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Competing on analytics.

Thomas H Davenport1

  • 1Babson College, Babson Park, Massachusetts, USA. tdavenport@babson.edu

Harvard Business Review
|February 2, 2006
PubMed
Summary

Leading companies leverage advanced analytics across business processes for competitive advantage. This requires significant investment, data accumulation, and a top-down commitment to a data-driven culture.

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Area of Science:

  • Business Strategy
  • Data Analytics
  • Competitive Advantage

Background:

  • Traditional competitive advantages are diminishing due to similar products and technologies.
  • Differentiation is increasingly found in optimized business processes.
  • Analytics offers a powerful tool for enhancing these processes.

Purpose of the Study:

  • To identify characteristics and practices of organizations excelling in analytics.
  • To outline the necessary changes for companies to compete using analytics.
  • To highlight the strategic importance of data-driven decision-making.

Main Methods:

  • Analysis of leading companies (Amazon, Harrah's, Capital One, Boston Red Sox) that dominate through analytics.
  • Examination of organizational structures and strategies for managing quantitative activities.
  • Review of executive commitment and cultural shifts required for analytics adoption.

Main Results:

  • Organizations competing on analytics deploy "industrial-strength analytics" across diverse activities.
  • Data-driven decision-making is empowered by employees with quantitative expertise and tools.
  • Analytics initiatives are managed at the enterprise level, not departmentally.

Conclusions:

  • Competing on analytics demands significant investment in technology and data infrastructure.
  • A company-wide strategy for data management is crucial.
  • Executive commitment and a willingness to transform employee thinking and work practices are paramount.

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