Tag Archives: Business Competitiveness

Don't Boil The Ocean

“Don’t boil the ocean!” Is it for you?

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“Don’t boil the ocean!” You might have heard this warning-like phrase.

It originates from the literal concept of boiling the ocean, an impossible task. The phrase serves as an advice to not make a task difficult by doing it too thoroughly.

Over time, this advice has become very popular in industry. In consulting, the phrase is something of a blanketrule that suggests prioritising rather than analysing all the data at hand to arrive at an answer.

Sounds logical, right?

This advice applies well to large corporations that have such humongous amounts of data, that it is practically impossible to analyse everything. Analysing all the available data to them is akin to “boiling the ocean.” It is time-consuming, costly, and impractical.

So, it totally makes sense for large businesses to “Don’t boil the ocean.”

But, for startups and small & medium businesses (SMBs), it doesn’t make any sense!

For instance, if a small startup is assessing their product market fit (PMF), they must extract every ounce of insight from the little data they have to correctly validate their hypotheses. For them, the data is yet to assume the size of an ‘ocean.’ So, it is perfectly fine for them to try to analyse everything – quantitatively, qualitatively, and contextually – to make the right decisions. Ignoring any data point at initial stages could be the difference between eliminating and selecting their right target customers (or death and growth).

Likewise, for SMBs with small databases, it seems sensible to not follow “Don’t boil the ocean.”

We have experienced this first-hand in our studies for mid-sized clients. Quite often, some nondescript looking data point turns out to be invaluable.

Also, being manically thorough or proverbially speaking boiling the ocean has its own advantages.

Examples galore from every conceivable field, of people becoming exceptionally successful because of being painstakingly thorough.

Then why do many (small) businesses take “Don’t boil the ocean!” as gospel truth?

They do so for three reasons:

1. Propensity to imitate larger successful businesses. When smaller businesses imitate their larger competitors, they are unwittingly doing a favour to their larger competitors. By doing “Don’t boil the ocean,” they are likely to miss on good insights, make wrong decisions, become less competitive, and as a result, miss on becoming a real threat to their competitors.

2. Lack of intent, energy, time, and resources to put in the grunt-work. Let us accept the fact. If you want to be extremely thorough at what you do, you must be prepared to spend disproportionately more time – your time – doing the task. And guess what – it is back-breaking work. Not everybody is willing (or has the energy, time, and resources) to put in the grunt-work. For them, advice like “Don’t boil the ocean” gives a smart-sounding escape. After all, you don’t know what you don’t know.

3. Misplaced priorities. Being thorough correlates with being effective. “Don’t boil the ocean” correlates with being efficient. Your first priority as an SMB is to be more effective in addressing your customers’ needs. In today’s information age, deep understanding about your customers and business makes you more effective. If you misplace this priority at the onset, you might end up being efficient in doing the wrong things.

So, Entrepreneurs and Small Business Owners, don’t fall in the trap of management consulting jargon. Reset your thinking!

As the famous saying (in Hindi) goes, “Dikhave pe na jao, apni akal lagaao (rough translation: don’t blindly follow Norself, think for yourself!)”

You are yet to realise your professional and personal goals, So go ahead, and boil the ocean.

If not boil, churn it, get real gems out of it, and enjoy growth!

And large corps: imagine what YOU can achieve if you stop following “Don’t boil the ocean.”

#Reset #ReThink

Related Posts:

<- Embrace tracking to avoid unpleasant surprises

For the next post topic, please give your suggestion in the comments below \/

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Predictive capability

Embrace tracking to avoid unpleasant surprises

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The previous Veracle implored starting a venture not with planning, but tracking.

Tracking has different connotations in different fields. All kinds of tracking have three benefits: predict the future, achieve phenomenal results, and minimise risks.

1. Tracking helps predict the future.

When we track something, we capture a data point.

When we capture data points over time, we observe patterns.

And when we observe patterns over time, we develop predictive capability.

We can use this predictive capability to solve complex problems.

Here is an example from ancient India.

Once upon a time, there lived a mathematician-astronomer – Varāhamihir – in Ujjain. He was a courtier in the emperor’s palace. His correct predictions made him famous as an astrologer.

According to Ancient Indian Hydrology and Brihat-Samhita, Varahamihir used to correctly predict the exact day and prahar (which is a three-hour long subdivision of the day) of the first rains of the season. He could also foretell whether the monsoon would bring enough rains. His forecasts helped the emperor pre-empt and solve water related problems.

Varahamihir had even predicted water on Mars over 1500 years ago. His predictions are still relevant.

Other legendary mathematician-astronomers like Āryabhaṭa and Bhāskarāchārya were also regarded as astrologers because of their precise predictive capabilities.

But how did they do it in the absence of any advanced instruments?

These scholars leveraged tracking as a tool to develop predictive capabilities.

They closely tracked everything about nature, the celestial objects, and their changing positions. They performed mathematical calculations to draw patterns and conclusions. This helped them connect the dots and understand how it impacted human beings.

In short, when we put tracking to good use, we can solve even big problems.

2. Tracking renders phenomenal results.

Tracking is one of the most underused tools available to everyone.

A little but consistent tracking can lead to remarkable results.

For example, Sachin Tendulkar very diligently tracked every single of the 50,000+ balls he faced in international matches. After a while, he could correctly predict what the next ball is going to be. It helped him bat more balls to boundary irrespective of the opponents or the playing conditions. That made him the legend he is.

On a lighter note, he has tracked the game so well over the years, that he is now being applauded even for his accurate predictions, like this one and this.

John D. Rockefeller, considered the wealthiest American of all time, had developed the habit of tracking the market when he was a regular book-keeper. When the panic of 1857 struck, Rockefeller keenly traced the tumultuous events when the people and businesses around him failed. His tracking habit gave him insights about the weakness in the economy. He used these insights to eventually become the legendary investor.

When we track well, we can achieve the stuff of legends.

3. Tracking minimises risks and avoids unpleasant surprises.

Every field, like business, sports, or personal health, has some ‘performance indicators.’

Close tracking of these performance indicators enables minimizing risks and avoiding unpleasant surprises.

For example, here are some informal indicators to track personal health. Clubbing of fingertips indicates low blood-oxygen, crease in ear lobes may allude to a possible heart trouble, irregular speech patterns, uncommon tongue texture and colour, and abnormal eyes may also reveal presence of some underlying health condition.

When we track our health performance indicators, we can prevent nasty health surprises and ensure longevity of quality life.

In general, when we embrace tracking in our lives, we can predict and control how our life pans out over the years and maximise bliss.

Tracking in business?

Likewise, in business, when we track business performance indicators, we can avoid business catastrophes, predict future performance, and maximise business growth.

We, at Veravizion, have established tracking mechanisms to review business performance. It enables us to identify red flags for our clients early-on and help them grow.

A business tracked well is a business worth running.

What tracking mechanisms do you use to manage your business?

Related Posts:

<- Want to succeed in your venture? Don’t start with planning

“Don’t boil the ocean!” Is this advice for you? –>

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Tracking

Want success in a venture? Don’t start with planning

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If you check out project success rates, you will be in for a rude shock. A significant percentage of project ventures fail. By conservative estimates, 39% of all projects fail at some point. KPMG puts the estimate at 70%. It’s like, every 2 out of 3 projects fail.

Often, the roots of failure lie in the project planning, or the lack thereof.

Why is the failure rate so high despite availability of so many tools, talents, and trainings?

Clearly, something is wrong.

Most projects follow some variant of the renowned PDCA – Plan -> Do -> Check -> Act – cycle for project planning.

And here is the problem: They start with planning.

But, planning is not the first step of good planning. Tracking is that first step.

Let me explain.

A project objective entails us going from our current position to a desired new position.

For example, a weight loss project involves someone going from 110Kgs to 70Kgs; or your business growth project requires you going from $5Mn to $50Mn.

Planning helps devise the path to go from the current position to the desired new position. Now, the path will take you to the desired position only if the planning is correct.

And the planning will be correct only if it is based on facts, and not on assumptions.

This is where tracking comes in.

Tracking is collecting facts by measuring everything about the current position. Tracking helps us build a comprehensive understanding of all past actions and behaviours (in a person, project, or business) that led it to its current position. This deep understanding helps us plan the right actions which we can practically take to reach the desired position.

Planning without tracking leads to incorrect planning, leading to suboptimal results and project failure.

So, for someone wanting to go from 110kgs to 70kgs, tracking the person’s behaviour helps understand their current position of 110kgs – the person’s body type, eating habits, working schedules, sleeping patterns, propensity to exercise (or not), belief in discipline, and in general the lifestyle.

[Since gym-instructors rarely track all this BEFORE starting the gym routines, it seldom* works.]

Likewise, for a business aiming to grow revenues from $5Mn to $50Mn, tracking the business helps understand its current position of $5Mn – who the customers are, what they buy, why they buy, when they buy, their buying habits, and pretty much everything about the business.

That’s why, tracking must be the first step of any project venture, before any planning.

The initial tracking provides factual inputs to devise the proper plan – the right path – to reach the desired position.

Once a venture starts tracking everything required to prepare the plan, the plan will be real, and executable. It will solve both the planning and execution problems.

Here is one case study.

One of my friends had migraine for many years. It was extremely severe – high frequency, high intensity kinds. In his words, “it would be as if someone is pounding Thor’s Mjölnir continuously on one side of my head, for hours, without break.”

He tried a lot of things, without any substantial results.

I suggested him the above approach. He effort- and time-tracked his entire days – EVERYTHING – for many weeks. Afterwards, we analysed the data. We gathered significant insights to plan the right actions to get rid of his migraine. He is now a relieved person.

In sum, if you want to succeed in your venture, don’t start with planning. Start with tracking instead.

*  More than 80% people who have gym membership do not use the gym because it doesn’t seem to benefit them. Only about 18% of members actually went to the gym consistently.

Related posts:

<– Fields Medal, Open Problem, and Business Decisions

Embrace tracking to avoid unpleasant surprises ->

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Business Decision

Fields Medal, Open Problem, and Business Decisions

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Earlier, we discussed how analytics with statistics is valuable and beneficial in making business decisions and formulating strategies.

There appears an increasing level of interest among math scientists to work on topics, like machine learning, that are changing people’s lives through its application in business.


“A topic that is attracting more and more attention is mathematical aspects of machine learning. There are many directions; one that interests me is how I could use some of these exciting new tools in my own research. Another very ambitious and noble goal is to create a mathematical theory of machine learning. When does it fail, and when we can we hope for good results?”

— Maryna Viazovska, 2022 Fields Medal winner, in a Q&A with Nature

This Veracle is about how the mathematicians’ work is instrumental in pushing the boundaries of making data-driven decisions in business.

Let us begin with a little fun challenge: Take a look at the four knights on the cover picture. Can you exchange the positions of the black and white knights on the given chess board?

If you can, then you may have it in you to win the Fields medal.

What is Fields Medal and how is it relevant to business?

The Fields Medal is the most* prestigious award a mathematician can receive. The International Mathematical Union presents the medal to young math scientists for outstanding contributions in mathematics. The Fields Medal is only awarded every four years.

Business Decisions
The obverse and reverse of the Fields Medal

This year, four mathematicians are the winners of the Fields Medal. They received their awards earlier this month in Helsinki, Finland.

Business Decisions
2022 Fields Medal winners

They have earned this distinguished honour for solving or moving closer to solving longstanding “open problems.”

An open problem is a known stated problem which has not yet been solved. It is assumed to have an objective and verifiable solution.

The answers to open problems pave ways for innovative ideas and possibilities. In business context, these answers facilitate, among other things, making business decisions better and faster.

How is their work exciting and significant?

Business decision making has become too complex. Business executives must consider both qualitative and quantitative information to make decisions.

Qualitative information uses subjective judgements. This includes non-quantifiable data such as employee expertise, people attitude towards change, and company culture among other intangible aspects.

However, quantitative information uses data. Now, organisations have too much data available to them. They have data generated by operational transactions, market research, and external sources. Organisations must analyse this exponentially growing data to make decisions. Moreover, they must make many of these decisions in the runtime.

To that end, businesses need more advanced computational algorithms to sift through zettabytes of data to analyse and arrive at useful insights. The conventional techniques are highly time and cost intensive.

This is where work of the Fields Medallists becomes significant.

How does mathematics help business decisions?

This year’s Field Medallists’ works are centred on number theory, probabilistic theory, and combinatorics, among other more intricate topics.

Here are a few examples of business applications of the topics of their work.

Number theory deals with the properties and relationships of numbers.

It has helped in public key cryptography, such as RSA algorithm. This has enabled confidential communications, digital signatures, and secure online transactions for e-commerce companies.

Probability theory is the branch of math concerned with calculating the likelihood of an event. It has numerous applications in business.

From all kinds of risk assessment and modelling (like that for investment and insurance) to sales forecasting, most prediction algorithms use probability theory.

Combinatorics is the study of objects and connections between them. Simply speaking, it has applications wherever we need to arrange things using permutations and combinations.

One can see examples of combinatorics everywhere. It can help in optimising communication networks and logistics. Combinatorics had a crucial role in manufacturing. For example, modular toy manufacturing.

How does it matter to Veravizion?

At Veravizion, we help our clients thoroughly understand their customers. The objective is to devise and implement effective marketing strategies for their business growth.

This involves figuring out our customers’ real target customers, understanding their purchase motivations, performing causal analysis, optimising resource allocations, and in general solving their business problems.

In this process, we apply several techniques such as clustering, regression, optimisation, resource planning, and various other statistical analyses. These are based on pure math and statistical concepts like probability theory, combinatorics, and mathematical optimisation.

Are there any areas of business where you think we can consider using math and statistics?

How else does math help businesses?

* The Abel Prize is also regarded as a top award in mathematics. According to the annual Academic Excellence Survey by ARWU, the Fields Medal is consistently regarded as the top award in the field of mathematics worldwide, and in another survey conducted by IREG in 2013–14, the Fields Medal came closely after the Abel Prize as the second most prestigious international award in mathematics.

Related Posts:

<– Is analytics all hype and no substance?

Want to succeed in your venture? Don’t start with planning –>

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What are isolated evidence and random variation

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We know that inferential statistics helps people to make intelligent and accurate conclusions about a greater population based on analysis results of a small sample. Simply put, we can make estimations about populations based on a small sample of people.

One example: if we met a small group of doctors and find that the cardiologists among them earned more than general physicians, we could infer that cardiologists, generally, earned more than physicians.

Another example: In exit polls, the pollsters ask a small group of people at polling stations about who they have voted. Based on their responses, the pollsters make a generalised estimation on who is likely to win from that constituency.

However, there can be two problems in here.

  1. Isolated evidence
  2. Random variation

Isolated evidence

The problem of isolated evidence happens when we draw inferences based on only a few cases. Such inferences might not be accurate.

Like the above example, if we happen to know only the top cardiologists who earn high salaries, we might be tempted to generalise that all cardiologists earn high salaries. This is because we personally know a few that earn high salaries. Here, we have isolated evidence of only a few known cardiologists that do not represent the entire population of cardiologists.

In case of isolated evidence, we generalise based on known cases. So, there is an element of cognitive bias. Since cognitive biases strongly influence our decisions, we tend to generalise based on these cognitive biases. It influences so much that we look at every evidence in the light of our cognitive biases.

This problem is more likely to occur in the context of personal experiences.

For example, if we do not have a good experience of a certain product (or a service or an institution), we will desist our friend from using it. Ours may be a case of isolated evidence of bad experience with that product (or service or person). Most other people might have had other experiences. In short, our isolated evidence is not enough to conclude whether something is good or bad.

Random variation

The problem of random variation happens when we have insufficient sample data which may not be representative of the population. Here, we are likely to make inaccurate predictions about the entire population based on inadequate data. In such cases, any observed trend is out of randomness.

Random variation is independent of the effects of cognitive and systematic biases. We must aim to collate sufficient data points to nullify the effect of random variation. In general, the larger the sample size, the smaller the effect of random variation on our estimation. As the sample size increases, the random variation decreases, and the estimation accuracy increases.

In the above polling example, the pollsters may survey only a few people from a tiny number of polling stations. The variation thus obtained is more likely to be random than indicative of the entire population.

Don’t they sound the same?

It is easy to confuse between isolated evidence and random variation.

We can even say that isolated evidence is a special case of random variation.

However, there is one key difference.

Isolated evidence is rooted in the form of personal bias. Whereas the random variation comes purely from inadequate sample data.

That is why isolated evidence is more prevalent in people’s personal experiences. So, a friend asking us not to purchase a product is a case of isolated evidence. The star rating of the product on an e-commerce platform is statistical evidence and solves this problem if the rating is given by thousands of unknown people.

So, the next time we are tempted to make a conclusion based on a small sample size, check whether it is statistical evidence, or a case of isolated evidence or random variation.

Related Posts:

<– How can we make difficult decisions?

Is analytics all hype and no substance? –>

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What business are you in

What business are you really in?

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How do you define your business? Can you tell what business are you really in?

Seriously, do take a moment and complete the following sentence.

I am in the business of ___________________________________.

Why is it important to know what business we are in?

Because it helps us decide exactly what to sell, whom to sell to, and how to sell. Without this clarity, businesses struggle to continue to survive.

Most of us define it based on:

  1. What we do: we print books and brochures; we are in the printing business.
  2. What we own: we own factories and workshops; we are in the manufacturing business.
  3. What products we sell: we sell toys; we are in the toys business.

However, this seller-centric approach is not optimal. What if customers stop using what we do, or stop making stuff with what we own, or stop buying products we sell. We will soon be history.

Then how should we think about what business we are in?

Let us understand with an example.

What business is Amazon.com in?

Amazon.com does packaging and delivery of stuff. Of course, they are a logistics and supply chain company. But they do not earn revenues from trucking and shipping.

Amazon.com owns large fulfilment centres and warehouses to store stuff. Clearly, they are a storage and warehouse company. But they do not profit from rentals and leases.

Amazon.com sells around twelve million products. Sure, that makes them a retail company. Except, they do not make money off the products they sell.

Rather, they make money by earning commissions through sellers. That means they are in asset-light brokerage business, right? But then, they own tons of assets, both physical and digital?!

So, what business is Amazon.com really in?

Amazon.com defines themselves as a customer-centric technology company. They use technology to connect retail buyers and sellers on a unified platform. They use data analytics to understand more about their customers – both buyers and sellers. Amazon leverages these insights so that sellers get more buyers, and buyers get a wider range of selection for cheaper from multiple sellers.

How could Amazon.com have clarity about what business they are in when they do so many things?

Because they do not define their business by what they do, or what they own, or what products they sell.

Amazon defines their business based on what purpose they serve for their customers.

That is the key.

We must define our business by what purpose we serve for our customers.

It keeps us aligned with the customer needs all the time. Moreover, it allows us to pivot with changing customer needs and preferences. Most importantly, it helps us build sustainable competitive advantage and ensures business continuity.

A product does not define a business, the purpose it serves for its customers does.

If products defined businesses, then Sony Walkman cassette player, Ambassador car, Toys “R” Us, Apple Newton, Pontiac, Polaroid camera, Nintendo, Palm Pilot, and many such products would still be around.

Yet, several companies have failed for not developing this clarity.

Kodak helped people create lifetime memories. However, Kodak thought they were just selling photographic films. So, when an engineer (ironically from Kodak) invented a filmless digital camera to achieve the same purpose in a better way, Kodak ignored. Not thinking about what business they were really in, they focused on their product – films. They completely missed the purpose they served.

Blockbuster enabled people to enjoy movies at home. But they thought that they were in the business of video rentals. At the time, Netflix also rented out videos by mail. Yet, Netflix figured out that they were really in the entertainment business. This clarity helped them pivot from the mail-based video rentals to DVD rentals to subscription video on-demand (SVoD).

The clarity is essential

To reiterate, we must define our business by what purpose we serve for whom.

Once we build this clarity, it is easier to articulate it to our customers thereby attracting the right customers and propelling our sales forward.

If you are yet to start your business, then why not do so by answering this question: what purpose of which customer do you want to serve?

Related Posts:

<– Startup Pitch: Are You Ready for the Shark Tank?

How can we make difficult decisions? –>

Cover Photo courtesy: Mark Fletcher Brown on Unsplash.com

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customer-centric sales

Customer-centric Sales is the New Competitive Advantage

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This Veracle explains why customer-centric sales is the new competitive advantage.

Earlier, we recognised the need for a new frontier for sustainable competitive advantage.

We explored if product differentiation can be that frontier.

The car, coffee, and cosmetic examples illustrate that product differentiation is ephemeral. It has become transient. It is now more a hygiene factor than a source of sustainable competitive advantage.

So, if product differentiation is merely a hygiene factor, how to compete in the cut-throat marketplace?

To answer this question, let us go back to basics.

Consider our typical sales situation. Three entities are present here: the seller, the product (or service), and the buyer (or customer).

Here, many salespeople focus on the first two:

  • How they as seller are different
  • How their product is different

This is the seller-centric approach.

It focuses on sellers and their products.

It reminds me of a captivating scene in the movie The Wolf of Wall Street. When Jordan Belfort (Leo DiCaprio) asks some conference attendees to “sell me this pen”, they take this same approach.

Sell me this pen” from the movie The Wolf of Wall Street

However, this seller-centric approach is suboptimal.

It may work in certain situations. But it isn’t ideal for building long-term customer relationships. Hence, it is not sustainable.

That brings us to the third entity present in the sales process – the customer.

Today, the customer has access to a lot more information at the touch of a screen. They can easily compare products and prices. If they don’t like something in a product, they switch just as easily. They know what is best for them.

In short, customers want to be in control of their buying process.

The problem is, the seller-centric sales does not do that.

A working strategy is ‘CUSTOMER-CENTRIC SALES.’

What is customer-centric sales?

Customer-centric sales is the approach that puts the customer’s needs and purchase motivations at the centre of the sales conversation.

In customer-centric sales, you don’t try to get people to buy your stuff they don’t need, by dwelling on seller or product differentiation.

Instead, you focus on knowing customers better. Make it data-driven. We call it developing customer intelligence. You strive to understand customers at a much deeper level.

Generally, salespeople know which customers buy their products?

But many times, they do not know ‘WHY do those customers buy their products.’ Unfortunately, this is more common than we think.

The key is to know the real reason and motive behind the purchase.

But, why is THE WHY important?

Because, customer’s reason to buy your product is likely to be different from your reason to sell it.

And guess what?

Your reasons to sell do not matter; while customers’ reasons to buy do.

This may sound harsh. But it is true.

You may be selling dog food because it is so good in quality that you can also eat. Whereas, the customer may be buying it because it is cheap and convenient.

You may be selling expensive maple wood furniture because the wood is durable and sourced from hardwood forests of North America. The customer may be buying it simply because it is lighter.

You may be selling homemade food as you have fresh organic homegrown ingredients. But the customer may be buying your homemade food because they can get it customised.

The point is this.

Customers buy anything for THEIR own reasons, not yours.

Businesses that get this insight embrace customer-centric sales approach and thrive.

Others that fixate on their own seller-centric differentiation without concern to customers’ reasons struggle.

Consider examples of a few companies where a seller-centric sales approach failed them.

Example 1: A video rental company closed because of not knowing their customer’s why.

You guessed it right.

Blockbuster was in the business of ‘renting out DVDs’. Their competitor Netflix also started ‘renting out DVDs’ in 1997.

Blockbuster’s model was seller-centric. It focused heavily on high street retail sales. Apart from other things, they maximised revenues by charging late returns (of DVDs). Blockbuster made 16% of their revenues in late fees.

On the contrary, Netflix pursued customer-centric sales strategy and studied customers. They enabled consumers to watch videos for a flat monthly fee without worrying about returns.

Blockbuster’s seller-centric model frustrated customers. Netflix’s customer-centric approach eased customers about returns.

Blockbuster vs Netflix

Meanwhile, faster internet allowed online streaming. It enabled customers to watch videos online. Ergo, customer buying preferences changed. They stopped going to stores altogether.

As a result, blockbusters seller-centric model collapsed. Whereas, Netflix re-aligned with customer’s watching preferences by offering videos online on-demand.

Eventually, Blockbuster ended up bankrupt. And Netflix emerged as one of the top ‘over-the-top content platforms.’

customer-centric sales
Source credit: Strategyjourney.com

According to the UK CMO of blockbuster Bryn Owen, Blockbuster’s sales-driven model did them in.

Example 2: “Share memories, Share life.” A Kodak moment (in 2012) that saddened everyone.

George Eastman, Kodak’s founder, invented roll film in 1888.

Kodak was primarily in the photographic film business. They prided on their silver-halide film technology.

Listening to customer demand, Fujifilm started selling film in 1934.

Meanwhile, the digital revolution started in the 1960s.

Steve Sasson, the Kodak engineer, developed the first digital camera in 1975.
Source credit: James Rajotte for The New York Times

By the late 1990s, the demand for photographic films dropped in line with the growing popularity of digital cameras.

Source: PMA, Business 2 community

The rapid spread of digital technology disrupted the photographic equipment industry.

Fujifilm invested in knowing customer’s changing preferences. They adapted to this shift by switching to digital lines of business.

Despite that, Kodak focused on film.

Not just that.

Kodak had acquired a photo-sharing site called Ofoto in 2001. If they were customer-centric, they would have been the pioneer of something like present-day Instagram.

Instead, Kodak used Ofoto to try to get more people to print digital images.

In the end, Kodak filed for chapter 11 bankruptcy in January-2012.

customer-centric sales
Kodak and Fujifilm stock performance comparison with key events.

Don Strickland, a former vice-president of Kodak, said: “We developed the world’s first consumer digital camera but we could not get approval to launch or sell it because of fear of the effects on the film market.”

Once the world’s biggest film company, Kodak became a posterchild for failure due to not being customer-centric.

Unfortunately, these aren’t isolated examples of companies stuck with seller-centric sales approach. GM, Nokia, Xerox, JCPenney, Palm, Sony are but to name a few.

Building a new competitive advantage with customer-centric sales

Building a true competitive advantage requires implementing customer-centric sales strategy. This strategy has these three benefits:

  1. You give customers, control in their buying process
  2. Customers get what they want
  3. It is sustainable

Most internet-age companies that are growing rapidly are customer-centric.

Amazon obsesses over customers as they want to be known as Earth’s most customer-centric company. Everyone knows about customer-centricity of Google, Nordstrom, and Southwest.

Companies like Lululemon, John Lewis, and Target have invested in developing customer intelligence to be customer-centric.

So, how are these successful businesses pursuing this deliberate strategy of customer-centric sales?

We will discuss in the next Veracle.

Related Posts:

<– Product Differentiation: Why it isn’t enough anymore

Startup Pitch: Are You Ready for the Shark Tank? (External: The Hitavada) –>

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Product Differentiation

Product Differentiation: Why it isn’t enough anymore

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What is Product Differentiation?

Product differentiation is a strategy employed by businesses to achieve a competitive advantage by differentiating their products from those of their competitors.

Product Differentiation – why?

Generally, salespeople highlight their differentiation advantage to customers in two ways:

  • Our company is unique and special. Buy from our company.
    • This is seller differentiation.
  • Our product is unique and special. Buy our product.
    • This is product differentiation.

We will analyse seller differentiation later.

In product differentiation, special typically means high quality. The source of uniqueness and high quality in a product could be varied. Some of them are rare raw materials, advanced technology, distinctive design, superior personnel, or unusual methods. These become the sources of product differentiation. Customers perceive such products as high performance or exclusive. So, they are willing to pay a higher price for them.

Up until now, product differentiation helped businesses sell, and charge premium to their customers.

However, this is changing.

In a recent conversation with the CEO of a cosmetics company in Europe, he gave a thought-provoking perspective in the context of their product differentiation.

The CEO: “[First] it was ‘natural’. Then we introduced ‘natural fruit-based’. Then it became ‘natural fruit-based paraben-free allergen-free’. And it went on like that… Whenever I try to differentiate my product further, I feel I am narrowing my customer base. It is a big problem because my loyal customer base keeps shifting…

Evidently, his concern is not misplaced.

In an online survey in Europe, 900 women aged 25-65 years buying cosmetics and being interested in organic and natural cosmetics associated different characteristics and qualities with organic and natural cosmetics (see EXHIBIT 1).

Source: Statista 2021, Veravizion analysis

To be honest, this finding isn’t surprising.

There are so many ways to differentiate a product within a category. They may not appear truly differentiated at all.

It appears, product differentiation as a source of competitive advantage is losing its sheen. It may not be enough going forward to compete.

Wonder why it is so?

To find out, we analysed the sources of product differentiation. Our analysis yielded these insights.

In our increasingly global and digital world, the sources of product differentiation have become pervasive.

  • Global supply chains make it easy to procure raw materials from any place on the Earth. That too fairly quickly.
  • A free market economy facilitates the effortless movement of goods and expert personnel.
  • The Internet makes it simple to share information and technology.

Basically, it has become easy to procure stuff and change. This helps your rivals achieve parity with your products in no time.

Let’s see how.

Consider examples from three diverse product categories: cosmetics, coffee, and car. Notice how a product that once appeared differentiated from their competitors’ doesn’t seem so anymore.

Example 1: The Body Shop – the first natural and organic cosmetic brand?

The Body Shop is perhaps the first global company to popularise the use of ‘natural ingredients’ in cosmetics. Anita Roddick, an activist, founded it to also promote ethical consumerism. The business’s original vision was to sell products with ethically-sourced, cruelty-free, and natural ingredients. The company was one of the first to prohibit the use of ingredients tested on animals. The Body Shop truly differentiated itself at the time. And it thrived. This was in the eighties and early nineties.

Product Differentiation
Source: The Body Shop

However, competitors followed suit soon after. Every cosmetic company wanted to show natural ingredients in their product. So much so that, it might be difficult to find a cosmetic company that does not seek to differentiate itself as natural or organic. Looks like, Natural is a hygiene factor in cosmetics now.

Example 2: Kopi Luwak – world’s most expensive coffee

Product Differentiation
Source: Pinterest

Civet coffee, also called Luwark coffee (or Kopi Luwak), is advertised as the world’s most expensive coffee. It is expensive because of an uncommon method of producing it. Civet coffee is produced from the coffee beans digested by civet cat. The faeces of this cat are collected, processed, and sold. A unique process indeed!

Civet coffee is originally from Indonesia. But, it is now produced across many countries in South East Asia. It is available in India too. It may only be a matter of time before we see this coffee in our favourite coffee shops. Moreover, there are other coffee brands such as Black Ivory, Finca El Injerto, Hacienda La Esmeralda, Saint Helena, and Jamaican Blue Mountain that are touted as the world’s most expensive coffee. Apparently, Kopi Luwak seems to have lost its flavour as world’s most expensive coffee.

Example 3: Exotic and handmade Phantom – an epitome of luxury

Product Differentiation
Source: Caranddriver.com

Rolls-Royce Phantom Coupé gained fame as your own bespoke exotic car handmade by expert craftsmen. Rolls-Royce claims that no two Phantoms in the world are exactly the same.

Finally, a true differentiator? We thought so too.

Only, there are at least ten other cars which take pride in calling themselves most exotic and handmade. Lamborghini, Bugatti, Pagani trump the track where Aston Martin is not even in the top-3.

Therefore, that forces us to ask.

Product Differentiation: is it a competitive advantage or a hygiene factor?

The point from the above examples is this.

The Body Shop might be natural and organic; Kopi Luwak might be a billionaire’s brew; Rolls-Royce Phantom might be exotic and handmade.

But they are not the only ones doing it in their industry. Rather, they join the crowd by competing on product differentiation.

Ironic, isn’t it!

The truth is this. The more you pursue product differentiation, the more you risk looking like the scores of your competitors doing the same.

It makes one wonder whether ‘our product is high quality’ has become a hygiene factor. It will not guarantee you sales, let alone premium prices. But not having it will definitely hurt sales.

But wait!

Apple pursues a product differentiation strategy. And Apple continues selling huge numbers of iPhones and iOS devices. In fact, iOS had more than 50% of the market share in the US as of May-2020 (see EXHIBIT 2).

Source: Statista

How do we explain this?

Clearly, something is at play here.

Is product differentiation a source of competitive advantage? Or has it merely become a hygiene factor?

If the latter, then how can you compete in the fiercely competitive marketplace?

What are your thoughts on this?

Let us analyse this aspect in the next Veracle.

Related Posts:

<– Competitive Advantage: do you have one? Is it sustainable?

Customer-centric Sales is the New Competitive Advantage –>

Cover Photo courtesy: Vix.com

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Competitive Advantage

Competitive Advantage: you have one? Is it sustainable?

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In a sales situation, a salesperson looks to convince a customer to buy their (product or service) offering. To do that, they must showcase how their offering creates value for the customer. They are aware that the customer would be comparing their offering with those of their competitors. This is where the competitive advantage comes into the picture.

Competitive advantage renders you an edge over your rivals. A company’s competitive advantage makes their (product or service) offering more desirable to customers than those of their competitors.

According to Investopedia, competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals.

The factors could be price, product quality, delivery speed, customer service, location, and so on.

Among these, the price factor is different from the other factors.

Let’s see how.

Competitive Advantage: the ‘Price factor’

When a business competes on price, they price their products lower than their competitors’ prices. Therefore, they must produce the product at a low cost to sell it at a profit.

Source: Walmart.com

For example, Walmart competes on price. Their slogan is “everyday low prices”. They must produce or procure products at a very low cost to sell at a profit.

Competitive Advantage: the ‘Other factors’

When a business competes on factors other than price, they must ensure high differentiation from the competitors on that factor. Their slogan would be the best quality, higher speed, better customer service, and so on. However, it takes additional resources, and thus higher costs, to create differentiation. Hence, they must price the product at a premium to sell it at a profit.

Competitive Advantage
Source: Christies.com

For example, dubbed as the world’s most coveted handbags, Hermès Birkin bags are super-expensive. Each bag is handmade by a single artisan craftsman using premium materials like calf skin, alligator skin, and even ostrich skin. And there is a waiting list for the top ones like the one shown here.

This low cost and high differentiation form the basis of business strategy for firms.

Porter defined these two ways in which an organization can achieve a competitive advantage over its rivals as cost advantage and differentiation advantage.

Cost advantage & differentiation advantage served us well.

Thus far.

However, competitive advantage must be sustainable. It should help us sell in today’s fiercely competitive markets and tomorrows. In the absence of sustainable competitive advantage, your product may not continue to sell for long.

This is where the challenge is.

Both these sources of competitive advantage are seller-centric. They talk about seller’s cost advantage and seller’s differentiation advantage.

The thing is, competitive advantage for a business is the factor (or reason) for which the business wants customers to buy their products.

And the truth is, customers buy anything for THEIR own reasons, not yours.

Please do let the above two insights sink-in before you read ahead.

Therefore, it follows that, the factor for which a business wants customers to buy their products should be customer-centric.

That is, the source of competitive advantage for a business should be customer-centric (and not seller-centric).

This is like the movement of scientific theory from the Ptolemaic system (the earth at the centre of the universe) to the Copernican system (the sun at the centre of the universe).

It is a paradigm shift.

When that happens, a business will always be aligned with customer-needs. As and when the customer buying preference changes, a business will be able to respond to the change by correspondingly aligning their source of competitive advantage.

Savvy?! But wait.

What is the significance of this finding?

This signifies that the existing ways of building competitive advantage – cost and differentiation advantage – alone may not suffice.

The evidence is in the huge number of businesses shutting down, like Arcadia group, Chuck E. Cheese, Debenhams, J. Crew, JC Penny, Mamas & Papas, Mothercare, Neiman Marcus, and Wallis to name a few. Some of them are (sorry, were) iconic retailers. The list is long. Many of them are permanently closing most of their stores. Don’t we know that all of them had built competitive advantage the traditional way?

In short, we need to build the next frontier for developing sustainable competitive advantage.

And how do we do that?

Can we do it through product differentiation?

We do it by putting in place a mechanism to understand your customers like never before.

This doesn’t sound anything new, right?

Except, the ways of understanding a customer have undergone a sea-change. There is a lot more we can learn about a customer to help them.

Let us summarise the whole thing.

In the internet age, when brick-and-mortar businesses are finding it difficult to compete and are closing down, companies cannot rely only on the traditional meaning and sources of competitive advantage.

There is a need to build new frontier.

Developing your customer intelligence is the first step in that direction. That entails understanding many more things than we have ever known until now. This new frontier of competitive advantage helps you build a solid platform to grow further and beyond.

Besides, who has ever gone wrong knowing more about their customers?

Related Posts:

<– e-Retail Innovations – How e-Retail is Changing?

Product Differentiation: Why it isn’t enough anymore –>

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Online Business Growth

Online Business Growth – The Easy or The Right Way?

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Online business growth – the easy way or the right way?

Onine business growth is a topic concerning most retailers. How can retailers grow their business in these times? The key message is at the very end.

Consider this scenario.

You are the owner of a mid-sized retail business. You presently sell your product to your customers in physical stores. A typical sale goes like this: Customers show up at your store. They specify their needs, you give options. You counsel, they choose. You pack, they pay, and you complete the transaction.  

Thus far, you have been successful in your current brick-and-mortar model. Your business has a loyal customer base. The net profit margin is in the range of 15%-20%. And, the cash flow is good too.

So, you decide to take your business to the next level.

How would you do it?

The answer is ‘you go omnichannel’.

The internet penetration of above 90% in most developed countries makes it a no-brainer. Among the developing countries, the internet has grown by over 5000% since year 2000 to around 59%. Moreover, customers now prefer to buy in an omnichannel environment.

In omnichannel retail, the focus is on providing seamless shopping experience to the customer across multiple channels. Omnichannel strategy helps you integrate physical store, online store, mobile app, and social media.

In-short, your business growth strategy now revolves around selling online.

To sell online, there are two main options:

  1. Create your ‘own online channel’
  2. Sell through existing ‘online marketplaces’

This decision determines the future course of your business.

Let us dissect each option.

Option-1: Create your own online channel

Creating your own online channel includes two things: first, setting up an e-store – an e-commerce website – to display products and receive customer orders. Second, you need to have an efficient and trustworthy logistics system to fulfil the customer orders. The entire order-to-fulfilment process must run smoothly to give customers a seamless shopping experience.

Having your own online channel has several benefits.

Top three benefits are:

  • You can create bespoke personalised experience for your customers. It allows you to ensure stronger connection and engagement with them.
  • You have total control over your business throughout the customer buying process. So, you decide how customers interact with your brand while being on your website. Also, you can create relevant content around your offerings to engage with target customers.
  • Most importantly, you gain direct access to your customers and their data. You can leverage advanced analytical techniques to analyse this data. This analysis can give you crucial insights about the type of visitors, their visiting trends, and their buying patterns. These insights help you decode the online customer behaviour. Using that, you can make appropriate changes to the way you sell online. This data-driven online selling strategy promises to help you grow your online sales.

What do top-brands do?

While it is not a surprise that top brands like Apple, Starbucks, Disney, and Under Armour have their own online channels, most mid-size businesses have also launched their own online stores. It helps them create unique customer experience. The successful ones have implemented advanced analytics to reveal insights about their customer buying behaviour.

Online Business Growth
How top brands ensure unique and enjoyable customer experience through their e-stores

However, a common perception among small retailers is that there are a few disadvantages with this option, viz. higher upfront investment, additional analysis and marketing costs, and higher lead-time for online business growth. Perhaps, that is why, almost one-third of small businesses in the US do not have a website of their own.

That brings us to the second option.

Option-2: Sell through existing ‘online marketplaces’

Online marketplaces allow you to sell products without you having to set up your own online store. The marketplaces host many sellers on their website. Marketplaces are popular among buyers because they allow to buy different products across categories without having to leave the site.

The marketplace owns everything on their website. They take care of the marketing too. In return, you pay them product listing fees and a commission on every product sold.

There are many online marketplaces around. A few are global, some are regional, and many of them are national. The popular ones are Amazon, eBay, Flipkart, AliExpress, Rakuten, Etsy, and Target, amongst many others.

Many retailers tend to choose this second option over the first. It seems easier to them. Ostensibly, they see the following ‘advantages’ in this option – no upfront set-up cost, reduced marketing costs, and no waiting for online business growth.

Except, these advantages hide the real disadvantages.

Let us explain by listing out six key disadvantages of ‘selling through marketplaces’ option:

No Upfront cost = Lose control over sales

You don’t incur upfront cost if you don’t invest in your own e-commerce set-up. Instead, you use the marketplace’s infrastructure to sell. You use their e-commerce applications, their algorithms, and their processes. You depend on them for the sales.

Sure, the sales can increase, but you may not know why. [GE executives recall how Mr. Jack Welch would get angry when the sales went high and they couldn’t explain why.]

In a way, you lose control over your sales process and data to the marketplace.

Why is it a big problem?

Because, if the sales go down, you would be clueless about it. And so, would not know how to fix the problem.

Let us see an example of what it means by not having control.

When you are selling on marketplaces, you cannot control what products are being sold beside yours. Worse, what if the other product looks identical to yours but is from your competitor. Worse still, what if the other product being sold has the same brand-name as yours, but in altogether different category.

It DOES happen!

Here is a real example* of a brand selling at one of the top marketplaces:

The organic soft-cotton baby onesie, is selling alongside

woman’s cocktail dress of the ‘same’ brand-name (but from a competitor); selling alongside

motor flush oil of the ‘same brand-name; selling alongside

a music label of the ‘sam-e brand-name

– all of them in the same window.

And you cannot do anything about it.

Reduced analysis and marketing costs = Risking business survival

Generally, marketplaces own the data on your product sales. The minute a retailer signs up to a seller’s account on a marketplace, they give permission to the marketplace to use their sales data however they choose. Most marketplaces don’t share that data back with the sellers.

So, in reality, when you choose to sell through a marketplace, you don’t just pay listing fees and a commission per transaction. You also pay with your sales data, and future sales.

[I would re-read that last sentence to let it sink in.]

Marketplaces can use your sales data to gather your customer intelligence. They can leverage it to offer your customers better deals through their in-house labels.

Sellers have shared stories about how this has impacted their business.

In short, you risk losing your loyal customers to your competitors if you do not leverage your sales data yourself.

No waiting for sales-success = Less opportunity to build your brand

Online marketplaces try to make the seller onboarding process easy to bring more offline sellers on their e-commerce platform. They try to make it smooth and quick. You can start selling in a few days [and you may stop selling in fewer days if you violate their policies].

Not just that, you may also start realising sales quickly on marketplaces. However, the presence of many other products makes it difficult for consumer to register your brand among so many others in their minds.

You are successful quickly = Threat of getting undercut on prices

If you start doing really well, someone will notice and one of the two things may happen – they may offer to buy you out or they may undercut you on price and terms, eventually killing you.

Online Business Growth

Remember Zappos? Zappos was extremely customer-centric, very successful. It was the first company that sold shoes online, at scale. They put a lot of importance on understanding shoes, their culture and customer centricity.

When Amazon wasn’t going anywhere with its own online shoe store, Endless.com, they made their first attempt to acquire Zappos in 2005. Zappos declined. What happened later is not up in public domain. However, Amazon eventually acquired Zappos in July-2009.

Hyper-competitiveness – Forced to sell on price, not differentiation

Conservative estimates put the number of active sellers on Amazon at 2.3 million as of 2019. Chances are, many of them are selling the same products as you do. This makes it difficult for you to compete, if you do not have aggressive [read: less] pricing, that helps the algorithm pick your product ahead of the competitors’.

Diapers.com may be the case in point. They built a $100 million business selling diapers online. They offered free delivery of diapers and other products to parents. But they couldn’t sustain the competitive pressures and ceased to exist in 2017.

Restrictive TnC on how you can communicate with customers = Limits brand building

There may be marketplace limitations on how your business can brand and communicate itself on the marketplace. Moreover, any slightest hint of violating the strict policies will earn you the dreaded ‘seller suspension’ message.

Does that mean marketplaces are bad?

NO! Not at all.

In fact, they have disrupted some aspects of retail for the better.

For example, online shoppers love Amazon. Amazon is allowing them to have wider selection, shop-anytime-anywhere convenience, and enjoyable shopping experience, all at a cheaper price. They have developed a world-class e-commerce platform over the years.

Marketplaces can be good for small retailers, that do not have resources to have their own e-store. Also, marketplaces may be useful for those businesses not aiming to create an enduring brand.

But they may not be for everyone.

You need to figure out whether marketplaces are right for you.

Then, what is the way forward to online business growth?

Companies are waking up to the risk of increasing their dependency on marketplaces. More and more mid- and large-sized companies are embracing “direct-to-consumer” sales model.

Almost all large businesses and brands have their own e-commerce stores. Some of them were tempted initially but then recovered themselves from increasing their dependency on the marketplaces.

Nike – just doing it without a marketplace!

Nike is one such example. Recently, Nike confirmed to CNBC that it will stop selling merchandise directly to Amazon, as part of its push to sell more directly to consumers.

To quote CNBC, “Prior to 2017, Nike had resisted such a deal with Amazon, focusing its attention on its own online marketplace and stores. The fear for many brands has always been that, by partnering with Amazon, a company loses control over how its brand is represented on the site.”

This Veracle makes a point that mid-sized businesses should strive to have their own e-commerce set-up. They should attempt to leverage their sales data using analytics. This could be the right way for their online business growth.

What do you think? Have you seen a mid-sized business struggle with this dilemma?

Related Posts:

<– Know customer shopping behaviour KPIs in e-retail?

e-Retail Innovations – How e-Retail is Changing? –>

*name withheld on request.

Cover Photo courtesy: Pradnya Design Consultants

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customer shopping behaviour in e-retail

Know customer shopping behaviour KPIs in e-retail?

Veravizion 2 comments

Customer shopping behaviour is an important concept in retail.

This is why.

How do you grow your retail business? You sell what customers want. How do you know what customers want? Well, you observe how they buy.

When customers buy a product or service, they do certain things. First, they search for the product online or in stores. Next, they try to seek more information and compare prices. Then, they check product ratings and seek feedback from friends. Over time, they engage with brands through social media.

All the actions mentioned above describe customer shopping behaviour.

Customer shopping behaviour in e-retail refers to how customers interact with your website. It involves understanding the actions a customer performs between landing on your website and leaving.

So, how exactly do we “observe customers”?

We do this using the various Key Performance Indicators (KPIs). KPIs help us get a sense of real-situation quantitatively.

Previously, we saw that e-retail and physical retail have different KPIs.

Now, we can measure the customer shopping behaviour in e-retail using the following KPIs:

  • Total visits
  • Bounce rate
  • Shopping cart abandonment rate
  • Shopping cart conversion rate
  • Sales conversion rate
  • Average duration on page

The flowchart in the figure below illustrates these actions. The little boxes on the right of each process show the corresponding KPI.

customer shopping behaviour flowchart
Flowchart depicting customer shopping behaviour in e-retail

Customer Shopping Behaviour KPIs in e-retail

Here is a brief explanation of each KPI.

Total Customer Visits

Total visits KPI is the total number of visitor landings on a website.

According to Google, 63% of all shopping begins online. That makes ‘Total Visits’ the vital first KPI for an e-retail sale. E-retailers try to increase this KPI to increase sales.

Bounce Rate

Bounce rate is the proportion of visitors landing on your website and leaving without taking any action.

If the website is engaging for customers, they interact with it. More the interaction, lower is the bounce rate, and better are the prospects of making a sale.

There are various reasons for a high bounce rate. Moreover, a high bounce rate doesn’t tell the entire story. Also, there are ways to improve it.

Shopping cart abandonment rate

This KPI means a customer added products in their e-retail shopping cart but later abandoned the order.

According to Statista, 63% carts were abandoned because shipping cost was too high. While these customers have not yet purchased, they are most easy to convert to a sale.

Shopping cart conversion rate

Similarly, this metric helps e-retailers measure the number of completed orders compared to the total number of shopping carts initiated by potential customers.

It is calculated as a ratio of number of visitors who placed an order, to the total number of visitors who started a shopping cart. It is expressed as a percentage.

Sales conversion rate

Google defines sales conversion rate as the ratio of transactions to sessions, expressed as a percentage.

The recent Adobe Digital Index 2020 report pegs average global conversion rate in retail at 3% of the total visits. The sales conversion rate varies across various retail categories. Conversion of consumer electronics is only half at 1.4%. Gifts, and Health & Pharmacy generate the highest conversion rates at around 4.9%.

Average duration per page

One e-retail KPI to measure is the time spent on each webpage. This is tracked as ‘average duration per page’.

This KPIs is based on similar one in traditional retail. In physical retail store, more the time a customer spends inside a shop, higher are the chances of purchase.

So, what do you think? Do you track these metrics? If yes, which ones do you think are the most important for your business?

Related Posts:

<– How E-Retail KPIs different from traditional Retail KPIs?

Online Business Growth – The Easy or The Right Way? –>

Author: Sumit Patil

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How will you measure your business and life

How will you measure your business, and life

Veravizion No Comments

The day, last Friday, started on a sad note when I read about the untimely demise of Professor Clayton Christensen, author of ‘How will you measure your life”.

He is more popularly known as the author of nine terrific books on Disruptive Innovation, most notable among them being ‘The Innovator’s Dilemma’.

Professor Christensen had conducted a series of management lectures (https://www.youtube.com/watch?reload=9&v=rpkoCZ4vBSI) for our Saïd Business School MBA-cohort in NMLT at Oxford. I had become a fan of him and really wanted to meet him to tell how much I enjoyed his lectures.

However, there was no way I could meet him just-like-that given his stature. Having said that, Oxford is a place where you can get randomly lucky, especially when it comes to meeting important people.

And lucky I got on that day in late-June almost seven-years ago, when I had a chance meeting with him in the lobby of SBS.

I still remember the day vividly, for it was a cherishable moment for me.

I was chatting with Leo, the ever-helpful receptionist at the front-desk, when I saw him coming from ‘The Jam Factory’ side.

I got really excited at the prospect of saying Hello to him.

When he entered the lobby, he appeared to be deeply engrossed in some thoughts. I observed that he was very tall physically too.

Unsure of whether or not to disturb him, I still went up to him and wished him, only half-expecting a reciprocal greeting in return.

To my pleasant surprise, he stopped and smiled at me. I gathered courage, introduced myself, and told him how much I had enjoyed his sessions, particularly the way he narrated the disruption in the steel industry and the concept of ‘getting the job done’.

He thanked me with a smile and asked me what I wanted to do post my MBA. I told him my plans as briefly as I could.

He seemed genuinely interested and further asked me what purpose I wanted to fulfil that will help me achieve success and happiness [from it]. Clearly not ready for such a question, I mumbled something which roughly translated as ‘I will work very hard to…something something’.

On hearing my answer, he gave me one of the kindest smiles I have received.

He then told me this, which were very insightful words for me.

He said, “Success and happiness are two different things.”

Once the purpose is clear, everything else will follow.”

First know what will make you truly happy.

Furthermore, he told me to achieve a balance [in everything].

I thanked him for his advice. After this little conversation, we wished each other well, and he moved on.

That was the last I saw him on the campus.

I was perplexed as to how such a busy and great man still found time to speak with (then) a student like me.

Later, I learnt that he had recently had a non-management book published.

The book was ‘How will you measure your life’.

I found this small 240-page book full of wisdom, for business as well as for life.

It comes from a man who was not just a great management strategist, but a great thinker, philosopher, and a genuine advisor.

Then I found it, there in the book, is written a sentence by him which solved my perplexion.

I came to understand that while many of us might default to measuring our lives by summary statistics, such as number of people presided over, number of awards, or dollars accumulated in a bank, and so on, the only metrics that will truly matter to my life are the individuals whom I have been able to help, one by one, to become better people…. These are the metrics that matter in measuring my life.

You indeed have, Professor Clayton Christensen!

Rest in peace!

<– Two Finals, Two Ties, and the Common Winner

Why do Businesses hire Management Consultants? –>

Two Finals, Two Ties and a common winner

Two Finals, Two Ties, and the Common Winner

Veravizion 1 Comments

“Fed-ex is doing great; is gonna win the finals this time [sic],” said M.

“If the match goes beyond 4 sets, then Djoko will surely lift the Wimbledon trophy,” bet I.

M, a die-hard Federer fan with whom I am having almost fortnightly consulting sessions these days, and I were discussing about the possible Wimbledon-2019 winner. We had an unusual start of the day this week, playing the ‘let’s predict the Federer-Djokovic finals winner’ game, after India crashed out of CWC-19.

Suddenly, the Federer-Djokovic finals seemed more entertaining to watch.

In the end, both of us were right.

Fed-ex indeed did do great coming close to winning the title on two occasions. Djoko indeed lifted the trophy with Federer’s massive mis-hit in the end.

There he squats down to follow his winner’s routine of nibbling on a few blades of Wimbledon grass – the sweet taste of success!

. The Championships 2019. Held at The All England Lawn Tennis Club, Wimbledon. \{year4}{month0}{day0}\. Credit: AELTC/Simon Bruty

No, I do not intend to write this post telling how predictive analytics has helped predict Djoko to be the winner against Federer in today’s match.

Except, that is what this might turn out to be!

For the starters, a Federer-Djokovic match has gone beyond the realm of simple analytics.

Why?

Till date, Federer is the only gentleman (ahem… Wimbledon effect, you see!) to have beaten Djokovic in all four Grand Slam tournaments.

Similarly, Djokovic is the only man to have beaten Federer in all the four majors.

Federer has an all-time high number of 20 Grand Slam titles under his belt, while Djokovic, with today’s win, is not too far behind with 16.

Federer has held the world No. 1 spot in the ATP rankings for a record total of 310 weeks, while Djokovic continues to do so for over 250 weeks now.

The playing surface hasn’t been a decider either; both of them have beaten each-other on all surfaces.

Federer is marginally better on 1st serve win % (which is usually > 70%), while Djokovic only slightly trumps on 2nd serve win % (hovering around 60%).

And both gentlemen have achieved a career Grand Slam, two of only eight people to have done so, ever.

With such complex statistics behind the two greats, how do we conclusively analyse, and say that Djoko has a better chance at winning 2019?

Let’s consider these facts:

Federer and Djokovic have faced head-to-head 48 times, with Djoko winning 54% of the times (or 26 games) overall.

Federer dominated Djoko in 13 matches out of 19 (with a win % of 68.5) until 2010.

Since 2011, Djoko has beaten Federer 20 out of 29 times (with a win % of 68.9).

Isn’t this amazing?

Roger ruled the Wimbledon centre court until 2010, winning it 6 times.

Djokovic dominated (well, almost) the Wimbledon since 2011, winning it 5 times.

What comes next is even more amusing.

I had written in this 2015 Veracle on Lessons from Wimbledon Centre Court, how Federer’s winning points came off 5 rallies or less. And the more rallies he played (against Djokovic), the more likely he stood to lose.

Switch to 2019, Djokovic’s winning points came from 8 rallies or more; the more rallies he forced on Federer, the more unforced errors Federer rallied.

In 2015, Federer had 35 unforced errors against Djokovic’s 16.

Also, in 2015, Federer ran 5 meters more than Djokovic, for every point scored.

Later in 2019, Federer rallied 62 unforced errors, 10 more than Djoko.

In 2019, Federer covered 7 meters more distance than Djokovic, for every point scored.

The Two Finals

Then, there is an uncanny resemblance in the match stats between 2015-final and 2019-final.

And I found it fascinating to compare the score-lines from the Wimbledon finals of 2009 and 2019.

2009 Wimbledon gentlemen’s final score-line:

Federer d. Roddick 5–7, 7–6(8–6), 7–6(7–5), 3–6, 16–14

2019 Wimbledon gentlemen’s final score-line:

Djokovic d. Federer 7–6(7–5), 1–6, 7–6(7–4), 4–6, 13–12(7–3)

See the only slight twist in the two score-lines? Just flip the scores of first two sets.

So much for the analytics…

Having said that, what a final it was! The longest one in Wimbledon history – and probably one of the most entertaining ones too?!

In the other tie, England defeated New Zealand with a margin as wide as a thin blade of grass.

In sum, when it comes to such close calls, nerves win. And DATA!

Just saying…

Related Posts:

<– How Deliberate Strategy Can Be the Working Strategy!

How will you measure your business, and life –>

You can also subscribe to our blog – Veracles – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedInTwitter or Facebook to receive easy updates.

Cover photo credit: Wimbledon.com

How Deliberate Strategy can be your working strategy

How Deliberate Strategy Can Be the Working Strategy!

Veravizion 2 comments

The article “Does your business have a working strategy” mentioned three types of strategies that organizations employ to grow and prosper. The subsequent Veracles discussed the first two – Nope and Hope – strategies.

In this post, we discuss the third type. It is called Deliberate Strategy. It focuses on developing a working strategy for your organization. Here we discuss “How deliberate strategy can be the working strategy for your business.”

What is Deliberate Strategy?

Deliberate Strategy is employed in an organization where business executives are:

  • growth-oriented and are looking for new areas of growth, and
  • have the risk propensity to commit resources to new approach

In this approach, businesses invest resources to develop a bespoke strategy tailored specifically to their business context.

In other words, businesses take deliberate steps within the context of their business situation to increase the likelihood of achieving long-term goals.

In short, the business outcome is not left to chance. Every aspect of operating and growing the business is deliberately and meticulously planned.

As a matter of fact, it is like a journey one undertakes to reach a destination.

Let us explain the analogy.

A journey has four parts: a starting point, a destination to reach, the route that takes from the starting point to the destination, and the resources required to undertake and complete the journey under any eventuality.

Likewise, developing a deliberate strategy requires an organization to take the following four actions:

  1. Understand the current business context.
  2. Define business goals.
  3. Develop plan to achieve the business goals from the current business situation.
  4. Commit resources to achieve the business goals while adapting to any changes.

Let us look at these four steps in more detail.

1. Understand the current business context.

This is the first step. The business executives developing a deliberate strategy need to first develop a complete understanding of the current business context with respect to the external business environment.

Initially, this involves obtaining customer intelligence, acknowledging operational capabilities, understanding product portfolio, acquiring competitor insights, and baselining financial metrics. This step will help you get a sense of your core ideology, financial and operational resources, organization strengths, weaknesses, and problem areas.

Why is understanding the business context important?

Because an organization has to first clearly define a business objective in order to achieve the objective. Here, the business context provides a frame of reference to define appropriate business objectives. For example, a firm with annual sales of $10million grappling with scale-up challenges cannot directly aim to become a $1billion organization.

Moreover, the business context serves as the baseline against which the firm can measure and compare the progress.

2. Define business goals.

Now, organizational purpose and vision are the guiding light for business executives defining business goals. The organizational vision will not be achieved if the goals are unclear. Therefore, it is necessary that business goals are clearly defined. Doing so helps the executives to communicate them unambiguously to all layers of the organization.

A well-defined business goal adheres to the QTR [read: Quarter] principle:

  • Quantitative – firstly, it has to be measurable
  • Timebound – secondly, it has to have a definite time frame within which to achieve it
  • Reasonable – and it should realistic, even if difficult, to achieve in the given time frame

To illustrate, here are some examples of some meaningful business goals (set by real-life firms):

  • Grow annual revenues to $865 million at a CAGR of 20% within three years
  • Conquer 5% more market share in our target market by the end of the year
  • Reduce operational costs to realize 15% profitability YoY within two years

At this point, a QTR-based business goal establishes the destination for a business to reach within a stipulated time.

3. Develop plan to acheive the business goals.

This is the third important step. Once the business goal is defined, the CEO and the top management need to put together a route to that end. Here, a customer-centric plan acts as the route.

This step is especially crucial to developing a deliberate strategy. In fact, this is where a Deliberate Strategy differs from a Hope strategy (or any other best practices strategy).

A Hope strategy is forward-designed and forward-implemented.

Whereas, a Deliberate Strategy is backward-designed but forward-implemented.

Let me explain.

A Hope strategy involves employing strategies and best practices that have worked for other businesses. Naturally, these strategies are picked up by an organization and customized for their use and implemented to reach the business goals. Thus, it follows a forward path.

On the contrary, a Deliberate Strategy starts from the end-point, i.e. the business goals. Mainly, it involves figuring out what is required to reach that state and then coming backward by designing a slew of bespoke actions to reach that state. This is how it is backward-designed.

This is the key difference between the two.

4. Commit resources to achieve the business goals while adapting to any changes.

This is the final step. Once the plan is defined and the business strategy is rolled out, the organization commits to the implementation journey along the strategic route.

As we know, a business strategy for an organization exists within the context of its current business situation. However, the business situation is part of the larger business environment. It generally includes the market (which buys) and the industry (which sells) among other stakeholders, like suppliers, regulators, government, and technology.

Meanwhile, the business environment is constantly changing.

Buyers (or customers), sellers (or competitors) and suppliers keep entering and leaving the business environment, like new passengers en route your journey.

Like you, your competitors are also persistently working on their own strategies to grow and capture market share.

Additionally, governments keep looking for newer ways to tax businesses. Also, the regulators are bringing new regulations to safeguard fair competition. Similarly, technological advancements are disrupting the way of doing business.

On the whole, the business environment is continually changing.

Therefore, it is imperative to keep looking for any changes that risk the execution of your bespoke strategy. Accordingly, the business needs to keep collecting data points and reviewing its strategy at regular intervals to ensure that the journey is on the right track.

To sum up, these are the actions that make for a working strategy.

How Veravizion implements Deliberate Strategy?

At Veravizion, we have developed our own framework that we call contextual problem solving with deliberate strategy. This framework facilitates the development of deliberate strategy using a Context-Drivers-Solution-Impact cycle. Also, it applies to any business across industries.

There are many companies that have employed Deliberate Strategies in the past to grow predictably. In particular, 3M, Amazon, Apple, Boeing, Google, Nike, Nordstrom, Procter & Gamble, are a few examples.

While reading the names of these well-known companies, it is easy to think that deliberate strategy works only for the big ones.

However, it is not so.

In reality, most of these companies were virtually a nobody BEFORE implementing deliberate strategies.

Deliberate Strategy

3M were miners. Their earlier venture, started in 1902, to mine corundum failed. In the past, 3M also tried their hands at other things like making sandpaper. They failed less, yet did not succeed like success.

Later, they chose to embrace “innovation and collaboration” as their Deliberate strategy. Today, 3M is known as the world’s most innovative company.

More Examples of Deliberate Strategy…

Here is an interesting example from “Built to Last”, the bestselling book by Jim Collin and Jerry Porras.

Boeing, until 1952, had been building aircraft primarily for the military. They had virtually no presence in the commercial aircraft market. Moreover, Boeing relied heavily on orders from their only major client – the U.S. Air Force – to survive. In short, nobody knew Boeing. Back then, their competitors Douglas Aircraft dominated and ruled the commercial market with their propeller-driven planes. While Boeing wanted to enter the commercial market with a big, fast, advanced, and better-performing aircraft.

If Boeing had followed the Nope strategy, we would never have known of them.

If Boeing had followed Hope strategy, they would have probably leveraged the competitor strategies of the time and would have built a better propeller plane at best.

Instead, Boeing embraced a Deliberate Strategy.

Boeing’s purpose and vision were to be on the leading edge of aeronautics pioneering aviation. Taking inspiration from there, Boeing announced their goal to make a jet plane for the commercial market. No other aircraft company had done that before them. Moreover, such a project was going to cost them about three times their average annual after-tax profit – roughly a quarter of their entire corporate net worth – to develop a prototype for the jet. But Boeing committed to it. Later, the strategy resulted in such fine planes as 707, 727, 737, 747, and 777. Douglas aircraft could never quite catch up to Boeing. Douglas struggled to survive by merging with McDonnell aircraft in 1967. Eventually, Boeing acquired McDonnell Douglas in 1997.

Apple is a more recent example of a business that became successful by devising and implementing a Deliberate Strategy. Apple believes in “breaking the status-quo”.

The strategy helped them differentiate in the crowded smartphone market and create an enviable position for them. As a result, Apple was the most valuable brand in the world for eight straight years.

To sum it up with key insights…

Deliberate Strategy helps an organization achieve its business objectives in a decisive and predictable manner.

The predictability comes only by acting deliberately.

The whole process is highly intentional, methodical, and purposeful.

And Deliberate Strategy is universal. The above framework would still work if you replace an organization with an individual or an institution.

There are many examples of successful implementation of deliberate strategy in all spheres of life.

Deliberate strategy is the difference between many successes and failures.

An organization’s strategy is its source of sustainable competitive advantage. Should one squander it away by following someone else’s strategy? What do you think?

Related Posts:

<– Can Hope be a Real Business Strategy?

Two Finals, Two Ties, and the Common Winner –>

You can also subscribe to our blog – Veracles – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedInTwitter or Facebook to receive easy updates.

Cover photo credit: Brad Wetzler

Other photos: 3M.com, Boeing.com, Apple.com

Can Hope be a Real Business Strategy?

Can Hope be a Real Business Strategy?

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The last Veracle was third of the six on business strategy. It tried to answer whether a business can still win with no strategy. While there are businesses that do not employ any strategy, one can witness more businesses following hope as a strategy. The hope strategy looks like this – let us take these actions that similar businesses take, and hopefully, we will achieve our objectives. So, the perplexing question here is – Can HOPE be a real business strategy?

What is Hope Strategy?

Hope strategy is one where businesses do a lot of the same activities in the hope that it will help them grow.

Hope strategy is most frequently observed in businesses where:

  • business executives are keen for the positive growth outcome,
  • but are not inclined to commit resources required for it.

Now, this seems counter-intuitive.

When a business executive is keen to grow a business, they would naturally want to invest resources to grow, right?! Not quite.

Ideally, business executives have two options to grow their business:

  1. Invest resources to develop a bespoke strategy tailored to their business context and implement it meticulously.
  2. Employ ideas, strategies, and best practices implemented before them by similar businesses in their industry.

The first option mentioned above is to develop a bespoke strategy. That is, this is Deliberate Strategy for your business. This option may appear costlier, at least in the short term, as it involves investing resources in designing a new strategy from scratch. But it isn’t. We will discuss this option later in the next Veracle.

The second option, which involves employing ideas, strategies, and best practices of similar businesses, appears to provide a proven path to progress in the short term.

Ironically, many businesses tend to take the second option out of the misplaced belief that the strategies that have worked for other businesses will work for theirs too. It is far too common to hear, “it has worked for them, why won’t it work for us?”

This belief is the basis for the hope strategy.

However, the problem is that the second option does not sound wrong.

Let us recall “the ship’s voyage” metaphor (cited in the previous Veracle) where we had likened a business to a ship sailing on a voyage to its destination.

The second option is akin to setting the course of a ship by looking at the lights of passing ships. In ship lore, this is a terrible blunder.

Likewise, setting the strategic direction of a business by looking at the strategies employed by similar businesses is a huge mistake.

That is why the second option is deceptive.

In short, what may have worked for other businesses, may not work for yours. This is because the business contexts are very different.

This is the key insight.

How to recognize Hope Strategy?

Businesses following a hope strategy exhibit three symptoms:

  1. Lack of clarity about self-identity
  2. Frequent change in the strategic direction. Taking actions on whims.
  3. Business running in a perpetual reactive fire-fighting mode

When a business has not developed a bespoke strategy of their own, they tend to adopt the strategies and best practices from the leading companies in their industry. In the worse cases, they adopt spur-of-the-moment ideas as strategies.

As a result, there is stress on doing a lot of those things and doing them right. There are too many initiatives and employees are working on too many pursuits simultaneously (without conviction).

Eventually, this approach causes them to lose their core identity over time.

While the business itself might be operating successfully, pursuing too many things causes frequent changes in direction.

Such a business might continue operating until the time it is able to innovate and satiate customer demands. However, the lack of a strategic direction coupled with any external challenges triggers the inevitable declining spiral.

Sony and Yahoo, are two of the many examples of businesses following hope strategy and declining.

Sony, with its miniaturization strategy, was at the top of the music industry before the digital era began. Digitalization happened in the early 2000s and there was a new trend of (illegally) downloading music online. Despite having the technology to launch a product for digital music, Sony did not invest in it. Sony only hoped that the trend would go away, eventually letting their music products business getting doomed.

Let us discuss Yahoo! in more detail.

Yahoo! is another case of how a pioneering business floundered in just hoping that some strategy would emerge.

InitiallYahoo! started in 1994 as a one stop shop web portal where it brought together news and other online services helping users navigate the internet. So, in a way, it was a gateway to the internet for most users of the time.

Exhibit 1 shows Yahoo homepage of 1994 when it was launched.

Can Hope be a Real Business Strategy?

During late 1990s (and early 2000s), it was an undisputed leader of the web with its email, online search and news. The company not only survived the dot com crash of 2000, its sales climbed multi-fold between 2001 and 2008 (as shown by the share price rise in Exhibit 2).

Can Hope be a Real Business Strategy?

In early 2008, Microsoft intended to acquire Yahoo for $44.6 billion, an offer Yahoo formally rejected citing shareholder’s interest. Eventually, Verizon acquired Yahoo, once worth almost $125 billion, for $4.8 billion, underscoring the company’s fall.

So, what went wrong? How does a good company like Yahoo fail so miserably?

Numerous reasons have been put forth to explain Yahoo’s failure. Here are some of the prominent ones:

  • Yahoo was jack of all trades, master of none. They tried to do many things – Yahoo Search, Yahoo Finance, Yahoo Mail, Yahoo Messenger, Yahoo News, and Yahoo Sports among others – but didn’t focus on being best in one.
  • Yahoo remained the same portal it was a decade ago and did not innovate.
  • Yahoo was late to mobile, according to a senior editor at Harvard business review
  • They did not focus on hiring the right talent; Yahoo apparently short-changed engineering, and media people were viewed more important, according to an EECS professor at Michigan.
  • Yahoo failed as Marissa Mayer could not perform the turnaround.

All these reasons seem right. And, it is easy to blame Marissa Mayer, who was at the helm from 2012 to 2017, for the ultimate decline.

But the real reason goes much deeper, and much earlier than that.

A close observation of the above five points reveal that these are symptoms of one common underlying cause: While doing so many things, Yahoo kept praying that something will work, some strategy will emerge, and they will survive.

The above conclusion may sound too simplistic, almost frivolous.

However, lack of a clear explicit strategy explains all the above symptoms.

Issue with Self-Identity

Yahoo started as a web portal and generated most of its revenue from selling advertising on the different service platforms it created. The key Yahoo services became so popular at one time that they started treating themselves as a media company, rather than a technology company.

There was a lack of clarity about self-identity.

So, the focus of hiring and talent retention philosophy kept shifting from engineering to media. As a result, Yahoo failed to innovate and remained the same portal even after a decade. Meanwhile, Google and Facebook hired top engineers (doing core programming) and leapfrogged Yahoo with better sleeker products. Gmail beat Yahoo Mail, Google Search outperformed Yahoo Search, and WhatsApp surpassed Yahoo Messenger impacting Yahoo sales.

As a company strategy, Yahoo started taking mobile seriously only after 2012, whereas other competing businesses already had an operational mobile strategy by then. Google’s Eric Schmidt mentioned mobile as one of their strategic areas in as early as 2006.

What about Strategic Direction?

The lack of strategic direction is evident considering Yahoo saw 8 CEOs in 20 years, and 6 CEOs within just 4 years. Founder and CEO Jerry Yang stepped down in December 2008 citing conflict of opinion in terms of strategic direction. His successor, Carol Bartz, openly admitted that she also grappled with the question of what Yahoo is, when she took over in 2009.

The acutest confirmation of lack of explicit strategy came during Marissa Mayer tenure when she spent over $2 billion binge acquiring 53 mobile-based companies, none of them really successful. Check out Exhibit-3 to see if you can identify some of them.

Can Hope be a Real Business Strategy?

In summary, it can be said that Yahoo! grappled with a clear explicit strategy for a very long time. Over the years, the CEOs just pursued what seemed right at the time hoping that some strategy would emerge. In the end, the hope strategy did them in.

Having said thus, it is appropriate to add here that it is very convenient to retrospectively dissect businesses and tell what went wrong. Wouldn’t it be more useful (for you and your business) if you knew the right way to define strategy, and more importantly, be able to tell whether it is going well? The next two Veracles attempt to do just that.

Related Posts:

<– Can a business still win with a Nope Strategy?

How Deliberate Strategy Can Be the Working Strategy! –>

You can also subscribe to our blog – Veracles – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedIn, Twitter or Facebook to receive easy updates.

Cover photo credit: hbu.edu

Is business strategy really indispensable?

Is business strategy really indispensable?

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Why do I need a business strategy?

Recently, the chief executive of a retail business asked me this question. Let us first understand what strategy is!

In simple words, strategy is a plan of action designed to achieve long-term goals.

People apply strategy in many different contexts. For instance, military, sports, and business are some areas where strategy is necessary to win.

In the military, strategy is essential to win a war. It allows armed forces to plan military operations – offensive and defensive – in order to gain battlefield advantage over enemies, and achieve goals of national (and global) security.

In sports, strategy is essential to win a game. It allows sportspersons to devise a game-plan in order to gain an on-field advantage over rival teams, and win a match.

In business, strategy is essential to be profitable and grow over the long term. It allows organizations to develop business models and design operational processes in order to gain a competitive advantage, and achieve goals of financial security.

Coming back to the question then, is business strategy really indispensable?

For a moment, let us hypothesize about situations when strategy may not be important.

What if you are the general of an army having limitless troops and tanks? Or, the coach of a sports team having boundless talent and practice hours? Or, the CEO of a business having unlimited resources?

These situations might tempt us into thinking that one can easily trump the opponent without needing a strategy if one has unlimited resources.

In reality, organizations always have limited resources.

Even if organizations have resources in huge numbers, they are always finite in quantity.

Military organizations have a finite number of soldiers, shooting weapons, and shells.

Sports teams have a finite number of players, play paraphernalia, and practice periods.

Business firms have a finite number of competencies, capacities, and capital.

So, when you have something in a limited amount, what do you do? You find ways and mechanisms to use it judiciously such that you achieve your objective before expending the resources entirely.

Strategy is that mechanism!

In short, Strategy is important because resources are always finite!

To clarify, here is an interesting way to look at it.

The right strategy assists you in allocating your finite resources in such a way that you can build a competitive advantage against your rivals of any size, and can still win.

There is a gem of insight in that last sentence in case you missed it.

Strategy is the concept that helps you use your resources wisely and effectively. It allows you to prudently allocate your resources where they can deliver the maximum possible returns.

Some Examples

There are numerous examples in the military, sports, and business where a smaller team has implemented the right strategy to beat a disproportionately larger opponent.

History books are replete with instances of battles where a very small army has defeated a large one by employing strategic maneuvers. The battle of Longewala, the battle at Rezang La, Napolean’s 1812 invasion of Russia, and the 1775 battle of Lexington and Concord in Massachusetts are few such examples.

Sports archives are awash with games won by employing a tangible strategy; such games were called the biggest upsets of the time as a strategy was a late entrant in the world of sports as compared to some of the other fields. Here are three examples:

In the final of 1950 world cup football, Uruguay beat Brazil by keeping the game simple, focused, and warlike. Brazil was the hot favourites to win the game. Uruguay team was under no pressure and their captain asked the team to play a no-holds-barred natural attacking game, which they did.

In the final of the 1983 ICC world cup, the underdogs India beat consecutive three-time finalists (and two-time champions) West Indies by playing to the team’s strength of disciplined bowling.

One of the best examples of strategy winning a sports match is the “Miracle on Ice” game during the men’s ice hockey tournament at the 1980 Winter Olympics in Lake Placid, New York. In this medal-round game, the United States team consisting exclusively of amateur players (but following military-style discipline) beat the four-time defending gold medallists the Soviet Union that consisted primarily of professional players.

Examples from Business World

The business world is full of case studies of businesses devising deliberate strategies, developing sustainable competitive advantage, and capturing significant market share on their road to business growth. Here are two examples of businesses winning on strategy:

Blockbuster was founded in 1985 as a video (VHS) rental company. Within 15 years, it had 6,500 video rental stores around the US and revenues upwards of $5 billion. Netflix began operations in 1999 and led its strategy based on people’s video-watching preferences. Netflix devised a highly customer-centric strategy that included subscription-based charges and no late fees, among other things. As a result, customers could watch a video for as long as they wanted or return it and get a new one. By end of 2010, blockbuster was bankrupt while Netflix, on the back of its deliberate customer-centric strategy, is worth more than $150 billion today.

In the late 1980s, the sales of carbonated soft drinks were at a high. It would be foolish to introduce yet another drink in the fiercely competitive market. Yet, Austrian entrepreneur Dietrich Mateschitz partnered with a Thai businessman Chaleo Yoovidhya to introduce a new drink named Red Bull. Predictably, sales were (s)low during the initial years. That’s when the co-founder defined a strategy sharply focused on a chosen market segment. To that effect, Red Bull was positioned as an energy drink for students and adventure enthusiasts. The strategy would eventually help the business increase annual sales to 6.79 billion cans in 2018. As a result, Mateschitz became the 31st richest person in the world.

These and many such examples signify that strategy is extremely important because organizations are invariably resource-constrained.

So what?

On this note, some meaningful follow-up questions to ask would be: Is any strategy good enough? Does your business have a working strategy? Are you able to explain it clearly?

Related Posts:

<– Top Analytics Trends 2017 – An INFOGRAPHIC

Does Your Business Have a Working Strategy? –>

You can also subscribe to our blog – Veracles – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedIn, Twitter, or Facebook, to receive easy updates.

Cover photo credit: photo by rawpixel on Unsplash.

Most Popular Perspectives from 2015

Most Popular Perspectives from 2015

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It’s New Year again – Happy New Year 2016!

Thanks for your overwhelming response to our insights shared with you over the last year.  We are excited to announce the most popular perspectives from 2015 published at Veravizion/Perspectives. These are our biggest stories of 2015 in case you missed them.

One of the wonderful aspects about sharing our insights is appreciating the incredible business acumen, diversity, and depth of thinking of our readers. Our articles, which we call our perspectives, are written after carrying out thorough research on every topic. Our belief is that these articles will push you into thinking about how the (business) world is transforming before our eyes, and how some long-standing business principles may not necessarily hold true today.

As the year is over, take a quick glance at how the world is getting used to being data-driven. Enjoy these stories and let us know about your top content in the comments. In the next one, we will see how the analytics world is likely to unfold in 2016.

Most Popular Perspectives from 2015

Story# 13 Lessons Every Executive Must Learn From Wimbledon Centre Court For Business Success

Most Popular perspectives from 2015 - Lessons from Wimbledon

Sports has always had many lessons to share for business success; and everyone and their grandpa knows this. Nevertheless, its relevance has never been as great as it is in today’s analytics age.

This article illustrates this phenomenon by drawing lessons for business success from 2015 Wimbledon final between Djokovich and Federer.

Story# 2Data Science: The Next Frontier For Business Competitiveness

Most Popular Perspectives from 2015

This article on Data Science by Veravizion was originally published as the cover story in the July-2015 edition of Computer Society of India – Communications magazine. You can also read this article at its source at http://www.csi-india.org (Link path: http://www.csi-india.org->PUBLICATIONS->CSI Communications->CSIC 2015->CSIC 2015(July)).“

Story# 3The Digital Transformation Imperative: Why Businesses Must Have Online Presence – An INFOGRAPHIC

Most Popular perspectives from 2015

INFOGRAPHIC: click to enlarge

The business world is fast going online, so what’s the big deal? The big deal is in grasping the fact that it may replace your business if you do not become a part of the change, soon.

The infographic in this article gives a glimpse of how fast the consumer purchasing trends are changing from physical to digital, and what you can do about it.

Story# 4How Do You Achieve Strategic Transformation For Enduring Growth Of Your Company? – Part-I

Most Popular perspectives from 2015

Historically, leaders of cities, communities, and organizations have been embracing strategic initiatives to ensure long term sustenance and growth of their respective ecosystems. Many a times, these initiatives were ‘intentionally’ directed at bringing about long term transformation of their systems. But do such initiatives specifically aimed at strategic transformation always result in the lasting growth of the entity? We discuss it in this article.

Story# 5What Does Digital Maturity Really Mean?

Most Popular perspectives from 2015

This is the last article in the Digital Business series in which we illustrate how small and medium businesses can transform themselves from mere-physical to also-digital, and be more competitive. We do this by taking a visual example of a fictitious light business of our lovable businessman Bobstick.

We hope you enjoy these stories!

<– What does Digital Maturity really mean

Top Analytics Trends 2016 for SMBs –>

Strategic transformation photo credit: businessinsider

You can also subscribe to our blog – Our Perspectives – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

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What Does Digital Maturity Really Mean

What Does Digital Maturity Really Mean?

Veravizion 3 comments
When I went to medical school, the term 'digital' applied only to rectal exams.” - Dr. Eric Topol

Well, things have certainly changed since! The previous article – an infographic – discussed about the urgent need for businesses to achieve digital maturity in order to survive and thrive. But exactly what does digital maturity really mean for a small and medium business organization that thus far has focused primarily on serving local customers?

You might be thinking whether this question – what does digital maturity really mean – is really relevant in today’s digital age. Our implicit hypothesis is that most businesses, especially those in the developed countries, are already digital by now, and so they must know what digital maturity really means.

Well, evidence shows that the above assumption is far from true.

Consider these stats from the UK Business Digital Index 2015 report which states that almost a quarter of UK businesses still lack basic digital skills:

  • Almost 35% of around 5.2 million organisations in the UK have a very low level of digital understanding and capability – they do not make use of the internet for their business and do not have any web or social media presence
  • Barely 53% of the businesses have their own website
  • Only 46% organizations have a medium level of digital maturity – i.e. they use basic e-commerce tools, perform some banking transactions online, and have basic social media presence.

Therefore our question is extremely relevant even today!

So what does digital maturity really mean?

To understand this, let us quickly recapitulate why businesses want (or need) to go online in the first place.

Businesses go online for a variety of reasons (read: benefits) such as expanding markets to grow business, deepening engagement with target customers, broadening product and service offerings, leveraging multi-channel capabilities, and in general staying competitive amidst the changing global business landscape.

All these reasons can be summed-up in one simple line: Business organizations, like yours, are going digital because your customers are increasingly seeing, hearing, feeling, searching, interacting, sharing, and buying stuff online.

The above sentence encapsulates the entire online activity happening today in the business world. [tweet this]

In short, your market has gone online and it would serve you better if you do, too.

So what takes you there?

Here are the 5-stages on your journey to achieving digital maturity for your business:

  1. Digital Apathy
  2. Digital Literacy
  3. Digital Transactions
  4. Digital Engagement
  5. Digital Maturity

Let us look at each one a bit more closely with an illustrative pictorial example for each:

  1. Digital Apathy:

This is the initial (or default) stage of any organization typically born before internet. This company mostly sells their products mainly to customers in its neighbourhood through its physical stores. There is a passive resistance (or indifference at best) in accepting digital strategy due to inertia mixed with scepticism towards going digital. There is absolutely no online or any beyond-the-shop interaction with the customers. The business owner is unmindful about going out of business in this increasingly digital world, and apparently suffers from ‘it won’t happen to me’ syndrome.

What Does Digital Maturity Really Mean?

  1. Digital Literacy:

There is (almost) a reluctant acceptance to the changing business scenario. The business has a (mostly passive) website that displays the products and services on offer but hardly anything beyond that. On the positive side, customers now have a gateway to your offerings and can find information about your products and services. There is a new one-way channel to update customers about new product and service offerings – a good beginning to say the least.

What Does Digital Maturity Really Mean?

  1. Digital Transactions:

The business finally wakes up to enormous possibilities the e-commerce world offers and introduces online transactions to sell its products online. There is a conscious effort to implement basic customer analytics to understand buying customer profile to grow revenues. The business also tends to apply e-commerce intelligence to provide leads reports to sales teams to grow further. There is an emphasis on generating and distributing user-oriented content in order to draw target customers to purchase online. Businesses may introduce their own inventory management and service fulfilment back offices to excel in their customer service to build customer loyalty. The business starts learning about rule based prioritization as they explore the benefits of implementing analytics for revenue and profitability growth.

What Does Digital Maturity Really Mean?

  1. Digital Engagement:

When a business establishes itself on the various social media platforms, there is a step change in the way it perceives customer interaction, customer engagement, and marketing. Old channels and methods of one-way communication are renounced in favour of digital channels which enable listening to customers’ feedback first-hand and responding in their preferred channel to facilitate effective customer engagement. One important aspect of increasing engagement is to create product touch-points across all channels vis. physical, desktop, mobile, kiosks, catalogue, direct mail, and social media. The order in these cross-channel chaos is set by the use of marketing analytics which helps to mine hidden consumer insights, understand customer purchasing journeys, optimize advertising spend, and engage with prospective customers at early st(age) to nurture them into loyal followers.

What Does Digital Maturity Really Mean?

  1. Digital Maturity

The focus at this stage is on innovating the existing business model and on integrating the overall strategy. Personalization is the key here! Customers have 24x7x365 access to the products and services across different digital channels but still have an Omni-channel experience. For example, a customer becomes aware of your product in one channel, say Pinterest, actively searches for it online on his office desktop, physically touches and considers buying it in-store, ends-up purchasing the stuff on their mobile, and shares his new purchase with Facebook friends. Matured businesses (like P&G and Amazon) have institutionalized integrated use of analytics services to study individual consumer behaviour through comprehensive understanding of customer interests, affinities, and actions. They are drawing intelligence trends to predict customers’ future wants and needs before customers themselves realize it. Considering the enormity of data getting generated every day, matured businesses are implementing advanced algorithms to auto-analyse data at its source for more real-time application.

What Does Digital Maturity Really Mean?

Achieving digital maturity is not the end; rather a beginning of the implementation of a truly personalized digital strategy for each consumer. Businesses embracing digital strategy will eventually lead the way.

We are in the throes of a transition where every publication has to think of their digital strategy” - Bill Gates

Cover photo credit: yourgenome.org

Related Posts:

<– Why your Business should go Digital

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Data Science

Data Science: The Next Frontier for Business Competitiveness

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This article reposted here was originally published as the cover story in the July-2015 edition of Computer Society of India - Communications magazine. You can also read this article at its source at http://www.csi-india.org (Link path: http://www.csi-india.org->PUBLICATIONS->CSI Communications->CSIC 2015->CSIC 2015(July))."

Data Science means extraction of knowledge from data. The key word in data science is not data; it is science[1]. Science of something means study of that thing to extract knowledge about it. In most generic sense, the purpose of every data science project is to answer a question (or a set of questions) backed by hard-facts. Academicians and researchers apply scientific principles to get specific answers about a research subject. Similarly, businesses employ data science principles to improve customer engagement, devise growth strategies, optimize operations, and build competitive advantage. This article shares a perspective on what data science really is, how it impacts various industries, what benefits does it offer to organizations – both for-profit and not-for-profit, and what are the key data science trends prevalent today.

DATA SCIENCE: WHAT IT IS (AND ISN’T)

Apparently Peter Naur and John W. Tukey seem to be among the first ones to have treated data analysis within the precincts of science[2]. John W. Tukey, who coined the term ‘bit’, has mentioned it in his 1962 paper ‘The Future of Data Analysis’. In my view, while the term ‘data science’ is relatively young, its application is not. There is an early evidence[3] of 1854, of Dr. John Snow applying scientific principles of data analysis to detect the root cause of The Cholera Epidemic in London. So data science has been around for a while albeit in different forms.

While we tend to associate data science with several other terms such as artificial intelligence, machine learning, data mining, analytics, statistics, computer science, and operations research, each has its own specific meaning that is different from another. Artificial intelligence is intelligence exhibited by machines and it pertains to the creation of a software system that simulates human intelligence. Machine learning is a science that involves development of self-learning algorithms which can be used to make data-driven predictions in a similar but unfamiliar environment. Popular examples include self-driving cars and web searches. Statistics is a study of collection, organization, analysis, and interpretation of numerical information from data. Data mining is the practice of analyzing data using (machine-learning) algorithms and statistical techniques in order to solve a problem. Computer science covers computational complexity, distributed architectures such as Hadoop, data compression, optimization of data flows, and not to mention computer programming languages (such as R, Python, and Perl). Advanced analytics or Analytics is just a marketing driven terminology that applies many of the data science principles to solve complex problems faced by businesses and society. So while the differences are subtle, each one has its own application in industry and academia. Nevertheless, data science overlaps with computer science, statistics, operations research, and business intelligence in many ways and almost completely encompasses data mining and machine learning.

The subtle differences notwithstanding, data science is an independent discipline which amalgamates statistics, computing skills, and domain knowledge. At the core, data science helps in deriving valuable insights from data. The data science process involves data collection, data pre-processing and cleaning, data modelling and analysis, and insights generation which are applied within a given functional domain to make decisions. Although the process is similar to knowledge discovery and data mining (KDD), a data scientist requires computing skills and domain knowhow to arrive at context-specific decisions. The person working in data science needs to exhibit three distinct skills applied in the different phases of a data science project. As shown in EXHIBIT-A[4], an individual with data science expertise possesses (or needs to possess) a combination of mathematics and statistics knowledge, hacking skills, and substantial domain understanding. The hacking skills include familiarity (but not necessarily proficiency) with software programming but more importantly, a propensity at being able to manipulate any type of data. This is because real-world data hardly exists in a nice tabular format. It[5] is scattered in thousands of text files or on hundreds of web sites or in numerous unstructured excel sheets at best. True data scientists that possess all the three skills are not abundant; because the role entails making sense of amorphous data, deriving bespoke models, and developing algorithms to analyse a complex problem specific within a domain.

Data Science Venn Diagram

Unfortunately, simply churning out numbers or fiddling with inefficient models rarely solves a problem. This is the reason data scientist is one of the most coveted roles in industry today.

Data science is being applied in many industries. Some of the uses in various industries include weather forecasting, intuitive search in online search technology, customer engagement in retail and consumer products and services, fraud detection in banking and credit cards, prediction of sources of energy in Oil and Gas, evidence based medicines in healthcare, and sentiment analysis from social network feeds. Some fields that are routinely implementing analytics services are eCommerce, retail, consumer products and services, financial services, insurance, pharmaceuticals, manufacturing, telecommunications, and high-tech.

HUNTING PEARLY INSIGHTS IN THE OCEAN OF DATA WITH DATA SCIENCE

More and more businesses are embracing data science and analytics in multiple organizational functions. There are mainly three most common ways in which data science is deployed depending on the size of an organization. Large corporations usually deploy their own in-house analytics departments by recruiting data analysts. Business leaders in large corporations typically have humongous quantities of data to sift through in order to make decisions that are important for their business growth. While having an in-house analytics team may not always be an ideal way for institutionalizing data science, even for large corporations, they seem to be driven by large amount of resources at their disposal. Secondly, some companies prefer to buy a COTS (Commercial-Off-The-Shelf) product to cater to some standard requirement. Thirdly, many mid-to-large sized companies prefer to employ customized data science or analytics services to solve their specific data analysis and business operational requirement. This option seems ideal for businesses looking for the flexibility to hire precise services for their bespoke needs.

While the data science projects in most for-profit organizations are getting more and more complex, the fundamental purpose underlying these projects remain the same – to achieve sustainable growth and improve profitability for their businesses. To that effect, the companies put data science into action to gain meaningful insights into their customers, operational processes, supply chain and logistics, product and/or service usage, financial aspects, and future business performance. Conventionally, data science has mostly been applied for market research and market segmentation. However, businesses have a lot more at stake with every business decision as competition has become more and more intense. Gone are the days when business decisions used to be taken on gut-feeling. In today’s globalized world, every major business decision needs to be data-driven. Data science assists organizations and individuals in making fact-based decisions that they can take and defend confidently. That is why it has become essential for organizations, business or otherwise, to deploy data science projects in every division responsible for making any kind of decisions. Some of the types of data science and analytics projects include customer focused analytics through clustering, recommendation engines, root cause analysis, automated rule engines, conjoint analysis to quantify perceived value of features offered, process simulations for operational analysis, predictive modeling for business forecasting, and clustering analysis to identify anomalies, just to name a few.

BENEFITS FROM IMPLEMENTING DATA SCIENCE INITIATIVES

There are some fantastic examples of business organizations gaining huge benefits by systematically and strategically deploying analytics initiatives that involve data science and ethnographic research. Procter & Gamble has institutionalized the data and design thinking approach to such as extent that it is now ingrained into their DNA. The result is that P&G boasts of more than 20 billion-dollar brands in their product kitty. Amazon, a technology company and not just an eRetailer, is really surviving and thriving by understanding customer preferences through the implementation of numerous algorithms. It has helped them to grow quickly from selling just books online in 1996 to target-selling twenty million products in countless other categories. There are many examples of smaller companies that streamlined their processes and implemented analytics based strategies to grow and enter into the big league. Data science initiatives within companies have rendered meaningful insights to drive their firm’s customer experience. These companies have utilized the insights to define their business growth strategies and pursue a culture of data-driven decision making. The benefits include getting pointers to new growth areas, generating ideas to introduce innovative new products, decreasing cost bases and improving productivity to boost profitability, identifying risks of obsolete technologies in their processes, detecting bottlenecks in supply chain, and streamlining inefficient operations.

Even as data science is rapidly changing the business world, it is also spreading its influence on other sectors such as academic research, governments, and social organizations. While the data deluge has increased the complexity for these sectors to analyze the data in a timely manner, it has also opened a plethora of opportunities for them.

Academic institutions in regions such as US, UK, and some countries in Asia are facing sustainability issues due to severe cuts in funding and grants. They are able to apply data science within their own institutional spheres to identify their respective competitive advantage and attract the right students to strengthen their reputation further. Similarly, medical research institutions are now able to work on projects like genome research, DNA sequencing, and stem-cell research for treatment of fatal diseases such as cancer and AIDS. Economists are able to analyze the publicly available data to determine relationships between income levels, education, health, and quality of life.

Governments and public sector organizations are concerned about issues such as monitoring and prevention of terrorist activities, early-detection and control of pandemics, and uniform aid distribution among the poorer countries, which they are able to tackle by sponsoring appropriate data science initiatives.

TACKLING CHALLENGES ALONG THE WAY

Data privacy and security concern has been one of the main reasons keeping some businesses from adopting data science. Moreover companies are facing real challenges in terms of bad quality of data, data inconsistencies, unreliable third party data, and information security. Nonetheless, all roads to meaningful business insights lead through data, whether it is organizational or public. Businesses need to put in place appropriate mechanisms to share data in a controlled manner with analysts and service providers in order to generate hidden insights that can be utilized for business benefits. Data breaches and data thefts remain a valid concern too. Past incidents, albeit few and sporadic, of customer confidential information getting stolen have deterred some from initiating analytics projects. However, business organizations are coming around to the fact that they are fast losing their competitive advantage to rivals due to staying away from analytics. Increasing number of organizations is taking up analytics to secure and grow their businesses as they do not want to be left behind any more. Organizations will increasingly recognize that it is not possible to operate in a 100 percent secured environment. Once organizations acknowledge that, they can begin to apply more-sophisticated risk assessment and mitigation tools. They will look to embed security at multiple levels viz. application-level, execution-level, storage-level, and even contract level. Interestingly, analytics itself is proving to be a great mechanism for security breach prevention.

KEY TRENDS AND THE ROAD AHEAD

In some of the western countries, data science has been thoroughly internalized within large corporations. Even the smaller businesses there employ analytics services to achieve specific business objectives. In India, while the (few) big corporations seem to be deploying such initiatives, most other organizations are still in the nascent stage. One survey of SME business owners cited that most common reasons for the slow pace of embracing [data science] are lack of awareness about the value offered by analytics, dearth of skilled resources, apprehension about technological complexity, cost and ROI concerns, and data security risks.

Notwithstanding the current adoption level, businesses are realizing that they may be taking a big risk not considering data science and analytics as a potent competitive strategy. There is a tremendous rise of personal data originating from social-media, sensor-originated data from wearables, and the Internet of Things (IoT) with the recent surge in the use of smartphones. More and more human actions are generating Exabytes of data today. To get a sense of the amount of data being generated, let’s just say that we will need around 50 billion trees made into paper to print 1 Exabyte of data. That’s roughly 9 huge stacks of papers, each touching Mars from Earth. This enormous amount of data will be of no use if not analyzed and utilized appropriately.

These trends are pushing businesses to re-think their business and growth strategies. There is an increased focus on teaching data science based courses by colleges and universities worldwide. Companies are realizing that the business environment has become uncertain with the fast pace of technological and demographical changes. As a result, many organizations are allocating higher budgets for deploying customized analytics for their businesses to deepen customer understanding, engage customers through multiple channels, identify new sources of revenue, improve productivity and profitability, streamline business processes, and build competitive advantage. Going forward, use of customized analytics will become pervasive. More and more organizations will develop their unique value propositions around the valuable insights they gain about their existing and prospective customers.

Implementing data science initiatives to build competitive advantage is a matter of leading and not following the pack. In an industry competing for the finite market share, early-adopters of data science best practices will be the eventual winners.

References:

[1] http://simplystatistics.org/

[2] Forbes: ‘A Very Short History Of Data Science

[3] Edward Tufte: ‘Visual Explanations

[4] Source: http://drewconway.com/zia/2013/3/26/the-data-science-venn-diagram

[5] ‘It’ refers to ‘the data’. In the modern world, the term ‘data’ is used in both singular and plural sense as per the context. Technically speaking, singular of data is datum.


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“This article reposted here was originally published as the cover story in the July-2015 edition of Computer Society of India – Communications magazine. You can also read this article at its source at http://www.csi-india.org (Link path: http://www.csi-india.org->PUBLICATIONS->CSI Communications->CSIC 2015->CSIC 2015(July)).”


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