Companies that put data science at the heart of their strategies and operating business landscapes are seeing tangible bottom-line benefits.
That’s the conclusion of a new white paper from A.T Kearney and Carnegie Mellon University that details how leading companies are driving innovation through analytics.
Insurer AIG’s $35 billion property and casualty division amped up its focus on analytics by hiring a new chief science officer in 2012. Since Murli Buluswar, senior vice president and chief science officer at AIG, joined the firm the team has grown from five to more than 100.
“As talent was brought on board – almost exclusively from a variety of industries – the abilities to ask insightful questions and shape problems through a multidisciplinary, functional lens were viewed as most important. The AIG science team has found it easier to engage the business as its successes have built and the rules of engagement have been clarified,” the paper notes. “In 2013, its work on core and strategic problems brought a meaningful return on investment.”
Analytics can also be applied to segmentation to identify potential customers, says Rayid Ghani, research director at the Computation Institute at the University of Chicago and former chief scientist for the 2012 Obama presidential campaign.
“Ghani, who started working with the campaign in spring 2011, says that the most important use of data was to help determine which voters would be the most persuadable – to support Obama, and in turn take the time to vote for him – and then to shift resources to attracting those prospective voters,” the paper notes.
“The team employed several terabytes of individuals’ data, including which elections they voted in, donation histories and email click through information. The data science’s team’s innovative use of predictive analytics brought significant value to Obama’s winning 2012 campaign,” according to the paper.
Moreover, analytics can bring significant value from identifying new business opportunities and eliminating supply chain bottlenecks, according to the paper.
“Retailers are using analytics to ensure that delivery times, product pricing and sort layouts are perfectly planned and executed across the whole chain,” the paper notes. “Retailers continue to address the challenge of combining targeted customer marketing with pricing and advertising to optimize the sales process. A willingness to experiment and learn from failures is a must.”
The paper points out that while many laggard companies are merely focusing on using analytics for reporting, leading companies are using five practices to drive innovation with analytics:
- Leaders tap predictive analytics to drive innovation and growth.
- Executive-level sponsors champion the culture change needed to embrace data-driven decision-making.
- Leaders are mobilizing the adoption of analytics through pilots and rapid proof-of-concept projects to highlight the value of big data.
- The top-performing companies take a balanced approach to building out the technology needed to support advanced analytics.
- Leaders forge a culture that spans corporate silos for collaborative decision-making.
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