In a highly competitive evolving business environment, detailed tactical plans and execution of core firm-specific objectives, coupled with effective monitoring and evaluation of key performance indicators (KPIs), have not only become a means to compete but also principal ingredients for survival. In the heart of this challenging endeavour to maintain competitive edge and relevance in a highly dynamic business environment, however, lies the core driver of firm or corporate operational activities – the strategic plan!
This highly treasured piece of a guarded corporate dossier, designed to define and influence specific strategic moves and tactics, has witnessed significant growth in page content and complexity over recent years. From a rudimentary and mostly theory-driven list of projected activities – consisting primarily of derivatives from corporate missions, visions and core objectives – corporate strategic plans in recent years have morphed into what can aptly be described as a well-crafted semi-complex element of business dossiers for the corporate elite.
The professional manner in which most strategic plans have been presented at corporate meetings over recent years could easily be mistaken for a formal display of a Picasso masterpiece in a setting accentuated with enchanting classical music. With a formal, highly choreographed presentation format one would rather expect from a sales person whose job is on the line, strategic plan presentations among decision-makers in the corporate ‘bubble’ have become something to behold!
A quick perusal of one of these documents often leaves one amazed at how impressively detailed strategic plans have become in recent years – thanks to customised templates infused with fancy computer-aided graphics and dashboards. In the midst of this golden age of the impeccably developed strategic plan adorned with corporate symbols and presented in a format destined to appease even your average picky CEO, lies a strategic defect! The defect of inadequate business intelligence (BI) emanating from weak firm-specific data analytics.
Data Analytics as referenced in this piece, should not be mistaken for basic trend analysis or summary of firm data highlights often captured in charts for esthetic value. A comprehensive Data Analytics report, with the potential to inform actionable business intelligence (BI), focuses on a detailed data- driven report examining firm-specific or corporate-wide (Trend dynamics, Trend learning, predictive analytical approaches, real-time statistical projections, real-time comparative analysis of key KPI’s etc.) data sets to highlight unique features with competitive edge potential using specialized systems and software.
Data analytic informed strategic plans described in this article has the potential to provide competitive edge by influencing the development of better BI’s while at the same time limiting the likelihood of successful duplication by the competition. This surmised advantage is possible because, more often than not, activities emanating from such data analytics are relatively unique and firm-specific; and not borne out of readily assessed leading theory which could be easily replicated by the competition.
For instance, in a hypothetical highly competitive business environment in which competitors readily react to leading strategies, data analytics informed strategic move by firm A, might be adopted by firm B in a reactive competitive move. However, firm B might not attain similar benefits that might accrue to firm A, because the adopted move might be inconsistent with firm B’s own structures and mode of operation defined by its underlying data trend dynamics. The expected return from such reactionary move by firm B, might actually prove costly and counterproductive all things being equal. In order words, even in an event where Firm A’s strategic move is matched by firm B, the likelihood of relatively minimal benefits or failure could be higher for firm B, because of potential mismatch between the adopted strategy and its underlying data dynamics. To better appreciate growing relevance of exhaustive firm-specific data analytics in recent years, one has to critically examine core sources of competitive edge among firms. Embedded within legion of sources of Competitive advantage prescribed by mature theories such as those proposed by Michael Porter, lies a common feature of being or presenting something relatively unique compared to one’s competition. Firm- Specific data analytics in this regard, has the potential to harness underlying firm-specific uniqueness to provide such competitive edge.
Importance of data analytics in corporate performance continue to grow significantly across the globe as benefits of traditional means of competitive edge seem to wane due to mass duplication. Studies examining the role of data analytics in corporate performance in recent years have provided significant empirical evidence in support of the critical role data analytics informed decisions play in providing competitive edge among firms. One of such studies conducted by MIT Sloan Management Review, in partnership with the IBM Institute for Business Value, highlight the growing importance of data analytics in corporate performance. In this study, researchers found that 58% of the more than 4,500 respondents studied, indicated that their companies were gaining competitive value from analytics. Again, “According to a 2014 study by Accenture and General Electric, 84% of the companies surveyed indicated that big data analytics could “shift the competitive landscape” for their industry and 89% believe companies that fail to adopt big data analytics strategy could lose both market share and momentum”.
Robert Hetu, a research director at Gartner (Gartner Special Report), further argued that advanced analytics has the potential to unravel deeper insights and discovery that can challenge prevailing business assumptions. Such analysis he argued, has the potential to put information in the hands of business analysts and offer significant potential to create business value and competitive advantage. Clive Humby, (Data Science Innovator), perhaps illustrates unique potential of data analytics in corporate performance in most dramatic fashion in the following declaration: ‘Data is the new oil! Data is just like crude. It’s valuable, but if unrefined, it cannot really be used. It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity; so must data be broken down, analyzed for it to have value” In order words, firms that are not harnessing advantages of data analytics might be literally sitting on untapped crude oil of strategic and competitive advantage! Raw, unrefined data!
There is an urgent need in my candid opinion to embrace data analytics as strategic assets and a source of gaining competitive advantage in a highly competitive business environment. This need, I believe stems from what I prefer to call maturation of theory-driven strategic moves. Maturation of strategic moves concept, describes a highly competitive business environment where key rational decision makers harness relatively similar theories of strategy in developing strategic plans and making strategic moves. In such environment, this article surmise that strategic plans and tactics might tend to be relatively similar with little potential to offer much need competitive edge.
In such environment, this article projects that minor differences in environmental scanning and niche targeting, might not offer significant competitive edge often hoped for or projected. If religiously adhering to core theories in strategy were enough to provide much needed competitive advantage and steady firm performance, then what accounts for continual struggles to attain projected KPI’s among firms with impeccable corporate strategic plans? Have recent growth in sophistication in corporate strategic plans, significantly improved the likelihood of attaining expected KPIs among firms? These fundamental questions should be integral in any holistic assessments of key drivers of corporate performance. Although I firmly subscribe to the multi-faceted nature of factors explaining variability in corporate performance, I am also of the opinion that significant missing link between corporate strategy and performance, lies in harnessing competitive edge firm-specific data analytics could provide.
The writer is an Assistant Professor of Business Administration and Quantitative Methods
University of Maryland Eastern Shore,Department of Business, Management & Accounting