Analyze this--or Competition will

Balaji Narasimhan November 9, 2015
Analyze this--or Competition will

With the type of analytics that is possible today, a startup can learn in one month what you took one year to figure out merely by studying the end result.

On Saturday, I left my 1972 vintage Jawa bike with my mechanic. When she comes back next month, she will have a new power coil and a new engine block that my mechanic says will give her tremendous power--I hope that teenagers who try to race me will feel as shaken as one of James Bond's martinis. This will be possible because nothing much will change on the outside--all the modifications will be under the hood.

 This was similar to the plans that enterprises made earlier--only the Board knew the true plans. But now, with analytics, all this is set to change.

Sometime back, James Niccolai wrote a piece titled This is how the future looks with IBM Watson and 'perfect data' and this had a scary bit of data--using IBM Watson, you can count the number of cars in Best Buy's parking lots, the size of packages people are carrying out, and predict its quarterly earnings.

Scared? You ought to be. What if you are a board member of Maruti and I told you that your competitors can count the number of cars leaving your various manufacturing facilities and arrive at your market share numbers before you did? Or, if you are Ola, how will you feel if Uber analyzed your taxi driver patterns and came up with a strategy to beat you?

Many times, we all talk about how IT delivers a competitive edge. It really doesn't, at least not for long--this is because, if you use IT to get a competitive edge, your competitors can do it too. But with the type of analytics that is possible today, a startup can learn in one month what you took one year to figure out merely by studying the end result. So, what you have gained over a period of decades may not really be worth much.

True, you will still have the non-IT stuff--your manufacturing excellence, your service commitments, and your brand name. But how long will it take, with today's or tomorrow's analytics, to reverse engineer this? How much time will it take your competitors to make this a part of their own processes?

What can you do about this? Essentially, nothing. One wonders if the law can do anything here, because your competitors are essentially studying data that was always publicly available, but couldn't be analyzed until now.

But if you can't beat them, you can join them. Nothing prevents you from analyzing what your competitors are doing. If your competitor is busy analyzing your manufacturing processes, you can always try to figure out how he has an edge over you in tier II cities and try to bridge the gap.

And while you are learning from your competitors and they are learning from you, you may soon reach a situation where there may be no great differentiators between you two. No unique selling propositions may exist--competition will then be all about price.

The world may then become truly flat.