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From Poor-Data and Poor-Insight to Rich-Data and Better-Insight

As we already know, organizations have ability to collect, store and analyze massive amount of data from multiple sources. They have spent a lot of money managing this big data. Investments in technology and analytics are useless unless employees can use data, information and knowledge in their decisions-making.  Many companies are facing a big challenge in data-driven decision-making. Good and rich data won’t quarantee good decisions on their own. I posted May 2012 an article about Insight IQ. It was based on April 2012 issue of the Harvard Business Review where Shvetank Shah, Andrew Horn and Jaime Capella argue that Good Data Won’t Guarantee Good Decisions. In this article I continue this theme a bit further.

Shah, Horn and Capella found that there are three main types of decision makers:

  1. Visceral decision makers (gut feel decisions)
  2. Unquestioning empiricists (rely on the number alone)
  3. Informed skeptics (gut feel with data)

If we consider the matter in data perspective I defined simple data collaboration or data insight maturity scale. It emphasizes level and maturity of data collaboration in decision-making.

Organizations on the right ‘high side’ are capitalizing the data in decision-making. They combine the gut feel with data and can drive decisions that make a real difference in productivity and profitability. They can drive real competitive edge from and behind the data. They drive all necessary information from markets for better decision-making. They know their customers and customer journey. Although the decisions can be very complex with limited amount of time and there are many options to choose from, they can still make the decisions and carry out them fast. These companies are the winners. They have hit the jackpot, but unfortunately I see these kinds of companies quite seldom. However, that is the goal to go for.

Another way of looking at this variety in corporate behavior is to divide companies in three categories according to state of data maturity. There are three types of companies: data collectors, data analyzer and data innovators.

1.       Data collectors

These companies are collecting and learning which data is important for their business. Light segmentation is used and it is more building and focusing on different customer groups. Analytical skills are very low and decisions are made as gut feel or based on basic sales figures and income statement

2.       Data analyzer

These companies have systematic way of collecting and storing data. They are invested in the technologies that are available to analyze the data. They can do basic business reporting but are not able to drive the real value behind the data. They are good at analyzing and reporting but suffer the lack of interpretation skills to drive deeper business insight.

3.       Data innovators

These companies are more comfortable with big data sets and technology. The focus is in how benefit from actionable insights and strategic big data. They have effective ways to share business information across functional areas that better decisions can be made. They have many data-savvy employees and data-driven decisions are informality in C-Suite.

Steps from data collector to data innovator

It is all about people, process and technology. Here are six steps to improve data-driven decision-making.

1. Emphasis on right data

  • collect all relevant information into one single platform
  • from business understanding to data understanding
  • automate the data collection process

2. From silos to holistic business view

  •  map all the relevant data, which is essential for decision-making
  • data preparation, consolidation and visualization are necessary
  • CMO & CIO partnership

3. Choose the right technology

  • find technology that meets your business demands
  • choose technology, which accept and read data from any source

4. Online reality

  • today’s business and business environment needs real-time data
  • online data as enabler of quick decisions and insights
  • rapid resource allocation
  • online business management and intelligent decisions

5. Create strategic marketing dashboard

  • KPI’s by channel
  • true values from returns and investments
  • identify risks and opportunities
  • measure and lead the customer journey

6. Create systematic analytic skills competence development program for employees

  • find the data-savvy workers in your organization
  • make them to train everyone else of their analytics skills and method
  • leverage analytics know-how widely in your organization
  • C-suites as exemplary for others

Symbiosis strategy – Creating the ultimate customer value proposition

Whenever two organisms of different species exist in close physical contact to the benefit of both organisms, that’s symbiosis. Symbiosis can occur between animals, plants, fungi or any combination thereof. Each organism contributes something that benefits the survival of the other, and in turn receives a survival benefit of its own. This is business version of Symbiosis as a strategy

Wikipedia: Symbiosis (from Ancient Greek sýn “with” and bíōsis “living“)[1] is close and often long-term interactions between different biological species. In 1877 Bennett used the word symbiosis (which previously had been used of people living together in community) to describe the mutualistic relationship in lichens.[2] In 1879 by the German mycologist Heinrich Anton de Bary, defined it as “the living together of unlike organisms.”

When talking about Symbiosis, we are looking for the possibility of the ultimate value proposition for a customer, which is impossible to produce alone. We consider Symbiosis model as a major evolutionary concept and strategic approach to collaboratively create value that would be impossible to deliver alone.  The idea of Symbiosis between customer and company can be described with levels of synergy: a) product centric b) customer centric c) sybiosis

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Symbiosis

The idea of Symbiosis was an outcome from the first meeting I had with Jarmo Lipiäinen when we started writing Customer Journey Management – the book. It was there all along but became more and more exciting as we really started working on it. We came to conclusion that Symbiosis is also possible and doable in many forms in business as it is in nature. The driving force for the Symbiosis is to find the ultimate value proposition and create collaboration in order to achieve it. Most often the ultimate value is a blind spot for companies in certain business sector just because it is impossible to reach solo.

Writers and ideologies that we have been influenced by are C.K. Parahalad’s texts about open innovation and how to co-create value with consumers. Co-creation and open innovation have become major methodologies for corporate development for a reason and proved that people are prepared to engage in dialogue with companies as long as it is relevant and mutually rewarding mentally and financially. The final confirmation for our thinking was Michael Porter’s article about how to create shared value and re-create capitalism in Harward Business Review 1/2011. Here’s Mr. Porters speach about the approach

Models of Symbiosis

Symbiosis can be based on direct collaboration between company and customer or between companies creating value together for customer. In Michael Porters shared value theory the symbiosis is between society and business. We came to conclusion that there are four general models of symbiosis which can also be combined:

  1. Shared Value = Symbiosis between society and business
  2. Platform/standard based = Symbiosis between platform owner, partners and customer
  3. Co-created = Customer & company
  4. Coalition = Several companies working together for a customer

Symbiosis strategy 1) SHARED VALUE

In the first year of business school, there was a professor visiting from the university of Beging. He told how foreign companies had to integrate in the society in order to become accepted and actually do business in China. Chinese customers required companies to establish their position in the market and become accepted. Company should contribute society by employing people, invest in local production, support local schools and educate people to work for them. It now seems that also western markets are beginning to require higher ethical standards from businesses.

Mr. Michael Porter has developed a theory of “shared value”. Shared value is about creating long-term competitive advantages by engaging with societies in deeper level. He used and examples comparing corporate social responsibility ideology like fair trade as an example. Fair trade pays a little more to farmer in order to improve farmers living conditions and consequently the products cost more in store where consumers eventually pay more too. In shared value example, the company doesn’t pay extra for farmers, but educate them, invest in better transportation capabilities, provide farmers with more effective production capabilities. By doing this, the company now gets higher quality products at the same price as before, only the farmer’s now get 200-300% more income than before. The products cost the same as before, the company has secured production and the farmer and society where the production is done benefits much more than fair trade could ever offer.

Mr. Porter argue that during the past 30 years companies have completely concentrated on maximizing profits. In recent years business increasingly has been viewed as a major cause of social, environmental and economic problems. Companies are benefiting their owners at the expense of broader community. This has put capitalism system under siege.

Symbiosis strategy 2) PLATFORM/STANDARD BASED SYMBIOSIS

There have been symbiotic customer & partner relationships in the past. However, current communications technology, software and service development has resulted an outburst of this business model. It has become more and more evident that companies can simultaneously be interdependent and interproductive towards the ecosystem operating in symbiosis. This model exists with in the ecosystem, but ecosystem can also exist without direct interdependency and –productivity.

An icon for platform based symbiosis and actually, shared value too, is Microsoft with Windows. Windows has led the way as computers have become natural parts of our everyday lives. Windows became the standard along with MS Office’s word, excel and power point and Internet explorer. Due to dominant platform position, other software developers have been capable of cost efficiently developing all sorts of applications and software for it and increased the level of service PC has been capable of delivering for all of us. Windows and other Microsoft products resulted enormous profits for Microsoft but also IBM, Oracle and thousands of other information and communication technology and software companies. Further on, as computers spread so fast Windows also played important role in the Internet revolution. At society level, Microsoft has enabled major increase in profitability at global level. Microsoft in general and especially Windows has changed the world.

Symbiosis strategy 3) CO-CREATED SYMBIOSIS

Co-creation has re-emerged as new way of creating value and business concepts from online environment and created a lot of fuzz as such. In the online environment most games and services would be empty without people interacting on them. The businesses actually rely on customers to create meaning for the frame, platform or game they are providing customers with. World of Warcraft, Facebook, Habbo Hotel, LinkedIn, the list is endless. In these cases the company provides customers a platform for communications, social interaction and fun. Customers co-create the meaning and the company funds their business by selling users attention to advertisers. Advertisers on the other hand also participate in value creation for users and co-create value both ways. In these cases each party act selfishly and use the opportunity of a) great free and fun communication platform as a customer b) great reach and dialogue opportunities as an advertiser c) enjoy the scale and free value creation by users and advertisers enabling commercial success as a platform owner.

Another form of co-creation is the rise of mutual companies. These companies are owned by their customers and have representatives for the owners steering the company.

Wikipedia: A mutual, mutual organization, or mutual society is an organization (which is often, but not always, a company or business) based on the principle of mutuality. A mutual exists with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services to all members of the organization or society. A mutual is therefore owned by, and run for the benefit of, its members. Members could benefit from dividends or lower cost of service.

North European countries are welfare states that have a cultural fusion combined from socialist thinking and pure capitalism. In these countries the state has strong role in healthcare, welfare and education. In these countries anyone can study in University and get allowance from State to support your studies. Educational level is at very high level in average in the total population. All this is financed with successful capitalism and taxation that benefit from commercial success of companies, capitalism in a word. North European model could be considered as a model for Shared Value in the state level. As the economic turmoil is shaking ground of how nations are organising the North European model is gaining traction. In this culture Mutual companies are doing very well. For example in banking and retail the market leading players are mutual and other mutual companies are also doing better than companies in average.

Symbiosis strategy 4) COALITION BASED SYMBIOSIS

In 2004 DMA event in New Orleans I was privileged to see when Mr. Robert Gierkink from Loyalty Management UK presented the Nectar –loyalty card case and really showed how it is possible to create Symbiosis between companies in order to create much higher value for customers in order to fight against competitors and really challenge them with pure customer value.

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The core idea of Nectar –loyalty program is to join forces and relationships of several companies in to one single program in order to enable stronger hold of customers in variety of different contexts and also offer higher reward for buying from this coalition. As a brand Nectar program is very skilfully positioned as high value for both coalition partners and customers.

The idea of Nectar was to spread current customer relationship and tie it to new partners enabling effective cross selling operation and increase in sales for all partners resulting a tool for market growth in all participating partner categories. The idea of Symbiosis between partners was very well argumented both rationally and emotionally. This symbiosis materialized as Nectar, which was positioned as a customer servant supporting customer’s individual needs and behaviour in his personal life. Nectar’s role as a program was to give individual advice and hints suitable for your consuming and lifestyle. Nectar does it’s job in order to integrate new brands and companies to customer’s life and rewarding for it.

Nectar worked too, it dropped the cost of acquisition and customer care program by 50%, cost of mailing was 1/44 compared to before. Partner companies like Barclaycard increased their turnover by 9% in the first year and BP sold 4% more at lower cost. In Direct Magazine Sainsbury reported that their responses to Nectar’s targeted mailings in paper and e-mail have increased by 300% and estimated that it has 50% efficiency improvement in understanding and segmenting it’s customers.

After Sainsbury launched Nectar for their customers, according to financial statements, their profit rose 14,2% from previous year and 10,8% in the following. At that point Tesco reacted by doubling their advertising investments and struck back by recruiting new members to their Clubcard program. In the following year Sainsbury’s profit decreased by 2,9% from previous year. However, Nectar profited participating members by coalition Symbiosis and increased value for customers resulting stronger steering power and pull towards companies participating in the program.

Conclusions about Symbiosis

There’s nothing new about synergy. Companies collaborate and have always operated in win-win relationships. However, we feel that most of the companies actually don’t look for the ultimate value proposition but settle for the second best. The four models of symbiosis: Shared value, Platform based, co-created and coalition models often occur in the way that they are combinations to some decree. Still, we think these four distinctive models offer a full perspective of what can be done and where you should look for such opportunities. What we predict and anticipate is a new breed of corporate collaboration, which means new burst of holding companies offering new value propositions based on combined synergy value from different companies concentrating on their core business but creating completely new value in collaboration.

Please comment and contact us about symbiosis strategy. This is the first time we publish this concept and we would love to have it validated academically.

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If you interested in alternative Loyalty strategies check out Loyalty strategies for pragmatists

Here is a whitepaper about how to come up with Symbiosis potential that I wrote way back 🙂 NOTE: in the square with segments from 1-4 the number 3 segment is about Habit driven behavior and that has not been defined in the text.

SEE ALSO

Lost insights and Corporate Blind Spots

Business Design with customer centricity

How to enable smart company and avoid corporate autism

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

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