The role of data in determining profitability

The ability to manage information is playing an increasingly central role in competitive strategy. In most industries, companies can no longer achieve sustainable competitive differentiation simply on the basis of the performance characteristics of their products alone. The pace of technological development means that any product innovation a company makes today is likely to be quickly copied by competitors and become a standard feature tomorrow. Coupled with this, globalisation is exposing companies of all sizes to unprecedented levels of competition. As a result companies are increasingly being forced to look at how they can increase the value they provide by tailoring their offer to customers’ individual needs whether that is through customising the company’s core product or adapting a range of supporting services (e.g. billing, shipping, customer support etc). Such an approach not only serves to provide a basis for short term differentiation, it also has longer term strategic benefits too. The more a company learns more about a customer’s individual needs and tailors its products and services accordingly, the greater the value the customer receives. Similarly, the greater the value the customer receives, the more important the company becomes to them. Progressively, the customer faces the prospect of ever greater disruption were they to consider switching to an alternative supplier owing to the time it would take any other company to acquire the same understanding of their needs and deliver a comparable tailored service.