If the value of this data does not hold for long, the competitive advantage can be lost, so can the rate at which the value deteriorates.
This write up tries to address this issue of how an organisation can use the data effectively to give it the competitive advantage over others and remain competitive in the market.
Data in large quantity can give indications of unheard of trends by Big Data analysis, Large quantities or small quantities of data, it is important to understand how the value of this data appreciates or depreciates over time, leading to gaining or losing competitive advantage for an organistion.
While going through the article (click here) HBR of Jan '20 by Andrei Hagiu and Julian Wright, the competitive advantage created by data is analysed in detail.
1. Value added by customer data relative to the stand alone value of the offering - customer data is what adds value to any digital application. The more data gets added, if it can lead to more value for the organisation, the application can have competitive advantage over its competitors.
2. Rate at which the marginal value of the data enabled learning changes - if the rate at which the marginal value of the data added keeps decreasing at a slower rate, the competition will find it difficult to catch up.
3. Rate at which the relevance of the user data depreciates is low - if the data becomes obsolete fast, the application does not have any competitive advantage against its competitors, any competitor can come and disrupt the system
4. Is the data proprietary ? - if the data is proprietary and cannot be copied by competitors, the firm can remain in the competition for a longer period of time
5. Is it hard to imitate product improvements based on consumer data ? - if the product improvement based on consumer data, for eg. Google Maps analysing user density on road and hence diverting traffic to less dense traffic roads to reduce travel times being momentary, is hard to imitate by competitors, hence the competitive advantage can be maintained.
6. Does the user data help improve the product for other users ? - the network effect gives great value for all users, the app which networkds with more stakeholders thus offers more value than those which network with less number of stakeholders
7. How fast can insights of user data be added into the products or service ? - if the insights of user data can be incorporated into the product or service at a faster rate than the competitors, the organisation can remain ahead of competition.
An organisation that has the strategy of retaining the competitive advantage over its competitors by the efficient use of data can lead the market and dominate it for a long time and give great value to its customers in the long run.
George ..
It's quite an interesting and enticing summarization of the article. Nowadays it's common wisdom that Data is the new oil, However the quality and volume of its fruits hinge greatly on how it is refined and modelled, therefore companies shall be vigilant enough to not get too ensnared by the size and quality their data repositories. This is in the view that Companies direct their product development strides along the lines for which they have data which entirely ignores understanding the circumstances any customer makes a buying decision,it can be concluded that Data at times can also blind an organisations ability to make products which the customers are willing to hire for a specific job.
ReplyDeleteInteresting comment Tejus. Whether the data directs product development or responds to customer preferences, the over riding stress on the importance of data in the modern day world cannot be overlooked. Even Prof. Yuval Noah Harari mentions in his book Homodeus that Dataism will be the new religion of the world, overtaking the established multiple global religions in the next couple of millennia.
DeleteData and algorithms are going to rule the world ..
What I spoke of in my previous comment I embibed from the HBR press book 'The Innovator's Solution' by Late professor Clayton Christensen and Michael Raynor of Harvard Business School. Their view of Sole reliance on data was in some ways contradictory to what was emphasized in this article.
ReplyDelete