data analytics and machine learning capabilities, they gain internal benefits by utilizing data to improve efficiencies within the business.
Organizations can use insights to ensure they have the right people and are looking at the right data at the right moment. GE, for example, used machine learning to integrate supplier data and saved $80 million by eliminating redundancies and improving contract negotiations.
These internal efficiency investments can help your business adopt big data and decrease the people and process barriers that inhibit companies from truly maximizing the value of their data.
Questions to Consider:
What metrics do I use to measure performance in my organization?
What redundant processes exist that can streamline innovation and data analytics?
How many data-focused employees do I have? Do I have enough?
Enrich Current Offerings
Data can also be used to innovate and iterate on existing market offerings. Enrichment comes in a variety of ways. Improving customer experience, updating an existing product line, or decreasing the cost of goods sold are organizational goals that can be significantly improved by utilizing data.
Netflix is one of the leaders in enriching their customer’s experience through data. Netflix Director of Global Communications Joris Evers said, “There are 33 million different versions of Netflix.” The data gathered by Netflix on each individual account is compared across the 182.8 million subscribers in the network and similar behaviors help Netflix recommend shows and movies to similar audiences. Netflix is also able to innovate on their current offerings to customers by understanding what exactly customers like to see. House of Cards, Birdbox, and Tiger King are all outputs of Netflix’s data-driven innovation focus.
Enriching your current offerings will help you compete with the 98.8% of other companies who are looking to data to help their business grow and win customers.
Questions to Consider:
Which products/services are the best sellers, and can they be enhanced?
How does our company analyze customer data?
What is the customer sentiment around our brand and product offerings? What do we need to make better?
The final way to use data and innovation to impact your business is by monetizing your data directly. Companies choose to sell raw data, package their data in the form of insights, or in some cases build out a decision platform with their data to inform customers on the next best action and, in some cases, make the decision for them.
We have found that the companies that monetized their data through decision platforms and outcomes as a service have a higher P/E ratio. For example, Square uses its customer’s transaction data to get a better understanding of their liquidity and will offer loans to merchants who are too small or too risky for traditional loans. Square is able to know the credit worthiness of its merchant well before a lender due to the real-time transaction data.
Most companies hope to recoup their data investments by directly monetizing data. However, companies should view their data more holistically than a commodity that can be sold in raw form. The value of data comes from further investment and analysis that provides decisions and outcomes to both the business and customer.
Questions to Consider:
What data am I capturing today?
How can my data be packaged and analyzed? Should this be done internally or externally?
What decisions can I make for my customer that improves my stickiness?
Your Next Data Driven Innovation Step
Using your organization’s data to drive innovation creates opportunities for growth and helps you avoid the pitfalls of failed data projects. Improving internal efficiencies, enriching current offerings, and monetizing directly are helpful places to start. If you have any questions about leveraging your data for innovation, please reach out to us at email@example.com.