Companies that innovate tend to become market leaders and disruptors, a new report by Mastercard and Harvard Business Review argues. But in order to innovate, businesses need to take risks. According to the report, titled Become 2020, that risk can be calculated and educated, if businesses use data to drive their decisions, rather than the gut feeling of one or multiple executives.
In conclusion – businesses that use data to take educated risks are more likely to become disruptors and market leaders, to see their revenue grow and to attract and keep highly talented workforce.
According to Become 2020, less than one in five organisations (17 per cent) are categorised as leaders, while four in ten (41 per cent) were identified as laggards. The rest are seen as followers-
Those that are considered leaders, in many cases (30 per cent) have seen their revenue grow by at least a fifth (20 per cent), or even more, over the course of two years. When it comes to laggards, just 14 per cent of them managed to showcase the same success.
When it comes to drawing insights, most leaders (73 per cent) use multiple internal and external data sources and use advanced analytics to parse the data, the report states. Roughly half (43 per cent) of organisations described as “followers” follow the same principle, while just 11 per cent of laggards do the same. Pharma and medical companies are the ones most ahead in this area (43 per cent) followed by energy and utility companies (42 per cent) and financial services firms (40 per cent).
On the other hand, laggards are the only organisations that collectively rely more on intuition than facts and data.
“The insights laggards rely on most to develop new products and services have nothing to do with the customer. In fact, 52 per cent say they watch what competitors are doing, making it that group’s most common input,” the report states.
The most innovative companies also reap the benefits of better employee retention and higher customer lifetime value.