A study published earlier this year showed only a quarter of senior executives believed their company made highly effective use of data, while another poll showed a mere 2% of leaders though it made a broad, positive impact.
Meanwhile, McKinsey points out that establishing a clear focus is key. Too many companies peer into reams of data hoping for patterns to emerge, it says, while they really should be putting the question horse before the data-collection cart.
That means asking questions about how data could be used to improve specific business functions from the outset, such as “how can we reduce costs?”, or, drilling down even further: “how can we improve the productivity of each member of our team?”
And sometimes the smaller the focus the better.
Even a slight change can give companies an edge over their competitors. “Easy fixes are unlikely, but companies can identify small points of difference to amplify and exploit,” McKinsey said.
It offers the example of a company in the consumer packaged goods sector that wanted to improve the profit margins on its breakfast brands. It got there by deconstructing the entire manufacturing process into sequential increments, then scrutinizing each to potentially unlock value.
It turned out the Eureka moment was found in the oven. Adjusting the baking temperature by just a tiny amount made the product taste better, and also made it cheaper to produce.
McKinsey’s advice to CEOs mirrors a recent study by the Harvard Business Review, which found few companies had successfully applied big data solutions by looking at the data first. “Companies that have been successful in harnessing the power of data start with a specific business problem and then seek data to help in their decision making,” HBR said.