<font color="#ff9900">by Ellen Rubin - Netezza, Vice President of Marketing</font>
"The best vision is insight." - Malcolm S. Forbes, former publisher of Forbes magazine (1919-1990
Leadership conferences are generally a mixed bag. They tend to take on weighty topics and raise interesting questions, but have a tough time providing any real insights or doing more than re-hashing mass-market ideas. The Forbes Leadership Networks Forum in Chicago this past week seemed at first glance like it might fall victim to this tendency. The title of the event was "America the Innovator: The New Rules of Global Market Growth," and the marketing claimed that it would help attendees learn about a staggering range of subjects, including but not limited to:
Global disruption by fast-growing economies like India and China
America’s role in this global economy
Innovation for Corporate America
Using analytics for competitive advantage
Social networks as the new holy grailI was exhausted just reading the brochure.
Happily, the conference included some terrific speakers who managed to provide hours of real insight and entertainment, and to stimulate lots of discussion among attendees. Steve Forbes, President & CEO of Forbes, former candidate for U.S. President, and now co-chair of the Rudy Giuliani campaign, kicked off the day and had a lot to say about America in the global economy. He stated his positions and biases upfront, including the need to lower taxes to make the U.S. more competitive for corporations, and to open immigration and get better at "letting in non-terrorists." Whether or not these opinions resonated with everyone in the room (doubtful), Steve was very clear on his bottom line: the only way for America to succeed is for its companies and institutions to become even more innovative and stay on the cutting edge.
To explain how,[Professor Clayton Christensen|http://www.claytonchristensen.com/] - world expert on disruptive innovation - took the stage and wowed the audience for the next couple of hours. Professor Christensen has written several famous books on the subject, including The Innovator’s Dilemma and The Innovator's Solution. At last year’s Netezza User Conference, he was a keynote speaker and dazzled the crowd with his vision, brilliance and dry wit. I won’t restate some of his widely-known ideas and insights, but I wrote down a short quote that resonated strongly for Netezza: "A disruptive technology is one that simplifies a complex problem."
Professor Christensen also shared some fascinating and contrarian views about Apple and the Harvard Business School (where he is a professor, but not afraid to say some unpopular things, it appears).
On Apple: they may be on top of the world right now, with over 100 million iPods sold and a great stock price, but they’re being disrupted by non-proprietary, standards-based, inexpensive mobile phones. Apple has won so far in the early stages of market disruption through its integrated, proprietary approach, with iTunes and all its sleek and beautiful products. Over time, however, Christensen predicts that the mobile phone players will carry the day and to compete, Apple will need to embed itself inside (à la "Intel Inside") and let the other devices pull content from iTunes. He feels the real opportunity is in the personalization of content from iTunes, not the devices themselves, although Steve Jobs hardly seems likely to agree.
On HBS: Professor Christensen said that a common problem that limits corporate innovation is that companies optimize their performance based on Wall Street driven statistics, such as gross margin percentage, that turn out not to be the ones that matter for their competitive survival. In the case of gross margin, this drives companies to build a broad range of product lines of high-margin niche products and to rule out innovative new products and technologies that don’t meet the hurdle rate. In the case of HBS, the "wrong statistic" is the high starting salaries of HBS graduates. Although this metric gets HBS ranked as the top business school on many lists, it is in fact making the graduates too expensive for most potential hiring companies. As a result, the hiring companies are forming their own corporate "universities" that allow them to hire cheaper talent and train them for specific corporate skills and knowledge. This has led to dramatic reductions in the number of applicants and recruiting companies at HBS. As an HBS alum, I had to chuckle at the thought of Professor Christensen presenting these ideas and meeting with stony silence in some oak-paneled room.
Next up was Professor Tom Davenport, world expert and author on the subject of "Competing on Analytics" - something very near and dear to us at Netezza. Professor Davenport lectured at Netezza University, our continuing education program, and his ideas have become a mantra for us as well as many other vendors and corporations in the world of analytics, including SAS, Accenture and others. Professor Davenport’s main thesis is that companies that use analytics for strategic competitive advantage outperform those that don’t. A common tendency in Corporate America is to[, by Malcolm Gladwell|http://www.gladwell.com/blink/] - Davenport’s wry comment: "As with overeating and other American habits, we don’t need any encouragement on this.") Instead, we need to look at examples like Amazon, Best Buy, Capital One, Google, Wal-Mart and others, where competing on analytics is the corporate strategy with commitment from the CEO down. (It was great to note that many of the companies Professor Davenport profiled as the case studies for competing on analytics are already Netezza customers!)
Academic theories are always interesting to hear, especially when presented by someone as dynamic and fun as Professor Davenport. But what made the case were the customer examples shared by him and his panel, which included Netezza customer, Rob Holland, SVP of U.S. Retail Measurement at ACNielsen (a service of The Nielsen Company), and Carol J. McCall, VP of Research & Development at Humana. Some highlights:
Best Buy segments their stores based on customer profiles, such as "Jill, the soccer mom," and sells targeted merchandise for the specific segments. The segmented stores earn twice as much as the non-segmented ones.
Humana uses predictive models for high-deductible health-care products to offer different pricing and options based on what customers need. They also use models to predict individual health, which enables them to build better relationships with customers who are at-risk and help them change their lifestyle behaviors to improve their health. These uses of analytics have returned more than $600 million to Humana and helped over 400,000 people!
ACNielsen analyzes data from tens of thousands of retail locations and grocery scans from over 100,000 grocery families. Based on this analysis, the company can break down the data to specific clusters of stores and tailor programs to help their retail and CPG customers be more competitive.I won’t even try to cover the other sessions or content, but it was definitely a packed schedule. The day ended with baseball; specifically, Moneyball. Wearing a Red Sox cap in celebration of the recent World Championship win, Davenport tied the day together with the story of how Billy Beane, general manager of the Oakland A’s, exploited an arbitrage opportunity by analyzing baseball statistics to find the real metrics that predicted success (batting average turns out not to matter much, while on-base percentage matters a lot). This let Beane pick the undervalued players and compete effectively against much-wealthier teams. (At the risk of being repetitive, Billy Beane was the keynote speaker at Netezza’s first user conference; we definitely have hit the trifecta with great speakers on innovation and analytics!)
In a sense, you could boil the whole day down to one major point: Make analytics a key aspect of your corporate strategy and leverage data to determine the critical metrics for your business - and don’t delay. As Davenport recently told a crowd at the SPSS user conference, "There's not much time to spare because somebody's going to become your analytics competitor." Or better yet, in the words of Bill James, the sabermetrics genius who inspired Billy Beane:
"There will always be people who are ahead of the curve, and people who are behind the curve. But knowledge moves the curve."* *
Ellen Rubin
