For companies struggling to compete and win – or remain sustainable – in the age of disruptive innovation, data and truth are both the demolition expert and the architect.
This is also a time of digital technology, cloud computing, big data and business analytics. Corporate leaders and drivers of transformative change have never had this much raw material to work with before. Nor have they had such tools to put that raw material to use.
This isn’t theory. At Clear Peak, we’re seeing real results from the real world. One that I’ve gotten to know – an established, S&P 500 company with operations in over 150 countries and over $10 billion in revenues – is using big data and data analytics to reinvent its operations, starting with its supply chain.
And the early returns are startling:
- Measurable cost savings.
- Measurable mitigation in risk and liability exposure.
- New insight and visibility that will help them make smart decisions into future.
- Greater accountability throughout their organization and strategic partners.
- Better performance and customer service.
- And a platform for sustainability.
How transformation happens
How are they getting there? They’ve committed to a multi-faceted, data-first approach.
They’re capturing all the relevant data they can from as many sources as they can, to make business performance more visible. They’re moving from spread-sheet-based data entry to a standardized, integrated, well-governed master data management environment. They’re replacing information silos with a single, central source of truth.
They’re aligning data, people, processes, new technology, and analytics to achieve the best possible outcomes. By being open to the facts that the data presents, they’re making decisions based on the reality of their situation.
And they’re taking action, assuming leadership and owning all facets of the change process.
The elements of change
Those facets are both “hard” and “soft.” The tangible ones involve data, processes and technology. They include replacing spreadsheets and silos with a data warehouse; the adoption of best practices in 3PL vendor qualification and review and a commitment to in-depth vendor research; and the embracing of solutions that let the company model scenarios to gain better visibility into contract awards and ongoing performance.
But there are intangible facets, too; people especially. One half to 70% of all organizational change management initiatives fail or fall short, according a 2015 white paper from the Center for Creative Leadership. Why? The paper’s four authors argue that organizations that focus solely on change management can run aground thanks to “uncertainties, fears and distractions” that foster defensiveness, inertia or a destructive level of staff turnover among middle managers and employees.
They counter that change leadership, an organic, from-the-inside process driven by change agents at the highest levels of the company, is needed to install the mindsets, skills and tools to lead a company through crucial transformations. Not surprisingly, those three assets are essential in moving to a data-first environment.
The Netflix paradigm
We all can list the many examples of companies that sank to the bottom, or limped into port, because they could not confront disruptive change or new competition. But I’d rather focus on the positive. Because I can’t be specific about our client for confidentiality reasons, and because their transformation is at an early stage, I look to the success of a smaller, data-driven company that’s mastered change leadership: Netflix.
Here’s a brief article from Business Insider that looks at Netflix’ amazing transformation over the past seven years. By 2010, its 14th year, it had attracted over 15 million subscribers to its DVD-by-mail business and had put retail video rental chains out of business. It was sitting on a gold mine of customer data, and it already had a data-driven culture.
But a massive disruption – content delivered through streaming video – loomed on the horizon. The company’s future was at stake. So it acted. After a faltering spinoff, it split Netflix into two units, one for its legacy business and one for streaming content. It made massive investments in technology, expanded its global presence and, of course, began to produce its own entertainment hits: House of Cards, Orange is the New Black, Stranger Things and more.
And not only did Netflix maintain its data-driven focus; it truly became data-first.
Phil Simon, author of The Visual Organization: Data Visualization, Big Data and the Quest for Better Decisions, wrote in 2014: “Through Big Data and [data visualization], Netflix seamlessly delivers mind-boggling personalization to each customer. At the same time, Netflix can easily aggregate data about customers, genres, viewing habits, trends, and just about anything else. Equipped with this data, Netflix can attempt to answer questions that most organizations can’t or won’t even ask.”
Said Business Insider last autumn, “[Chief product officer Neil] Hunt says Netflix has an ‘unprecedented’ level of data that ‘helps us decide the kinds of shows/movies we should make, and we can predict an audience for them with a surprising degree of certainty.’”
Now it has more than 80 million subscribers.
Your challenges and opportunities may not be on the same scale as Netflix’ (or our S&P 500 client), but let me leave you with this fundamental question: Are you taking maximum advantage of the raw material – the data – you have to make the incremental or significant changes necessary to improve your business’s performance and value?
 David L. Dinwoodie, William Pasmore, Laura Quinn and Ron Rabin, Navigating Change: A Leader’s Role (2015), The Center for Creative Leadership