CHAPTER THREE ANALYTICS AND BUSINESS PERFORMANCE TRANSFORMING THE ABILITY TO COMPETE ON ANALYTICS INTO A LASTING COMPETITIVE ADVANTAGE Flashcards
What major problem did Richard Fairbank and Nigel Morris identify in the credit card industry?
The industry lacked a focus on the individual customer.
What solution did Fairbank and Morris propose for the credit card industry?
Technology-driven analytics.
What was the first card created by Fairbank and Morris that targeted debtors?
The industry’s first balance-transfer card.
What is the key to Capital One’s ability to target individual customers?
A closed loop of testing, learning, and acting on new opportunities.
How many marketing experiments does Capital One run per year?
About eighty thousand.
What percentage increase in retention did Capital One achieve through its analytical approach in its savings business?
87 percent.
What is the name of Marriott International’s enterprise-wide revenue management system?
Total Yield.
What metric did Marriott use to relate actual revenues to optimal revenues?
Revenue opportunity.
What percentage did Marriott achieve for its revenue opportunity figure?
91 percent.
Which company was the first to offer auto insurance online in real time?
Progressive.
What technology does Progressive use to offer discounts to safer drivers?
Snapshot technology.
How many analytical experiments does Intuit run annually?
1,300.
True or False: Companies that are ‘really good at analytics’ are more likely to be in the top quartile of financial performance.
True.
What was the median ROI for analytical projects aimed at improving production?
277 percent.
Fill in the blank: Companies with strong analytical orientations represent ____ percent of the sample.
25 percent.
What did the first survey conducted by researchers assess?
The analytical orientations of thirty-two organizations.
What relationship was found between analytical maturity and financial performance?
A significant correlation.
What was the primary objective identified by 53 percent of executives regarding enterprise systems?
Improved decision making.
True or False: High performers are less likely to use analytics strategically compared to low performers.
False.
What percentage of high performers indicated they have significant decision-support or real-time analytical capabilities?
65 percent.
What was the notable difference between high and low performers regarding the value placed on analytical insights?
36 percent of top performers valued it to a very large extent, compared to 8 percent of low performers.
What is a significant difference between low- and high-performance businesses regarding analytics?
High-performance businesses have a more positive attitude toward analytics and apply them more extensively across their organization.
65% of high performers use decision-support analytics compared to 23% of low performers.
What percentage of low performers value analytical insights to a very large extent?
8%
In contrast, 36% of top performers value analytical insights highly.
How do high performers use analytics in decision-making compared to low performers?
High performers are twice as likely to use analytics for guiding future strategies and day-to-day operations.
They make decisions based on rigorous analysis at more than double the rate of lower performers.
What conclusion did Accenture and MIT reach about the commitment to analytics in 2015?
The stronger a company’s commitment to analytics, the higher that company’s performance.
This was based on a seven-year study involving 864 respondents.
List three advantages that high performers have in using analytics.
- Twice as many high performers use analytics in key areas for decision support
- They embed predictive analytics insights into key business processes
- They invest significantly more in analytical human capital and technology
High performers are also more likely to keep monitoring decisions and course-correct as needed.
True or False: Analytics can provide a sustainable competitive advantage.
True
While individual insights may be transient, companies can gain a competitive edge through unique data collection, proprietary algorithms, and distinctive business processes.
What is one way organizations can sustain a competitive advantage using analytics?
By ensuring that analytics are applied judiciously, executed well, and continually renewed.
Continuous improvement and reinvestment are key to maintaining an analytical advantage.
Fill in the blank: High performers are ______ times as likely to invest a substantial portion of their technology spend on analytics.
three
They also spend more on training and using consultants for analytical human capital.
What is the role of the CompStat program in New York City?
It associates crimes with geographical regions to guide police deployment.
CompStat has been credited with contributing to crime reduction in New York.
What is the primary function of the Domain Awareness System (DAS) in New York City?
To harness big data analytics for solving crimes and preventing terrorist attacks.
DAS collects extensive data, including video feeds and license plate reads.
What was one of the earliest applications of analytics in the US federal government?
The Taxpayer Compliance Measurement Program initiated by the IRS in 1963.
This program analyzed which taxpayers were likely to cheat on their taxes.
How has the Department of Veterans Affairs (VA) utilized analytics?
By employing electronic medical records and analytics to improve healthcare delivery.
The VA has implemented predictive modeling for chronic diseases and automated treatment protocols.
What is the ‘Smart Nation’ initiative in Singapore focused on?
Transforming public policy decisions using integrated city planning and analytics.
It covers strategic, operational, and tactical decision-making.
Which company is known for providing web analytics services as part of its offerings?
Google Analytics helps users improve SEO and customer engagement, often provided for free.
What is the goal of Google Analytics?
To improve understanding of the web by providing metrics on website results and user behavior.
Google aims to educate web publishers and advertisers to enhance overall web experience.
True or False: The use of analytics in government can only improve efficiency and effectiveness.
False
While analytics can enhance efficiency, they do not necessarily increase competitive capabilities in the traditional sense.
What is the primary goal of Google in providing web analytics?
To improve the understanding of the web and the internet by providing metrics on website results and user behavior.
What does Google offer to educate web publishers and advertisers?
An online ‘Analytics Academy’, a blog, online articles, webinars, and public speakers on web analytics.
What major investment has GE made in analytics?
A multibillion-dollar bet on the ‘industrial internet’.
What applications are included in GE’s industrial internet investment?
- Predictive maintenance for turbines
- Predictive maintenance for jet engines
- Predictive maintenance for locomotives
- Route optimization for locomotives
- Clinical analytics in health care.
How does Verizon Wireless utilize location data?
To analyze location data from customers’ mobile phones for better targeting of ads and offers.
What is the purpose of Philips’ CareSage service?
To monitor and care for elderly patients using data from wearable devices and home monitors.
What is algorithmic trading?
A trading method that uses algorithms to make decisions based on large data sets.
Which hedge funds are known for relying heavily on analytics?
- Bridgewater Associates
- Renaissance Technologies
- Two Sigma.
What is a key characteristic of analytical consulting firms like Accenture and Deloitte?
They identify analytical consulting as a growth area in response to client demands.
What type of solutions do quantitatively oriented consultants provide?
Analytically intensive business solutions, such as supply chain optimization.
What role does Dunnhumby play in the retail sector?
Helps retailers use data and science to delight customers and build loyalty, including the development of loyalty programs.
What does Catalina provide to the grocery industry?
Analytical services to understand the effects of coupons and promotions, managing one of the largest databases of purchase histories.
Fill in the blank: IRI has gathered data from retailers’ point-of-sale terminals, panels of almost 100,000 consumers, and _______.
pantry audits.
How has marketing changed according to Sunil Garga from IRI?
Marketing has changed more in the last twenty-four months than in the last twenty-four years due to analytics.
What is a common challenge for firms selling data and analytics?
Convincing customers of the need for analytical capabilities.
True or False: Many established companies are incorporating analytics into physical products.
True.
What is the function of the Garmin TruSwing device?
Measures and analyzes metrics based on the mechanics of a golfer’s swing.
What are two factors that hindered the success of large US airlines in utilizing analytics?
- Supported an obsolete business model
- Competitors adopted similar analytical approaches.
What is one reason why airlines must work hard to distinguish themselves in analytical competition?
There are few barriers preventing any airline from employing standard analytical approaches.
What do the success of companies like Amazon and Google indicate about analytics?
That the use of analytics can lead to better business performance and competitive advantage.
List the five factors that make an analytical approach a source of competitive advantage.
TBD in further chapters.
