Will Your Company be Predator or Prey When it Comes to Adoption and Application of Advanced Analytics?

NEW YORK, Jan. 22, 2018 -- As incumbents struggle to compete against the disruptive force of advanced analytics, smart companies are taking advantage of it and gaining on their competition.  In response, investors have rewarded these disrupters with much higher valuation growth than even the best-performing stock among the large incumbents.  A recent Bain & Company report, Predator or Prey: Disruption in the Era of Advanced Analytics, found that the valuation of analytics-enabled disrupters grew faster than the largest industry players – 15x for the auto industry, 6x for video distribution, and 3x for both quick service restaurants and retail.

Bain surveyed more than 330 executives and found that most companies have yet to embrace advanced analytics, even though new challengers and a select few incumbents are using it to innovate and disrupt their industries.  The research revealed that only about 5 percent of companies said advanced analytics is a top priority.  A full 30 percent of companies said it had not been a priority for investment and progress thus far.  

“The signs that an industry is ripe for advanced analytics disruption are becoming clearer. So are the disruptive patterns that commonly follow,” said Rasmus Wegener, a Bain partner and advanced analytics and business transformations expert, who co-authored the report.  “Indicators of potential disruption involving cost and customer experience often have at their root in serious product, service or process deficiencies. Analytic disrupters turn these shortcomings into major opportunities by addressing and solving them with advanced analytics.”

New business models take this a step further.  They disrupt competitive dynamics and shift profit pools by combining services, technologies and data sources that may not even seem to be related.  In doing so, such disruptive business models create a significant and discontinuous change in customer and business value—all powered by advanced analytics and new ways to collect and deploy data. 

This disruption is sometimes obvious but, more often, companies have to look for the signposts.  Bain has identified three common patterns of disruption:

1. Data and analytics help provide existing products or services at a radically lower cost.
    
2.  A step-change improvement in customer experience:  Data and analytics can significantly improve customer experience and in turn customers’ advocacy of an existing product or service.
    
3. New business models combining services, technologies and data in unexpected ways: In order to generate new value for the business and in the eyes of the customer, the new models typically address existing customer needs in a novel way by combining services, technologies and data sources that may not even seem to be related. 

“By taking a hard look at the signposts of inefficiency and ineffectiveness described above, business leaders can foresee the types of disruption in which analytics enables radically lower cost or a step-change improvement in customer experience,” said Wegener.  “Much harder to predict, however, are the specifics of the third pattern. Yet, of the three, this one redefines the rules of competition and can completely alter the profit pools of entire industries.”

Editor's note: To arrange an interview, contact Dan Pinkney at [email protected] or +1 646 562 8102

About Bain & Company
Bain & Company is the management consulting firm that the world's business leaders come to when they want results. Bain advises clients on strategy, operations, information technology, organization, private equity, digital transformation and strategy, and mergers and acquisition, developing practical insights that clients act on and transferring skills that make change stick.  The firm aligns its incentives with clients by linking its fees to their results.  Bain clients have outperformed the stock market 4 to 1. Founded in 1973, Bain has 55 offices in 36 countries, and its deep expertise and client roster cross every industry and economic sector. For more information visit: www.bain.com.  Follow us on Twitter @BainAlerts.

Media Contact: 
Dan Pinkney
Bain & Company
Tel: +1 646 562 8102
[email protected]