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And IFA was among the best in the industry at evaluating external sources of data (credit histories, demographic studies, analyses of socioeconomic status, and so on) to predict depression, back pain, and other expensive chronic conditions. “Oh, paper, please,” she replied. If not, you may be missing out on a potent competitive tool. Some 14 months earlier, IFA and ShopSense had joined forces in an intriguing venture. profitability by Royal Bank of Canada (Davenport and Harris (2007) • Accurate estimate of customer’s future value (Piccoli and Watson 2008) • Analysis of customer data to design more effective marketing campaigns (Kohavi et al. IFA could even put a positive spin on the creation of new insurance products based on the ShopSense data. Born in Tazewell County, he was the son of Billy and Dorothy Colley Harris. I learned how to recognize an organization that is ready to embrace their data and find a better way vs an organization that is not ready. competing on analytics 07 by davenport thomas h harris jeanne g hardcover 2007 Nov 15, 2020 Posted By Nora Roberts Publishing TEXT ID a78bcec0 Online PDF Ebook Epub Library jeremy shapiro 2010 competing on talent analytics harvard business review thomas h davenport is the presidents distinguished professor of it and management at babson In the article, analytics chief Steve Worthington described how the organization employed a pattern-based approach to issuing coupons. What, then, should IFA and ShopSense do? Laura was about to rein in her stats guy when Rusty Ware, IFA’s chief actuary, addressed the group. “Imagine what that guy could do with an even larger data set,” O.Z. The challenge for the insurer, however, is that there is no proven correlation between the purchase of certain foods and fewer health problems. Decisions that might be made on the basis of the shared data represent another hazard for consumers—and for organizations. The culture at Borders is such that the managers involved would have just assumed we wouldn’t do something like that. Two new components were added to the DELTA model, creating the DELTA Plus model. We use proprietary data-mining and analytical capabilities to help guide consumers through the health maze. If access to and use of customer data are to remain viable, organizations must come up with ways to address customers’ concerns about privacy. She would be seeking their approval to buy more of the ShopSense data; she wanted to continue mining the information and refining IFA’s pricing and marketing efforts. About ten years ago, we created our Total Rewards program. People believe that retail and other organizations will use their data wisely to enhance their experiences, not to harm them. With top management’s blessing, Steve and his team had agreed to provide IFA with ten years’ worth of loyalty card data for customers in southern Michigan, where ShopSense had a high share of wallet—that is, the supermarkets weren’t located within five miles of a “club” store or other major rival. She’d read every article, book, and Web site she could find on customer analytics, seeking to learn more about how organizations in other industries were wringing every last drop of value from their products and processes. Still, the deal wasn’t without risks: By selling the information to IFA, it might end up diluting or destroying valuable and hard-won customer relationships. “That’s because what we’re doing isn’t visible to our customers—or at least it wasn’t until your recent comments in the press,” Alan grumbled. Several managers at the table began talking over one another in an attempt to respond. About the author (2007) Thomas H. Davenport is the President's Distinguished Chair at Babson College and a research fellow at the MIT Center for Digital Business. DAVENPORT, Va. ? The arrangement proposed in this case study seems shortsighted to me. Laura had read a profile of ShopSense in a business publication and learned that it was one of only a handful of retailers to conduct its analytics in-house. In this fictional account, for instance, a shopper’s grocery purchases may directly influence the availability or price of her life or health insurance products—and not necessarily in a good way. Plan a funeral, find contact information and more. She is the co-author of. Some of the information captured in our online joint promotions is accessible to both Harrah’s and its business partners, but the promotions are clearly positioned as opt in. Katherine N. Lemon (kay.lemon@bc.edu) is an associate professor of marketing at Boston College’s Carroll School of Management. David Norton (dnorton@harrahs.com) is the senior vice president of relationship marketing at Harrah’s Entertainment, based in Las Vegas. In "Competing on Analytics: The New Science of Winning," Thomas H. Davenport and Jeanne G. Harris argue that the frontier for using data to make decisions has shifted dramatically. If not, you may be missing out on a potent competitive tool. One of the biggest problems in U.S. health care today is obesity. One corner of the space was being used to store prototypes of regional in-store displays featuring several members of the Houston Astros’ pitching staff. It was the same way at both Saks and Target when I was with those companies. Laura understood it might be a tough sell. When business opportunities come along, they’ll be screened according to those standards—and the decisions will land right side up every time. Most customers would probably be quite surprised to learn that their personal information could be used by companies in a wholly unrelated industry and in other ways that aren’t readily foreseeable. You have more information at hand about your business environment than ever before. 4 Reviews. If you wouldn’t want your personal data used in a certain way, chances are your customers wouldn’t, either. Laura made a mental note to speak with Miss Maryellen about what sugary cereals do to kids’ teeth (and to their parents’ wallets). Browse the world's largest eBookstore and start reading today on the web, tablet, phone, or ereader. The lines at the local ShopSense supermarket were especially long for a Tuesday evening. As regional manager for West Coast operations of IFA, one of the largest sellers of life and health insurance in the United States, Laura normally might not have paid much attention to Shop-Sense’s checkout procedures—except maybe to monitor how accurately her purchases were being rung up. Cooper, IFA’s general counsel, began to clear his throat over the speakerphone. business performance Davenport and Harris 2007 5 a group of tools that are used from CIDM 6308 at West Texas A&M University For instance, we know that if somebody buys a travel guide to France, that person might also be interested in reading Peter Mayle’s A Year in Provence. If ShopSense retained control of its data to some degree—that is, if the grocer and IFA marketed the Smart Choice program jointly, and if any offers came from ShopSense (the partner the customer has built up trust with) rather than the insurance company (a stranger, so to speak)—the relationship could work. Share. No one else has the historical data we have.”. No one else has the historical data we have or as many customers nationwide.” He was right, of course. Shortly after reading that article, Laura had invited Steve to her office in San Francisco. Some companies have more leeway than others to sell or trade customer lists. Exclusive access to ShopSense’s data would give IFA a leg up on competitors, Jason knew. The paper presents an interpretive framework that explores the definitional … Many have expressed support, but COO Alan Atkins isn’t so sure: If customers found out that the store was selling their data, they might stop using their cards, and the company would lose access to vital information. Gregory Kyle Harris, age 52, passed away Wednesday, March 14, 2007, at his home. Before she could follow up on Jason’s comments, though, Geneva Hendrickson, IFA’s senior vice president for ethics and corporate responsibility, posed a blue-sky question to the group: “Take the fruit-and-nut stat Archie cited. The data we’re getting are hugely important as a basis for serving customers more effectively (based on their purchase patterns) and as a source of competitive advantage. Despite the fact that alienating 75% to 90% of customers may not be the best idea in the long run, many retailers have adopted this “top tier” approach to managing customer relationships. Both CEOs are subjecting their organizations to a possible public relations backlash, and not just from the ShopSense customers whose data have been dealt away to IFA. But are you using it to "out-think" your rivals? We don’t sell information, and we don’t buy a lot of external data. “Look at Progressive Insurance,” she began. Sammy will understand, the CEO told himself as he sank deeper into the love seat in his office, a yellow legal pad on his lap and a pen and cup of espresso balanced on the arm of the couch. I absolutely loved this book. As he watched the minute hand sweep on his wall clock, Jason wondered what risks he might be taking without even realizing it. We carefully control the content and frequency of even our own communications with Rewards members. Instead, the message coming from the senior teams at both IFA and ShopSense is that any marketing opportunity is valid—as long as they can get away with it legally and customers don’t figure out what they’re doing. Her cart was nearly overflowing in preparation for several days away from her family, and she still had packing to do at home. This book unleashed a worldwide movement in organizations wanting to harness their data for competitive advantage. Companies engaging in customer analytics and related marketing initiatives need to keep “win-win” in mind when collecting and handling customer data. “Do we need more sunscreen?” Laura wondered for a moment, before deciding to go without. Laura had flown in two days ahead of the meeting and had sat down with the chatty statistics expert and some members of his team, going over results and gauging their support for continuing the relationship with ShopSense. In those one-on-one conversations, only Alan Atkins, the grocery chain’s chief operations officer, had raised any significant issues, and Steve had dealt patiently with each of them. How can these companies leverage the customer data responsibly? “The big question is, Should we be charging more?” she mused to her husband. The Five Stages of Analytics Maturity was developed in 2007 by Tom Davenport and Jeanne Harris in their book, Competing on Analytics. She got to the checkout area and waited. Consistent with several earlier studies (Davenport, 2006, Davenport and Harris, 2007, Goes, 2014, Mcafee and Brynjolfsson, 2012b), in this study, we view BDAC as an important organizational capability leading to sustainable competitive advantage in the big data environment. Health insurer IFA and grocery chain ShopSense have formed an intriguing partnership, but it threatens to test customers’ tolerance for sharing personal information. Business Deployment: A Leaders' Guide for Going Beyond Lean Six Sigma and ... General management / Harvard Business School Press. As a benefit to society?”. Humana provides health benefit plans and related health services to more than 11 million members nationwide. Like IFA, we ask our customers to share their personal and medical histories with us (the risky behaviors as well as the good habits) so we can acquaint them with programs and preventive services geared to their health status. Rain was in the forecast that afternoon for Dallas, so Steve Worthington decided to drive rather than ride his bike the nine and a half miles from his home to ShopSense’s corporate offices in the Hightower Complex. They also earn Tier Credits that give them higher status in the program and make them eligible for differentiated service. Angry customers will certainly speak with their wallets if that trust is violated. IFA’s customers might also think twice about their relationship with the insurer. In my company, this pilot would never have gotten off the ground. The CEOs in the case study need to take the “front page” test: If the headline on the front page of the newspaper were reporting abuse of customer data (yours included), how would you react? Competing on Analytics with Internal Processes, Competing on Analytics with External Processes, A Road Map to Enhanced Analytical Capabilities, The Architecture of Business Intelligence, Competing on Analytics: The New Science of Winning. We do rely on analytics and models to help us understand existing customers and to encourage them to stick with us. “How about this, though: Households that purchase both bananas and cashews at least quarterly seem to show only a negligible risk of developing Parkinson’s and MS.” Archie had at first been skeptical about the quality of the grocery chain’s data, but ShopSense’s well of information was deeper than he’d imagined. None of the states that IFA did business in had laws prohibiting the sort of data exchange ShopSense and the insurer were proposing. Save. Looked at another way, analytics enable firms to understand how poorly they can treat individual or groups of customers before those people stop doing business with them. How can both companies leverage the data responsibly? It wasn’t the same as when that online bookseller got into trouble for charging customers differently based on their shopping histories. “Exclusive rights to our data will give you information that your competitors won’t be able to match. For instance, so-called healthy purchases might earn customers a discount on their standard insurance policies. Laura glanced again at the clock. If consumers lose trust in firms that collect, analyze, and utilize their information, they will opt out of loyalty and other data-driven marketing programs, and we may see more regulations and limitations on data collection. But are you using it to “out-think” your rivals? Commenting on this fictional case study are George L. Jones, the CEO of Borders Group; Katherine N. Lemon, an associate professor of marketing at Boston College; David Norton, the senior vice president of relationship marketing for Harrah’s Entertainment; and Michael B. McCallister, the president and CEO of Humana. I honestly don’t think these companies have hit upon a responsible formula for mining and sharing customer data. In our Personal Nurse program, for example, we’ll have a registered nurse follow up with a member who has filed, say, a diabetes-related claim. Customers’ information needs to be protected. At Borders, we’ve built up a significant database through our Borders Rewards program, which in the past year and a half has grown to 17 million members. Another concern for consumers is what I call “battered customer syndrome.” Market analytics allow companies to identify their best and worst customers and, consequently, to pay special attention to those deemed to be the most valuable. The make-or-break issue, she thought, would be the reliability and richness of the data. Laura nodded in agreement, silently cheering on the insurance company’s uberanalyst. Professor Department of Management Information School of Management Thomas H Davenport. Her bosses have some concerns, however. Each time they visit one of our 39 properties and use their card, they earn credits that can be used for food and merchandise. In response, Laura and her actuarial and sales teams conceived an offering called Smart Choice, a low-premium insurance plan aimed at IFA customers who didn’t indulge. “Point taken,” Steve replied, although he knew that Alan was aware of how much positive attention those articles had garnered for the company. How can the two companies use the customer data responsibly? competing on analytics 07 by davenport thomas h harris jeanne g hardcover 2007 Dec 11, 2020 Posted By Leo Tolstoy Public Library TEXT ID a78bcec0 Online PDF Ebook Epub Library of winning thomas h davenport and jeanne g harris argue that the frontier for using data to make decisions has shifted dramatically certain high performing enterprises are The insurer’s general counsel should investigate this deal. Laura was flying the next day to IFA’s headquarters in Cincinnati to meet with members of the senior team. This position paper explores BDA in e-commerce by drawing on a systematic review of the literature. Archie had been invaluable in guiding the pilot project. Even better, both firms would be engaging in trust-building—versus trust-eroding—activities with customers. And, according to recent studies, more and more of those organizations were sharing their data with business partners. “Some poor soul puts potato chips in the cart instead of celery, and look what happens.”, “But what about the poor soul who buys the celery and still has to pay a fortune for medical coverage,” Donna argued, “because the premiums are set based on the people who can’t eat just one?”. “Your CEO needs to hear only one thing,” Steve had told her several days earlier, while they were comparing notes. Reprint: R0705A. Harvard Business Publishing is an affiliate of Harvard Business School. “But I’ll go on record as being against the whole thing,” he said. All rights reserved. I rarely eat at home, but I still buy tons of groceries—some healthy, some not so healthy—for my kids and their friends. Would customers feel comfortable with the data-sharing arrangement if they knew about it? Read full review, Tom and Jeanne have written an excellent new book (building on a paper they wrote some time ago) about what they call "analytic competitors", that is to say companies that use their analytic prowess ... Read full review, Check out the new look and enjoy easier access to your favorite features. His newest book (coauthored with Jeanne Harris), Competing on Analytics: The New Science of Winning (Davenport & Harris 2007), provides guidelines for basing competitive strategies on the sophisticated analysis of business data, and highlights several firms that do so. Their secret weapon? Harvard Business Press, Mar 6, 2007 - Business & Economics - 218 pages. If you looked at a breakdown of purchases for my household, you’d say “Wow, they’re consuming a lot.” But the truth is, I hardly ever eat a bite. In this book Jeannie Harris and Thomas Davenport do such and incredible job of outlining the natural progression of analytics in multiple different industries! “Of course, those customers realized later they might pay a higher premium when the company found out they routinely exceeded the speed limit—but that’s not a legal problem,” O.Z. “It wins all the business with the safe set by offering low premiums, and it doesn’t lose its shirt on the more dangerous set.”. IFA had been looking at this relationship only in the context of individual insurance customers, Steve explained, not of group plans. Noté /5: Achetez Competing on Analytics: The New Science of Winning by Thomas H. Davenport, Jeanne G. Harris (2007) Hardcover de : ISBN: sur amazon.fr, des millions de livres livrés chez vous en 1 jour It was able to steal a march on its rivals simply by recognizing that not all motorcycle owners are created equal. 2002) • Identify of ‘best value’ inventory items to drive sales of items with better fill rates, and reduce inventory (Carte et al. Like most successful retail companies, our organization is customer focused; we’re always trying to see a store or an offer or a transaction through the customer’s eyes. Prospective IFA customers were required to disclose existing medical conditions and information about their personal habits—drinking, smoking, and other high-risk activities—the actuary reminded the group. Get PDF. Author: Thomas H. Davenport, Jeanne G. Harris, 2007. Competing on Analytics: Updated, with a New Introduction: The New Science of ... Handbook of Research on Socio-Technical Design and Social Networking Systems. So would it be useful for our company to look at grocery-purchasing patterns, as the insurance company in the case study does? Lucky for him, others had been held up by the traffic as well. Laura had finally made it to front of the line. For years, IFA’s regional manager for West Coast operations, Laura Brickman, had been championing the use of customer analytics—drawing conclusions about consumer behaviors based on patterns found in collected data. “I don’t know whether to grab a cup of coffee or a bat,” Steve joked to the others, gesturing at the life-size cardboard cutouts and settling into his seat. • • •. I could see the upside of using a grocer’s loyalty card data to develop a wellness-based incentive program for insurance customers. “You know, this deal isn’t really as much of a stretch as you might think.” He pointed out that the company had for years been buying from information brokers lists of customers who purchased specific drugs and products. “I haven’t heard of anybody canceling based on any of our other card-driven marketing programs,” he said. Going forward, all ShopSense would have to do was send IFA some tapes each month and collect a million dollars annually of pure profit. The insurer wanted to buy a small sample of the grocer’s customer loyalty card data to determine its quality and reliability; IFA wanted to find out if the ShopSense information would be meaningful when stacked up against its own claims information. Thomas Hayes "Tom" Davenport, Jr. (born October 17, 1954) is an American academic and author specializing in analytics, business process innovation, knowledge management, and artificial intelligence.He is currently the President’s Distinguished Professor in Information Technology and Management at Babson College, a Fellow of the MIT Initiative on the Digital Economy, Co-founder of … The two were attending a wine tasting hosted by a friend. This would address the “unintended use of data” problem; customers would understand exactly what was being done with their information. Laura for years had been interested in the idea of looking beyond the traditional sources of customer data that insurers typically used to set their premiums and develop their products. “Besides, it’s not like we’d be directly drawing the risk pools,” he said. Donna Greer gently swirled the wine in her glass and clinked the stemware against her husband’s. ShopSense was already selling its scanner data to syndicators, and, as her CFO had reminded her, the company currently made more money from selling information than from selling meat. Print. It might be. “Trans fats and heart disease—no surprise there, I guess,” Archie said, using a laser pointer to direct the managers’ attention to a PowerPoint slide projected on the wall. Now she has to sell her company’s senior team on buying more information. Laura also knew that if IFA decided not to buy the grocer’s data, some other insurer would. Buy Copies. Specifically, she wondered, would it identify individual consumers as employees of particular companies? There was always the chance an employee would let something slip, but even if that happened, Steve doubted anyone would be shocked. Casinos, credit card companies, even staid old insurance firms were joining airlines, hotels, and other service-oriented businesses in gathering and analyzing specific details about their customers. When the tougher, gray-area decisions need to be made, each person has to have the company’s core principles and values in mind. I can’t tell people how to run their meetings or who should be at the table when the tougher, gray-area decisions need to be made, but whoever is there has to have those core principles and values in mind. Once the register printer had stopped chattering, the cashier curled the long strip of paper into a thick wad and handed it to Laura. It’s a win-win for the company and for the customer. “Correlations, no matter how interesting, aren’t conclusive evidence of causality,” someone said. Customer analytics are effective precisely because firms do not violate customer trust. At Harrah’s, we have less than most because our customers may not want others to know about their gaming and leisure activities. Taking care not to crack any of the eggs, she squeezed the remaining items into the cart. noted. We tell customers the value proposition up front: Let us track your play at our properties, and we can help you enjoy the experience better with richer rewards and improved service. competing on analytics 07 by davenport thomas h harris jeanne g hardcover 2007 Dec 09, 2020 Posted By Frédéric Dard Publishing TEXT ID a78bcec0 Online PDF Ebook Epub Library high performing enterprises are now building their competitive strategies around data driven insights that in turn generate impressive business results competing on In health care, especially, this has to be the chief concern—above and beyond any patterns that might be revealed and the sort of competitive edge they might provide. Instead of ceding complete control to IFA, ShopSense could be somewhat selective and send offers to all, some, or none of its loyalty card members, depending on how relevant the grocer believed the insurance offer would be to a particular set of customers. They’ll be able to get to know you intimately without your knowledge. Maybe the company should formally position Smart Choice and other products and marketing programs developed using the Shop-Sense data as opt in, he wondered. Inevitably, however, customers will become savvier about analytics. Ethical behavior starts with the CEO, but it clearly can’t be managed by just one person. Marketers can be tempted, despite pledges about privacy, to use collected information in ways that seem attractive but may ultimately damage relationships with customers. Customer data come to us in many different ways. Instead of pulling back the reins, organizations should be nudging customer analytics forward, keeping in mind one critical point: Any collection, analysis, and sharing of data must be conducted in a protected, permission-based environment. Instead, she’d probably respond to an offer of a free doughnut or pastry with the purchase of a coffee. View upcoming funeral services, obituaries, and funeral flowers for Davenport-Harris Funeral Home, Inc. in Birmingham, Alabama. George L. Jones is the president and chief executive officer of Borders Group, a global retailer of books, music, and movies based in Ann Arbor, Michigan. This Harvard Business School book is written as expected with a heavy academia structure. She reminded the group that some big insurers had gotten into serious trouble because of their profiling practices. Occasionally, we’ll buy demographic data to fine-tune our marketing messages (to some customers, an offer of tickets to a live performance might be more interesting than a dining discount, for example). Steve was hoping to persuade CEO Donna Greer and other members of the senior team to approve the terms of the data sale to IFA. Copyright © 2020 Harvard Business School Publishing. That may be an extreme example, but it suggests that IFA’s correlations may be flawed. The company sets rules for what can be done with the information. “‘Directly’ being the operative word here,” Denise noted wryly, as she took her copy and passed the rest around. We then suggest ways they can reduce their health risks or treat their existing conditions more effectively. It was several days after the review of the ShopSense pilot, and Jason was still weighing the risks and benefits of taking this business relationship to the next stage. A big hole in these data, though, is that people buy food for others besides themselves. Many typologies of IT capabilities have been proposed. Take the insurance company’s use of the grocer’s loyalty card data. The result: improvement in the bottom line and in the customer experience. Although Davenport and Harris have maintained the first edition’s chapter structure, they offer an entirely new Introduction and revised every chapter, with new content, new examples, and new research. Peter urged Donna to drop the issue for a bit, as he scribbled his comments about the wine they’d just sampled on a rating sheet. The standard is about competing on data with analytics. Transparency is a critical component of any loyalty card program. The CEO shot her husband a playfully peeved look—and reminded herself to send an e-mail to Steve when they got home. We use a range of industry standard security measures, including encryption and firewalls, to protect our members’ privacy and medical information. The focus was on varieties from Chile and other Latin American countries, and Donna and Peter had yet to find a sample they didn’t like. Before wheeling her cart out of the store into the slightly cool evening, Laura briefly checked the total on the receipt and the information on the back: coupons for sunblock and a reminder about the importance of UVA and UVB protection. Cooper broke in over the speakerphone. Then Steve began distributing copies of the spreadsheets outlining the five-year returns ShopSense could realize from the deal. “But if we’re finding patterns where our rivals aren’t even looking, if we’re coming up with proprietary health indicators—well, that would be a huge hurdle for everyone else to get over,” Jason noted. The two met several times, and, after some fevered discussions with her bosses in Ohio, Laura made the ShopSense executive an offer. He was a graduate of Council High School and was last employed as a mechanic. But Jason also saw dark clouds on the horizon: What if IFA took the pilot to the next level and found out something that maybe it was better off not knowing? Davenport and Harris show how exemplars—organizations as diverse as the Boston Red Sox, Netflix, Amazon.com, CEMEX, Capital One, Harrah’s Entertainment, Procter & Gamble, and Best Buy—are using new tools to trump rivals. This is limited information at best and inaccurate at worst. She came away from a meeting with the grocer’s analytics chief, Steve Worthington, convinced that ShopSense’s customer loyalty card data could be meaningful. First and foremost, they need to let customers opt in to their data-sharing arrangement.

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