This image is just notes from my pad, but one comment is a crucial aspect that is really important in business today – the idea that the team that manages all its sources of value has a significant advantage. Those resources are become digitalized, represented as data.
The end result is that analytics becomes central in building a strategic advantage. For probably the most dramatic example of what analytics can potentially do, check out my CMSWire post on the Amazon-Whole Foods merger. The grocery retail industry has operated on thin margins. Whole Foods Market has been the noted exception for years, thanks to its emphasis on organic foods. Organic foods have traditionally carried a higher price, so its contribution margin is higher than common goods.
But during 2016, Whole Foods saw competitors begin to also offer organic foods. The most notable is Wal-Mart. Wal-Mart has offered groceries at lower prices, putting earning pressure on Whole Foods. It experienced 6 financial quarters of declining earnings, due in part to the increased competition.
Analytics can not fix a bad business model, but it can make an effective one better. Whole Foods has an effective model, and Amazon’s ability to leverage wholistic analytics on its cloud technology and operations can offer new ways to Whole Foods to cut costs where possible.