Driving Sustainable Competitive Performance from Data - How we Organise is as important as our Strategy

It seems obvious that we're trying to deliver Sustainable Competitive Performance through our Data & Analytics investments. We have focused much in the last 5-10 years around so called 'offensive' activities such as Churn, Retention, Cross-Sell/Up-Sell and other activities that are focused on knowing more about our customers to sell them more, increase our share of their wallets and drive our revenue and profitability. In tough economic times that we find ourselves in, defensive strategies, such as Cost Reduction, Financial Performance Optimisation, Compliance and Regulatory control and targeting legacy systems optimisation become more important.??

Across all this we need a Data Strategy that will sustain the business.??I have written before that for many of us Porter’s 5 Forces was the MBA 1-0-1 for what makes a business competitive.??However, in the past 10-15 years have moved towards Resource Based Theory to understand what drives sustainable competitive performance for a firm:

• Resource-based theory?(1)?suggests that resources that are valuable, rare, difficult to imitate, and non-substitutable best position a firm for long-term success. These strategic resources can provide the foundation to develop firm capabilities that can lead to superior performance over time.

You are unlikely to find much reference to these theories in HBR, Forbes or Sloan, however, they are increasingly important if you wish to build a Data Strategy that will support the delivery of a Sustainable Competitive Performance for your business (2).??

How does Resource Based Theory look at Data & Analytics???

In simple terms, the academics break Resource Based Theory (RBT) down into three groups, Tangible Resources, Intangible Resources and Human Capabilities as follows:

1.????Tangible Resources

• Access to Data – an obvious one, but how much data and of what type does your business have access to, both proprietary and non-proprietary.??The reality is many organisations have a lot of silt and not many nuggets of gold!??Do you have unique knowledge about your customers, suppliers or the market?
• Basic Resources – do your Data & Analytics initiatives have access to people and funding.??Again, sounds obvious, but without sufficient budget or people you can’t be successful.
• Data Driven Technology & Architecture – is your data architecture a bolt-on to your wider Enterprise Architecture or is it increasingly central to it.??From a Resource Based Theory, sorry to say that Data Technology is of itself not a source of competitive advantage precisely because it is mot rare, difficult to imitate or non-substitutable (we can all easily move from GCP, to Azure or AWS; and likewise, Tableau, to Qlik or PowerBI)

2.????INTANGIBLE

• Data Driven Culture & Governance – how is your data governed and is the culture around data pervasive across the organisation
• Innovation/Organisational Learning – does Data drive your organisational innovation and learning

3.????HUMAN SKILLS

• Data & Analytics - Technical Skills – is your business still powered by Excel despite investing lots in Data & Analytics.??Is Data Science confined to the central Data team, or do you have Citizen Data Scientists.
• Managerial Skills – Data driven Decision Making.??Do opinions still matter in your business… more importantly are you able to use input KPIs and not just traditional lagging KPIs (aka financial results) to drive your management decision making.??Is everything focused on last month, last quarter or are you building scenarios and is more management time focused on next month, next quarter and how we will win in the market?
• Chief Data Officer Role & Responsibilities – where does the CDO sit in the organisation.??Are they a support, enabling or strategic function!??Ie Do they provide insight to support the Board, or are they at the Board using insight to influence the decision making of the overall business.

The eight ‘capabilities’ I’ve included here, are currently unique to me and central to my research albeit 5 or 6 have been used by other academics as part of their research.??Some would fit easily into your existing Data Strategy, but I would recommend you consider all of them.

We all know the role of the CDO/CDAO is difficult to pin down. In part that's despite the role existing for 20 years or so, and the efforts of Tom Davenport et al, almost no one has written actual academic research into the role of the Chief Data Officer and whether they actually make a difference or not, which is something I hope to remedy.??

Strategic Management theories (like RBT and Porter) whilst considering Human Skills, do not consider how they should be organised, as this is the separate domain of organisational theory.??

• In the real world we do need to consider “Why do firms do what they do?” and “Why do some firms perform better than others?’, which means bringing together Strategic Management and Organisational Theory – albeit in my experience almost no consultancies do this in practice!
• Academics (3) are beginning to realise that these separate domains must come together otherwise many traditional firms will find themselves increasingly unsustainable due to the transformation wrought by the digital revolution in product markets and the markets for capital, labour, and supplies.??

Ultimately, the view is that you can have the basic Strategy, but unless you organise for success you are doomed to failure and that is so often the case for Data & Analytics!

Anyone interested in my evolving research into these topics, and how it might apply to your business, should DM me and I will reach out from my academic email as I am researching the Doctorate with Aston University.??For those of you who like to understand more – add these references to Google Scholar to read the underlying academic papers.

1.?????Barney, J. B., et al. (2011). "The Future of Resource-Based Theory."?Journal of Management?37(5): 1299-1315.

2.?????Mikalef, P., et al. (2020). "Exploring the relationship between big data analytics capability and competitive performance: The mediating roles of dynamic and operational capabilities."?Information & Management?57(2).

3.?????Davis, G. F., and Theodore DeWitt. (2021). "Organization Theory and the Resource-Based View of the Firm- The Great Divide."?Journal of Management?47: 1684 - 1697.