In the past ten years, digital analytics has evolved by leaps and bounds, revolutionizing how businesses run. In an increasingly data-obsessed world, advanced analytics has become fundamental to just about every corporate function, such as marketing, customer service, manufacturing, and pricing. However, advanced analytics has yet to make an equally significant impact on strategy development, but that is quickly changing.
Strategic development can be taken to the next level with advanced analytics, which can vastly encourage impartiality in decisions by evaluating the likelihood of your strategy succeeding before allocating resources to it. It also identifies new growth opportunities, pinpoints early-stage trends, and predicts complex market dynamics, putting you far ahead of your competition.
Keep reading as we dive into just a few of the ways advanced analytics can enhance your strategy development.
Predict Complex Market Dynamics
Advanced analytics can help forecast real-world behavior and allow stakeholders to better understand the trade-offs and assumptions that come along with making strategic choices. Things like market demand, competitive responses, and customer behaviors can all be predicted using various modeling methods such as agent-based simulations, system dynamics, Monte Carlo analyses, and numerous machine-learning approaches.
These types of models are instrumental in studying systems composed of numerous independent entities, where it can be difficult to anticipate behavior when it involves the interactions and decisions of many parties, like customers and competitors. In these scenarios, strategists rely on agent-based modeling and simulation, which allocates a set of decision-making rules to each agent. It then simulates their decisions using the information available to the agent. Behavior is then more observable from the system that would have otherwise been impossible to predict using traditional models.
Although agent-based modeling is commonly used to test dynamic social behavior, epidemics, and natural systems, it is yet to be widely used in strategy. Still, companies in markets with numerous competitors, customers, and suppliers, will find these models incredibly helpful. It can help businesses understand the impact of specific efforts, like new product launches and re-pricing, and how it affects the demand for their products.
Encourage Impartiality in Decisions
Even the most experienced planners tend to underestimate the cost and time needed to carry out projects successfully. This phenomenon was observed by Daniel Kahneman and Amos Tversky, which they called the “planning fallacy.” They described this as the tendency to make predictions based on specifics combined with their personal experience and intuition. However, they do not factor in the distribution of outcomes in similar cases, resulting in overly optimistic forecasts.
To remedy this, the two proposed a corrective technique called “reference class forecasting” that used data to support the inside view on real-world outcomes or base rates, taken from a reference class of similar cases. This technique has gained massive momentum over the last 20 years, with countless articles spotlighting the methodology’s application in academic and practical environments. With this approach, you can encourage bold strategic moves while being realistic about some ambitions, especially when they aren’t likely to be achieved without especially solid execution.
Identify New Growth Opportunities
New growth opportunities can sometimes be hard to spot, even with a keen eye, and advanced analytics can play a crucial role here. Opportunities such as acquisition ideas, new applications for current offerings, or ideas for new products can all be identified with the help of algorithms that use detailed network analysis and natural language processing to run through and establish connections among hundreds of text sources. From there, publicly available data on a particular topic can be leveraged to strengthen strategy development and reduce the margin for error. You can also use the data to pinpoint potential growth areas and draw a shortlist of acquisition prospects, furthering your chances of success.
Pinpoint Early-Stage Trends
The latest artificial intelligence engines can analyze publicly available information, poring over billions of web pages, news sources, patent filings, clinical trial reports, and much more. It can also identify patterns in disparate data sources, allowing you to identify emerging trends, like the change in frequency of a term appearing in the search.
For instance, a manufacturing company is reviewing different self-driving vehicle technologies to invest in, which is a significant undertaking with an enormous capital expenditure potentially in the billions of dollars. The company’s executives would benefit from understanding related trends and when a particular technology will be at its high point. By real-time tracking of patent and academic research publications, announcements, and investments throughout different technologies, they could accurately and rapidly gain more insights. They can also monitor relevant regulatory changes. With access to advanced analytics from software consulting companies, your company can easily jump ahead of your competition with refined and classified data culled from a wide range of sources that helps you make informed decisions.
The benefits of advanced analytics are numerous, and the impact it can have on strategic development can’t be overstated. Incorporating advanced analytics into your development process can substantially improve your outcomes and enjoy more successes. From predicting complex market trends, identifying growth opportunities, identifying early-stage trends, and engendering better decisions are just a few of the ways in which advanced analytics can improve your strategic development and keep you ahead of the competition.
AscentCore is a digital product development company that provides end-to-end product development services, including specialized expertise, in various industries and solutions. We create digital products that empower companies to transform, disrupt, accelerate, and scale. Contact us today to learn more about how we can help you leverage digital technology to improve your strategic development!