Catch them if you can: How leaders in data and analytics have pulled ahead

 

Here is an excerpt from an article written by Josh Gottlieb and Allen Weinberg for the McKinsey Quarterly, published by McKinsey & Company.  It shares the results of a latest McKinsey Global Survey on the impact of data and analytics on industry competition for leading companies. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.

* * *

As data and analytics transform industries at an ever-quicker pace, the strategies and organizational cultures of leading companies offer others a road map for success.
While it may come as no surprise that data and analytics are reshaping industry competition and organizations’ core businesses at an accelerating pace, the persistently lackluster response to this phenomenon by most companies should raise some eyebrows.
In our latest McKinsey Global Survey on the topic,1 respondents say that since our 2017 survey, the changes data and analytics have brought to their industries are growing in both magnitude and scope. Yet they also indicate that many of their companies are still responding to these shifts with ad hoc initiatives and one-off actions, rather than through long-term strategic adjustments that are required for sustainable success in an evolving business environment. (Explore the survey results in our data visualization, “An interactive look at organization’s use of data and analytics.”)The survey suggests that companies still dragging their feet do so at their own risk, because the gap between leaders and laggards just keeps growing.
According to the results, companies with the greatest overall growth in revenue and earnings receive a significant proportion of that boost from data and analytics. Respondents from these high-performing organizations are three times more likely than others to say their data and analytics initiatives have contributed at least 20 percent to earnings before interest and taxes (EBIT) over the past three years.2How are these leading companies managing to capitalize on data and analytics, and what can other organizations do to catch up? Above all, the responses from high performers indicate that their leaders are creating both data and analytics strategies for the long haul. These organizations are also making data a core part of employees’ work flows and mind-sets by educating them as part of a broader effort to build a strong data-driven culture. All the while, they are ensuring that high-quality data and modern technological foundations are in place to support these efforts at scale.

Competitive threats are accelerating—and becoming more diverse

Across industries, respondents see the use of data and analytics increasingly upending the competitive landscape. Forty-seven percent say that data and analytics have significantly or fundamentally changed the nature of competition in their industries in the past three years. While this middling figure indicates we’re still in the early days of the shift, it increased a whopping 38 percent since the previous survey. When asked which competitive shifts they’re seeing, respondents most often cite new entrants launching analytics-based businesses—as they did previously—but also note that other changes are quickly becoming more commonplace (Exhibit 1). For example, respondents are almost 2.5 times more likely than before to report traditional competitors launching entirely new data and analytics businesses and pooling their data via a shared utility. Forty percent also note that companies are forming data-related partnerships along the value chain, a 91 percent increase from just one year before.

Despite the rise of a range of competitive threats, the results indicate that many companies are still scrambling in their efforts to address them. Four in ten respondents say their companies have only responded to these changes in an ad hoc fashion.3

* * *

Here is a direct link to the complete article.

The survey content and analysis were developed by Josh Gottlieb, a practice manager in McKinsey’s Houston office, and Allen Weinberg, a senior partner in the New York office.

They wish to thank Lyndon Adams and Toby Sykes for their contributions to this work.

 

 

 

Posted in

Leave a Comment





This site uses Akismet to reduce spam. Learn how your comment data is processed.