Most managers think they manage by relying on business analytics. We receive a lot of statistics about sales, stock levels, absenteeism and what not - numbers after numbers are analysed by looking in the rear mirror and if we are lucky, sometimes even data about what is happening right now. But how much valid data on the customers’ actions and the company’s operating environment do we actually have access to on a daily basis?
The tragedy of management ostensibly based on business analytics and information management is that people have failed to process, apply and incorporate the data as part of the company’s strategic management. Conventional management in Finland continues to be based on experience, knowledge of the line of business and close familiarity with the company – rather like the state-of-the-art offshore industry relying on the experiences gained by old sea dogs who have spent all their life at sea.
The digitized operating environment and, above all, the enthusiasm shown by stakeholders to make use of electronic interfaces challenges companies to harness real-time data for management purposes. Data and the knowledge and information garnered from it help build a bridge between the company and its stakeholders. It allows the company and management to move away from updating strategy folders to start living the corporate strategy in the real-life environment.
Management support is available in the form of constantly updated information on the business environment and company operations – just like the instruments of modern cars provide a wealth of information to the driver. Parking radars, lane departure warnings and tyre pressure monitoring systems, for instance, provide information on safe passage.
Data secures your future. By moving the company’s entire value chain to the cloud, it is possible to manage the business by making full use of processed customer information.
It is not just a question of customer needs and successful completion of deliveries – it is about building the entire management system around the customer relationship. Here are a few examples of how data flows have been incorporated into the management system.
- Crowdsourcing. Starbucks offers a service called MyStarbuckIdea, which provides a description of the company’s business concept practically in its entirety. Anything can be commented on and feedback is welcomed for the purpose of improving performance. If the company receives dozens or hundreds of thousands of ideas, it is easy for it to identify areas where improvements are called for or new things that the customer and markets are ripe for.
- Customer-responsive offerings. Betabrands consults its customers to find new ideas for developing its clothes collections. The best ideas are put to the vote and the most popular are included in the product assortment. It is the customers who decide and formulate the solutions on behalf of the company.
- Online monitoring of customer deliveries and customer service. When ordering products from international web stores, people can monitor the delivery progress online. The transparency of deliveries and interaction with the customers improve customer loyalty and satisfaction.
- Customer services online and in the social media. By building up customer relationships online, it is possible to take sales, customer services and marketing where the users of the products and services are. KLM sells flight tickets worth tens of millions of euros in the social media; Uber does practically all its promotion and marketing in its own application, while Evernote has never spent a cent on marketing communications. Ultimately, it is the users of the services and the reputation spreading on the net that promote the company’s solutions.
- Online measurement and analytics. An intelligent operating environment and digitization of business processes make it possible to live the corporate strategy in real life. Aside from results and failures, the company receives a constant flow of information on the use of its services and related challenges.
In the digital age, companies no longer need to be limited to second-guessing consumer patterns and attitudes – now they can be surveyed and measured on an on-going basis. A company that lives in the cloud is able to develop customer relationships and increase their value in the everyday environment. We already see that consumers, in particular, appreciate actors who allow them to decide where, how and at what level of service they transact with the company.
It is puzzling to note how siloed, production-orientend and traditional Finnish companies actually are. Here, product development, marketing, sales, production and customer service lead their separate lives happily with little connection to a business approach based on customer data and orientation.
Digitization represents a change of culture that challenges the entire organisation to develop its operations on a real-time and customer-responsive basis.