Does your data create competitive advantage?

By now, most businesses have understood the power of data. Whether to improve decision making or to drive better business outcomes, data is the ultimate aid that firms aim to have.  Organizations have learnt to leverage data to build better products, improve services, and eventually advance their customer/employee value proposition. Indeed,  data creates competitive advantage.

Cloud and other modern technologies have advanced the data production and consumption processes to enable today's volume, velocity, and variety of data. Ever-changing technology seeds the exponential growth of data for us to understand more about our ecosystem.  Data-enabled learning is a fundamental feature in every product today and so we can learn about our ecosystem more continuously than ever.  Unlocking the power of this data creates competitive advantage.

Additionally, AI has completely reshaped the data science and GenAI fundamentally learns everything about its human partner. Data and AI have become the perfect twins, one without the other is not going to survive or grow in the modern world. The new possibilities that AI has created around us depend on the data culture of the organizations. Good data fuels good AI. If data is optimized for AI, it creates competitive advantage.

When Michael Porter originally coined the term - Competitive Advantage - he defined two types of advantages - cost advantage (provide same products/services at lower cost than competition) and differentiation advantage (provide superior products/services that are more closely aligned to customers' needs than what the competition offers). Walmart is the best example for data creating the competitive cost advantage. Apple is the best example for data creating the competitive differentiation advantage.

Enough on theory and proof points but what are some scenarios where data does NOT create competitive advantage? Here are some, add more.

• No-data is better than poor-quality data:  If the quality of the enterprise data is poor, the health of the organization is bad. Good data fuels good insights. Analyzing the data lifecycle to identify potential control points for automated and human intervention to assure high quality data is the only way the data can create competitive advantage.
• Data governance not set for responsible democratization: Companies that do not manage data as a strategic asset cannot get any competitive advantage from it. Those that have an established enterprise data strategy can (a) reduce data duplication, (b) avoid disparate silos among data, (c) control the data democratization and (d) meet all the compliance and regulatory requirements. Only for those that have well-established data governance, data creates competitive advantage.
• Data architecture not designed to extract value from it: Not only that the data architecture's foundations should be fixed for cracks in the system, but most importantly it should be designed to handle the specific components such as unstructured datastores, data preprocessing, vector databases, etc., Additionally, the architecture should scale to handle some of the newer challenges such as LLM integrations, prompt engineering etc.
• Prioritized security risks not addressed properly: if the risks, sensitivities, and regulatory requirements are not addressed properly, the data becomes dangerous.  Organizations must constantly look at the data protection and security governance processes to address the specific risks that arise throughout the data life cycle, time to time.
• Not having formal DataOps for continuous improvement: If not continuously tracked, quality of the data will deteriorate, and the competitive advantages will be lost. Establishing formal dataops teams/talent to religiously track using automated and human intervention, reporting well-defined KPIs to assess/identify/fix the potential red flags, and applying learning to continuously improve the data ecosystem are all critical to data health.

Creating competitive advantage is not a one-time task. We know that data creates competitive advantage but success is very hard to sustain. With the right enterprise data strategy and operations, firms can stay successful.