So, you jump in your car, switch on the ignition, put on a blindfold, floor the accelerator and speed through oncoming rush-hour traffic. No surprise, the journey is a short one with potentially catastrophic consequences. Such an outcome is highly predictable; however, today many corporations needlessly approach running their businesses in a similar fashion.
The issue, you ask? They can’t use the data they have at their disposal to support business strategies. More often than not it’s about having too much data and not enough ability to see the woods for the trees.
McKinsey Global Institute recently released a research report – Big Data: The next frontier for innovation, competition, and productivity – that raises a number of interesting questions about how today’s corporations can turn their big data into actionable management information and thereby remove the “corporate blindfold.”
Big data examples may well include the fact that for 15 out of 17 industry sectors in the U.S., each company has more data at its disposal than the entire U.S. Library of Congress. The demand for storage to support this explosive big-data growth continues at around 23% year-over-year. Aside from the cost of storing all this information, the deluge presents many challenges. And it also provides significant opportunities to leverage kaizen, or continual improvement, to create and maintain their own competitive advantage.
In a number of industries – from global service-parts, manufacturing, chemicals and travel – many innovative companies are embarking on the pricing kaizen journey. They’re embedding pricing science in their businesses for sustained competitive advantage. Top-performing corporations are moving away from “gut-feel pricing” to a more automated and scientific approach. Behind this move is the need to deal with market volatility, erratic commodity costs, multiple product sets and uncertainty in turbulent markets.
All these variables are changing in real time, leading to businesses handling huge amounts of data as part of their pricing decisions. By using their existing investments in big-data analytics, innovative corporations are unlocking their inner pricing kaizen. However, many business leaders haven’t yet been exposed to the power that pricing can have on their overall performance, and how optimizing their approaches can increase profitability and sustain corporate performance.
A recent pricing study by Deloitte validated the fact that a simple 1% increase in price performance can potentially boost profits up to 12%. Such a compelling uplift is surely worth investigation, bearing in mind the information to deliver on the promise of pricing kaizen exists today within big-data repositories. Our business leaders – the profit hunters – are ideally placed to tear off the corporate blindfold; to accelerate performance and outperform their markets.