Analytics or intuition?
What’s most important? There’s a spirited debate around this question. Are the big data and analytical “quants" really going to rule the new world? Or, will the more intuitive and creative types offer leading companies the competitive edge?
A quick review of three independent surveys across thousands of companies yields this answer: analytics is your winner.
Let’s take a look at our three sources: Bain & Company, MIT Sloan Management Review, and the Product Development Institute (related to Stage-Gate International).
Bain & Company
Bain surveyed executives at over 400 companies ($1 billion and up) to produce its report entitled "The Value of Big Data: How Analytics Differentiates Winners." Bain’s research concluded "companies who use analytics the best are 2x more likely to have top quartile financial performance. [However], we found that only 4% of companies are really good at analytics, an elite group that puts into play the right people, tools, data and intentional focus.”
"Companies who use analytics the best are 2x more likely to have top quartile financial performance.”
-- Bain & Company
The Bain report went on to say this:
"Leading companies embed analytics into their organizations by resolving to be data driven and defining what they hope to accomplish through their use of Big Data. The CEO and the top leadership team need to describe how analytics will shape the business’s performance, whether by improving existing products and services, optimizing internal processes, building new products or service offerings, or transforming business models. Top-performing organizations do this well, often building their organizations around data and a commitment to make data-driven decisions.”
MIT Sloan Management Review
MIT surveyed over 3,000 executive managers (around the world and across all sectors) to produce its report entitled “Big Data, Analytics and the Path From Insights to Value." They also surveyed leading researchers. MIT’s research concluded that "Top performers view analytics as a differentiator: Top-performing companies are three times more likely than lower performers to be sophisticated users of analytics, and are two times more likely to say that their analytics use is a competitive differentiator.”
"Top-performing companies are 3x more likely than lower performers to be sophisticated users of analytics."
--MIT Sloan Management Review
The MIT report went on to say this:
"Our study clearly connects performance and the competitive value of analytics. We asked respondents to assess their organization’s competitive position. Those who selected “substantially outperform industry peers” were identified as top performers, while those who selected “somewhat or substantially underperforming industry peers” were grouped as lower performers. We found that organizations who strongly agreed that the use of business information and analytics differentiates them within their industry were twice as likely to be top performers as lower performers. The biggest obstacle is not the data: Despite the enormous challenge felt by most organizations to “get the data right, ”that’s not what executives name as the key barrier to achieving the competitive advantage that “big data” can offer — the top two barriers are “lack of understanding of how to use analytics to improve the business” and “lack of management bandwidth.”
Product Development Institute
The Product Development Institute (in it’s affiliation with Stage-Gate International) has worked with thousands of companies (and tens of thousands of new product launches) over the past 30 years. Along they way, they have compiled a massive database of product launch and innovation performance results. Consistently, their research clearly shows that companies using a proven idea-to-launch process (like Stage-Gate) and advanced market research enjoy “new product success rates that are 3x higher” than competitors.
"Companies using a proven idea-to-launch process (like Stage-Gate) and advanced market research enjoy new product success rates that are 3x higher than competitors."
-- The Product Development Institute
None of this should really surprise us. As we face challenges every day, we are constantly looking for data and analysis that can help us make better and faster decisions to obtain better results. Of course, we also rely on intuition and creativity to create new and better products, decisions and futures…innovations that would have been unborn if left purely to data warehouses in the clouds that are being mined by the quants.
The Bottom Line
Einstein wrote “Intuition does not come to an unprepared mind.” We've proven that today's top performing companies are prepared to take full advantage of analtyics for long term competitive advantage. Top performing companies of the future will have invested heavily in market research and advanced analytics. Indeed, they will make these consumer and market-driven insights the very foundation of their businesses. At the same time, the best companies will blend this unprecedented new level of insight with the age-old and awe-inspiring ability of humans to dream, create and invent a better world for us all.