I came across an interesting chart today showing the ROI of investing in different areas of a business’s operations, it came from John McKean’s book “Information Masters”.
Although I do not have the full context for the chart, my interpretation is that it shows the various levels of investment in the 7 “competencies” identified by John and the various levels of impact each have on a firm’s results. It confirms our own experience and research that show that small investments in skill development (People) and culture can yield substantial ROI for firms.
Something we also agree on is outlined on page 6 of the book:
“The typical firm invests in massive customer databases and networks without investing in the other elements which detemine a true competency in information:
1. Employee skills to apply it.
2. Process by which to efficiently deploy it.
3. Organizational structure and rewards for effective use in and across functional areas.
4. Culture to perpetuate its use and appreciation of its value.
5. Leadership to fully understand and support its role and investment.
6. Information itself relative to its value and accuracy.”
I recently had the pleasure of being interviewed by Linda Popky of L2M Associates, a Marketing Strategy Consulting firm.
It allowed me to reflect a little on what it takes to build a market-driven firm and why it remains a critical issue for any business. The reality is the only firms that will thrive now and in the future are those with a close eye on the marketplace.
A great example is Walmart that uses “business intelligence” technology to crunch its masses of data and turn it into actionable insight. The latest Economist magazine, describes the following case: “Wal-Mart peered into its mammoth databases and noticed that before a hurricane struck, there was a run on flashlights and batteries, as might be expected; but also on Pop-Tarts, a sugary American breakfast snack. On reflection it is clear that the snack would be a handy thing to eat in a blackout, but the retailer would not have thought to stock up on it before a storm.”
This is a great example of gaining customer insight from information which allows a company to take profitable action.
To listen to my interview on why customer insight and other market driven behaviors are so critical to business profitability click here