peopleanalyst

library / lib8d26fa934a8a54c3

Competing on Analytics: Updated, with a New Introduction

Thomas H. Davenport, Jeanne G. Harris · 2017

In a sentence

A field-defining guide arguing that organizations can build durable competitive advantage by systematically using data, statistical and quantitative analysis, and fact-based decision making as a distinctive strategic capability.

Competing on Analytics, revised and updated, makes the case that in an era when products, geography, and technology are easily copied, the last durable source of advantage is executing business processes and decisions better than rivals through analytics. Davenport and Harris draw on hundreds of company examples (Netflix, Capital One, UPS, Caesars, Marriott, Google, Amazon, Walmart) and sports teams to define what makes an analytical competitor, lay out the four pillars (distinctive capability, enterprise approach, senior management commitment, and large-scale ambition), and chart a five-stage maturity road map plus the DELTA model (Data, Enterprise, Leadership, Targets, Analysts) for building capability. The updated edition tracks the rapid evolution through four analytics eras—from descriptive 1.0 to big-data 2.0, mainstream 3.0, and autonomous/AI-driven 4.0—and shows how human, organizational, and cultural factors, not just technology, separate winners from also-rans.

The four lenses

  • Science
  • Statistics
  • Systems
  • Strategy

The model

A causal model in which design levers (senior management commitment, enterprise-level approach, analytical talent, data and technology architecture) and contextual conditions (analytical maturity stage) build an analytics-based distinctive capability, which drives improved decision making and embedded operational analytics, ultimately yielding superior business performance and sustainable competitive advantage. An analytical, fact-based culture mediates and reinforces these effects.

Senior Management Commitment to Analyticsdesign lever

The degree to which top executives passionately advocate for, model, invest in, and act upon fact-based, analytical decision making, setting the cultural tone and committing resources for analytical competition across the enterprise.

Enterprise-Level Approach to Analyticsdesign lever

The extent to which an organization manages data, technology, and analysts in a coordinated, enterprise-wide fashion rather than in disconnected functional silos, ensuring one version of the truth and broad access to analytical resources.

Analytical Talent and Workforce Capabilitydesign lever

The availability, quality, and management of analytical professionals and data scientists plus the data literacy of analytical amateurs and decision makers, enabling design, interpretation, and use of analytics throughout the organization.

Data and Technology Architecturedesign lever

The quality, integration, accessibility, and sophistication of an organization's data and analytical technology environment, including data management, repositories, analytical tools, visualization, and deployment processes.

Analytical Maturity Stagecontextual condition

The organization's overall position along the five-stage continuum of analytical competition (from analytically impaired to full analytical competitor), conditioning how quickly and effectively capability-building investments translate into outcomes.

Analytical, Fact-Based Culturepsychological state

The shared norms and behaviors emphasizing experimentation, evidence-based decisions, objectivity, and willingness to act on data, which translate analytical capability into actual decisions and behaviors across the organization.

Analytics-Based Distinctive Capabilitybehavioral pattern

A strategically central business capability (e.g., revenue management, customer loyalty, supply chain optimization) that the organization performs better than rivals by applying extensive data, analysis, and fact-based decision making.

Fact-Based Decision Making and Embedded Analyticsbehavioral pattern

The degree to which decisions and operational processes are guided, supported, or automated by data and analytics—including real-time, embedded, and autonomous decisions—rather than intuition.

Business Performance and Competitive Advantageoutcome metric

Organizational outcomes such as profitability, revenue growth, shareholder return, market share, customer loyalty, cost savings, and sustained competitive advantage attributable to analytical competition.

How they connect

  • senior management commitment influences analytical culture
  • senior management commitment influences enterprise level approach
  • enterprise level approach predicts distinctive analytical capability
  • analytical talent predicts distinctive analytical capability
  • data technology architecture predicts fact based decision making
  • analytical culture mediates fact based decision making
  • distinctive analytical capability influences fact based decision making
  • fact based decision making predicts business performance
  • distinctive analytical capability predicts business performance
  • analytical maturity stage moderates business performance
  • analytical talent influences analytical culture

A candidate measure

Competing on Analytics: Updated, with a New Introduction — derived measurement candidates

Senior Management Commitment to Analytics

Frequency of analytics mentions in annual reports/analyst calls; Presence of analytics in stated strategic competencies; Number of analytically oriented senior hires

self-report suitability: medium

Enterprise-Level Approach to Analytics

Existence of CDAO/analytics hub; Proportion of data centrally managed; Number of conflicting data definitions

self-report suitability: medium

Analytical Talent and Workforce Capability

Number/ratio of analysts and data scientists; Training/certification completion rates; Numeracy test pass rates

self-report suitability: medium

Data and Technology Architecture

Data quality scores (completeness, consistency); Architecture maturity stage; Cost per gigabyte stored/analyzed

self-report suitability: medium

Analytical Maturity Stage

Analytics Maturity Assessment score (1-5); DELTA factor ratings

self-report suitability: medium

Analytical, Fact-Based Culture

Number of experiments per year; Share of decisions citing evidence; Perceived fact-based culture index

self-report suitability: high

Analytics-Based Distinctive Capability

Benchmark performance in focal capability; Number of proprietary analytical metrics; Strategic centrality rating

self-report suitability: medium

Fact-Based Decision Making and Embedded Analytics

Percent of decisions supported by analytics; Number of embedded/automated decision applications; Experiment-to-decision rate

self-report suitability: medium

Business Performance and Competitive Advantage

5-year CAGR; Profit margin; Total shareholder return; Same-store sales growth; ROI on analytics projects

self-report suitability: low

Run the assessment

The story

The reader A business leader or manager who wants to build a durable competitive advantage and outperform rivals in their industry.

External problem

Traditional bases of competition (geography, technology, products) are easily copied, leaving few ways to differentiate.

Internal problem

They feel uncertain whether their gut-based decisions are good enough and fear being outmaneuvered by smarter, data-driven competitors.

Philosophical problem

In a world awash in data, it is simply wrong to keep making important decisions on intuition when facts could guide them better.

The plan

  1. Assess your data, leadership, and culture to determine your analytical maturity stage.
  2. Choose a distinctive capability and strategic target for analytics.
  3. Build the DELTA capabilities: data, enterprise approach, leadership, targets, and analysts.
  4. Pursue a full-steam-ahead path with executive sponsorship, or prove value through small projects first.
  5. Embed analytics into decisions and processes and act on the results.
  6. Continually renew metrics, models, and capabilities as conditions and technology change.

Success

  • Smarter, faster, fact-based decisions that consistently beat competitors.
  • A distinctive capability optimized by analytics, yielding higher revenue, profit, loyalty, and market share.
  • An analytical culture with the right talent, data, and technology that is hard for rivals to copy.

At stake

  • Continued reliance on intuition while data-driven competitors capture your best customers and markets.
  • Wasted data and technology investments with no strategic impact.
  • Becoming an also-ran or case study, like firms felled by complacency.

Related in the library