Insights-Driven Businesses Succeed in the Digital Age
Insights-driven businesses—those that use data to generate applicable insights that can establish a competitive advantage—will grow from $333 billion in revenue in 2015 to $1.2 trillion in 2020, a Forrester Research report states.
Companies that are insights-driven use a combination of algorithms and expertise to continuously adapt their business strategies, with the goal of creating customer experiences that differentiate them from competitors. To succeed in the digital world, businesses need to become more insights-driven, the report urges.
“The most important reason [for adopting an insights-driven approach to business] is to drive growth. The global economy is not really booming, but the thing that keeps stock value increasing is when growth exceeds analyst projections,” says Brian Hopkins, vice president and principal analyst at Forrester. “When we looked at these insights-driven businesses…they’re growing like crazy, and the way that they’re doing that is by using insights that they gain from analytics and data—and codifying algorithms—to drive the decisions that they’re making.”
Although it acknowledges that organizational and data silos can be difficult to work around, the report lays out four steps for businesses to become more insights-driven.
The first is focusing on disruption in digital business. While many organizations are digitally focused, they need to take the next step by incorporating an insights-to-execution process into their digital strategies.
Applying current insights is the second step in becoming more insights-driven. This involves becoming organized. While many companies have centers of excellence, they need to use them to incorporate analytics and testing skills into operations throughout the business.
The third step is to pursue all relevant data, regardless of the effort it requires. For an investment firm, for example, this might mean customer clicks, transaction history, risk preferences, up-to-the-minute financial data, and daily news to gain insight into what content individual investors find most valuable.
Establishing beneficial partnerships is the last step in becoming insights-driven. Organizations probably won’t own all the data, expertise, and technology that they require. For this reason, it is important for businesses to work with a wide variety of partners.
“The thing that’s really important about data is the action you can create from it. If you’re not focusing on driving action to change the most important competitive outcomes—the things that differentiate you that will cause you to grow—if you’re not focusing the application of insight there…then you’re missing the whole point,” Hopkins says. “You’ve got to focus on exactly where that data and the insight from that data can drive action that makes a difference between you and your competitors.”
There are three key benefits to becoming insights-driven, the report claims. The first is that it’s an approach that’s not as hard to adopt as one might think. The report points out that it is important for organizations to remember that the most valuable insights often come from their own employees.
Improving digital interactions with customers is the second benefit. As customers contact businesses more often, specifically through digital channels, insights-driven businesses can easily improve these customer interactions with the knowledge they have gained.
Lastly, insights-driven businesses will be able to prepare for the future by providing their employees with information on how customer preferences evolve.
“The data-to-insights piece is secondary to how you act on those insights, because that will tell you the kind of data and the kind of technology back end you need,” Hopkins says. “Figure out where that competitive advantage is based on how you’re going to implement insights to drive your business.”