Competing on Analytics: The New Science of Winning
By Thomas H. Davenport and Jeanne G. Harris
Harvard Business School Press, 2007
Too often, in their early applications to business, mathematical techniques were solutions in search of a class of neatly structured problems rarely encountered in the real world. But, as Thomas H. Davenport and Jeanne G. Harris make clear in Competing on Analytics: The New Science of Winning, the world has changed.
The catalysts for this change have been (1) an increase in our ability to capture, store, and analyze vast quantities of data, and (2) the emergence of a new generation of computer-literate executives. Analytics have developed into important tools for the extraction of competitive advantage by supplying rapid, specific feedback on the outcomes of management actions. Indeed, Davenport, the President’s Distinguished Professor of Information Technology and Management at Babson College, and Harris, executive research fellow and director of research for the Accenture Institute for High Performance Business, show how leading companies from a wide range of industries are now using a hugely expanded arsenal of mathematical techniques to drive their decisions and actions and compete more effectively.
The authors supply benchmarks against which firms can measure their analytical competence; the five levels range from the “analytically impaired” to “analytical competitors.” This latter category includes Harrah’s Entertainment, Capital One, Procter & Gamble, and the British supermarket chain Tesco. Organizations like these are using a broad variety of mathematical techniques both internally (in the areas of finance, manufacturing, research and development, and human resources) and externally (with customers and suppliers) to analyze, forecast, and optimize their decisions. The key factors in their analytic capability are technology itself, human components such as culture and leadership, and organizational elements such as performance management and strategy execution. In its stories and precepts, this book makes it clear that, although analytics are no substitute for business judgment, they enable leaders to exercise that judgment at much finer levels of discrimination.
The authors also list the potholes companies should avoid as they attempt to become more analytical. The most common is choosing the wrong problem or the wrong analytical technique. They say the biggest challenge is that objective criteria may pose a threat to powerful bureaucrats in organizations in which information is regarded as a source of power to be hoarded. With its high-level, comprehensive overview of the field of analytics, this book could become a worthy entry point for anyone interested in the subject.permalink.