What It Takes To Stay On Top
We are all acutely aware that the world of business has changed dramatically from the 1950s to the present day but it’s still comes as a shock to see that only 60 of the companies that were in the Fortune 500 in 1955 are still there today. Over that span of time, 88% of those Fortune 500 companies have fallen by the wayside and, if anything, the pace of change is even faster and more unrelenting today in this digital age.
Today, data is the driver of change and companies need to be data-obsessed, leveraging data as a primary competitive advantage. Companies like Uber (the world’s largest taxi company that owns no taxis) and Airbnb (the world’s largest accommodations provider that has no real estate) are dominating and disrupting their industries and all companies need to learn to think differently to evolve or else they will fall behind.
Kellogg is one of the 60 companies that has remained in the Fortune 500 but doing so has not been without its challenges. Consumer behavior changed dramatically and the company had a hard time keeping up, finding itself falling to the lagging, not leading, edge of their industry. It took a fresh focus on data to keep Kellogg on track. Rick Davis, VP, Global Data Governance at The Kellogg Company, presented his personal journey at the Chief Analytics Officer Forum in October. His keynote was appropriately titled, “Thriving in a Changing World,” and represented the perspective from a company that initially failed to keep up as the world was experiencing a digital revolution and consumer preferences were rapidly changing. While certainly not alone, the Kellogg’s example provides valuable lessons learned for traditional companies and inspiration for how to get started with enterprise digital transformation.
The Old Rules No Longer Apply
The rules that made companies successful over the last 100 years no longer apply in today’s digital world. As an example, Kellogg’s began as a company who sold a single product, Corn Flakes cereal, back in 1906. The company grew massively over the next 100 years, becoming the second largest snack food company in the world, selling a wide range of products in over 180 countries. The company was organized to manufacture on massive scale but the trend toward individual and unique offerings significantly diminished the need for scale in manufacturing. A seismic shift in the way they operate was needed and to begin, Kellogg’s needed a better understanding of what customers really wanted in a snack product. They did so by using data to analyze consumer preferences and behaviors.
At the same time, another major shift for traditional companies is scale in advertising. Brands can no longer just launch a TV ad to the masses to sell a product, as consumer’s tolerance for irrelevant advertising is at an all-time low. In today’s omni-channel world, consumers expect advertising to be personalized and they expect brands to truly understand their needs by reaching them at the right time, with the right message, through the right communication channel. The monolithic ad models of that past no longer apply as companies today must segment their audiences with behavioral, demographic, and psychographic data and reach audiences across many digital channels.
Finally, the notion that old ROI rules for all decision making is a practice that no longer works. If you wait to rev up the ROI machine before making a decision to act it’s highly likely that you are going to be too late. To win today, you have to place a few bets and you need to employ fast and rigorous feedback cycles to fuel real time decision making . Davis discussed examples of how the need to show ROI can actually set the company back because the window of opportunity was missed in the process. Today, predictive analytics can be used to make fact-based decisions in real-time, without waiting on traditional ROI models.
The Way Forward
There are many ways that data and analytics can move the enterprise forward to meet the needs of today’s digital consumer. The first step is making data a priority and accepting the need to shift to a consumer-first, data-driven culture. An analytical mindset has to be ubiquitous in the organization. Intellectual curiosity is key; companies need people who question why things are done a certain why because the biggest opportunities are often in places that the C-suite isn’t even thinking about. As Davis eloquently stated in his keynote, the ability to connect seemingly unrelated objects to understand the details can result in fireworks. And the alternative might just be to be one of the 88%.