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Fashion’s Moneyball Moment: How Analytics Can Be Your Competitive Advantage?

Fashion Retail

The Math Works. Over the course of a season, there is some predictability to baseball. When you play 162 games, you eliminate a lot of random outcomes. There is so much data that you can predict: individual players’ performances and also the odds that certain strategies will pay off.

Billy Beane, Ex-General Manager – Oakland Athletics

Oakland Athletics broke the American League record with their 20th consecutive win in 2002, California

This edit draws a sports analogy and introduces an analytics maturity framework through which you can accelerate your journey to make analytics as your competitive advantage. Moneyball: The Art of Winning an Unfair Game is a book by Michael Lewis, published in 2003, about the Oakland Athletics baseball team and its general manager Billy Beane. Its focus is the team’s analytical, evidence-based, sabermetric approach to assembling a competitive baseball team despite Oakland’s small budget. A film based on the book, starring Brad Pitt and Jonah Hill, was released in 2011. (source wiki). You can buy the book here and watch the movie here. For the time-starved, here is a statistical analysis clip from the movie.

Statistical Analysis Clip from Moneyball

Much of the Oakland Athletics success in that season is attributed to their General Manager, Billy Beane and former Assistant General Manager, Paul DePodesta.

DePodesta, a graduate in Economics from Harvard University joined the A’s in 1999 and quickly started incorporating analysis of baseball statistics to value and purchase players.

This approach came into the limelight following the historical 2002 season when Billy Beane purchased vastly undervalued players to supplant the departure of key players prior to the start of the season. Due to severe budgetary constraints of the Oakland Athletics, Billy resorted to the methods being researched by DePodesta in order to purchase underrated players to meet the California based team’s payroll.

It’s not difficult to draw the parallels between baseball and business: in baseball, it’s about winning pennants wherein business it’s about becoming the market leader; in baseball, it’s about stealing wins from the other, in business it’s about stealing market share; and in baseball, it’s about winning baseball games wherein business it’s all about winning customers.

Like in baseball, being an analytics-driven organization doesn’t only pay off in wins, it pays off in dollars — and in a big way. According to a recent Forrester report, businesses that use data and analytics as a fundamental strategy for their business are forecasted to steal $1.2 trillion a year by 2020 from businesses that are not analytics-driven.

The question at this juncture will be “What is the path to excel in analytics? and Where do you stand?”

If there is someone who opened the doors for analytics as a strategic lever for organisations, that would be Thomas Davenport, a Harvard alumnus. In his latest edition of the book Competing on Analytics – The New Science of Winning gives a compelling case for every organisation to look at analytics as strategic machinery not just a nice to have tool.

The maturity of any organisation can be abstracted in five levels from Analytics Impaired to Analytics Competitor as in Fig. 1 below. Their characteristics across the dimensions of data, enterprise, leadership, targets and nature of analysts are also provided.

Fig. 1 Analytics Maturity Model

It is also important to know what to expect at different stages of maturity. Fig. 2 expresses the analytics outcomes at different stages of maturity.

Fig. 2: Sophistication of Intelligence vs Competitive Advantage

At this point, it may be worth asking for some examples of companies who are analytics competitors. While digital-native companies get a head start in the analytics race, there are non-digital native companies which are setting benchmarks too.

Companies like Amazon, Netflix, StitchFix etc. are clear examples of companies who are differentiating and competing through their analytics. There are non-digital-native companies like Progressive Insurance, Visa, Tesla etc. are driving long term value generation through analytics.

This may be a good point to ask Where your organisation stands on the Analytics journey?

While the analytics maturity model looks like a ladder, we believe companies irrespective of size and scale can step jump their analytics journey with strong leadership commitment and taking their team along. Like the Oakland Athletics innovation through analytics and creating an all-time record with one of the least resources, taking over the wealthy and rich clubs, your organisation can also set an industry benchmark and win consumers like never before.

At Stylumia, we enable organisations in fashion and lifestyle brand/retail space to accelerate their Analytics Maturity journey and make Analytics as a key strategic differentiator. Our clients are step-jumping their competitors with cutting edge Stage 4/5 solutions. Here is one such case study published recently in a leading business magazine. 

The journey does not stop at Level 5. It is constantly elevating the degree of sophistication and continuing to compete at a different level. We work with brands and retailers across the maturity continuum including Level 5.

If you have the will of Billy Beane, we can be the DePodesta for you working with you through the journey and carve an edge in the space you operate.

Blog by Ganesh Subramanian

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