Ch8 Article 1 - Business Insight (A Special Report) -...

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Page 1 of 4 2009 Factiva, Inc. All rights reserved. Business Insight (A Special Report) --- Innovation: Staring You in the Face --- The path to new products might start with the customer data you've already collected; You just don't realize it By Ranjay Gulati, James Oldroyd and Phanish Puranam 2,081 words 22 September 2008 The Wall Street Journal J R9 English In the quest for innovation, companies continuously collect and analyze ever-increasing amounts of customer data. But what if a company has already collected the most valuable information and doesn't realize it? Sometimes the answer to the innovation challenge lies not in collecting new customer data but rather in finding creative ways to share and repurpose customer information that's already in-house. Consider two quick examples. First, gambling giant Harrah's Entertainment Inc. has long collected customer information to optimize marketing offers and increase customer loyalty. But eventually, Harrah's was able to use those details about the spending habits of its high rollers to help it redesign its casinos, positioning games to encourage those customers to play even more. Second, Royal Bank of Canada uncovered a new innovation engine, and gave its consumer-credit business a boost, by looking again at old rejected loan applications. The idea was to see whether any of those applicants had improved their credit ratings in the meantime, and then offer credit cards to those who had. None of this is as obvious -- or as easy -- as it may seem. The transition to greater sharing of and finding new uses for existing information can be difficult when each department is used to collecting and analyzing its own data, often with a kind of tunnel vision that excludes the possibility of unexpected uses and discoveries. At Royal Bank of Canada, the decision to look again at rejected loan applications was a dramatic switch for the risk-management department, says Cathy S. Burrows, director of client strategy at RBC Insurance, Toronto. Says Ms. Burrows: "To have a risk group saying, 'Let's go out and go after customers we have turned down and offer them money' -- that is a huge change." We studied companies that successfully share and repurpose data in ways that lead to improved operations, new products and greater revenue. Information cross-leverage can produce a fountain of new ideas across disparate domains within a firm. Indeed, our research revealed there is a strong correlation between a company's ability to share and find new uses for information and its capacity for innovation. Firms with these skills are also more likely to complete information-intensive projects less expensively, more quickly and with greater success. Some of the companies we studied accomplished information cross-leverage systematically, with
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This note was uploaded on 01/26/2011 for the course MKT 337h taught by Professor Staff during the Spring '08 term at University of Texas at Austin.

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Ch8 Article 1 - Business Insight (A Special Report) -...

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