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This article discusses the manner in which analytics-savvy companies achieve competitive advantage using Big Data. The LEAP study surveyed 430 companies around the world from a wide range of industries. Respondents were clustered into leaders (10 per cent), explorers (32 per cent), followers (38 per cent) and laggards (20 per cent). To date, only leaders have attained the analytic competency needed to significantly impact business results. Leaders deploy executive-level “champion practitioners” to carve out analytics mindshare throughout their organization. They also use predictive analytics to fuel innovation and growth, and often utilize pilots and rapid proof-of-concept deployment. While laggards remain focused on applying data for reporting, leaders use analytics to evaluate risks and tradeoffs, understand cost and revenue drivers, and predict trends. Leaders find champions at the very top of the organization, such as the chief operating officer or chief financial officer. Efforts at laggard companies are more typically headed by IT chiefs or business lines. But data and decision making can no longer reside in their own silos. Executives accustomed to “going with their gut” are likely to resist the change brought on by analytics, but this change is inevitable.

The increasing reliance on data-based knowledge is rapidly changing how business is done. But the current discussion tends to neglect the often poor quality of insights won through the use of data warehouses by firms that have often not adequately maintained their data storage solutions. This article focuses on the problems generated by proliferated data systems and their impact on decision making in large, complex financial services institutions. Factors that lead to the emergence of systems disparity include: 1. Product and Service Diversity: Any large organization is in fact an umbrella covering many internal businesses that have been aligned to specific markets. 2. Back Office/Front Office Division. 3. Technology Advance: New systems are rarely built on the same platform as previous systems. 4. Natural Development. 5. Geography. 6. Expediency: The most expedient system solution is often implemented instead of the optimum architectural solution, which may take longer and represent opportunity risk. 7. Budgeting and Downsizing. Ultimately, failure at any point adversely affects the chain of events at all stages beyond the point of failure. In a disparate environment, the number of dependencies is greater than the number of disparate systems; and the greater the degree of divergence, the greater the operational risk to the enterprise.

There is a growing cottage industry of superficial thought about corporate governance, and bad science has overwhelmed the process of clarifying the role and processes of a successful board. As this article states, there are features of governance and functions of governance. Regulators have forced boards into a compliance mode that places high value on features of governance as opposed to functions of governance, with grave penalties for non-compliance. The focus on features has led to a faulty evaluation metric for corporate governance. Indeed, counting features — such as separation of the chairperson and CEO, majority voting, and elimination of staggered boards — is the most common scale used when comparing boards. However, the verification of a board’s features does little for understanding and evaluating actual board behaviour. Understanding a board’s success or failure should be based on organizational theory, such as organizational design, culture, the personality and leadership of the CEO, and the quality of the board. How the functional relationships between the board and management work is likely far more important than board features to the growth, and sometimes survival, of an organization.

In the aftermath of the 2008 financial crisis, the not-for-profit sector in Ontario was forced to shift from a provider of social needs to a creator of social opportunities for communities doubly hit by rising unemployment and falling social supports. The Ontario Trillium Foundation moved to fund innovative, collaborative programs involving not-for-profit organizations, businesses and governments in creating viable social enterprises. Ottawa, London and Sarnia were three communities faced with different, but still difficult economic times, and each had responded to the crisis by proposing alternative models of social transition. In 2013, representatives from the not-for-profit sector in these cities joined with the Richard Ivey School of Business to present a proposal that promised they would work collaboratively, learn from each other, document the entire process and develop tools to prepare and guide many others. Would the Trillium Foundation support such a creative and ambitious project? See supplemental cases 9B14M046B.

Supplemental cases for 9B14M046.

Strongest Families is a 12-week distance treatment program for children with various mental health disorders and their families. The program was started in Nova Scotia in 2001 to address issues of stigma, lack of access to primary care specialists and difficulty of obtaining care, especially in rural areas. To meet these needs, the program utilizes long-distance communication methods such as weekly telephone meetings with trained personnel who are available days, nights and weekends, so access to care is easy and convenient for families. The founder of the program has already proven its efficacy in a major outcome paper that disseminated the supporting evidence to the research community. As chief executive officer of the Strong Families Institute, a federally registered not-for-profit organization, he and his founding partner, now chief operating officer, want to scale up the program to other provinces and eventually other countries, but they must get government ministries and other stakeholders on side in the interests of making mental health care widely available to the children and families who need it.

In January 2005, the vice-president of International Affairs at the Hospital for Sick Children in Toronto, Ontario, must decide how to respond to a request for proposal from the Hamad Medical Corporation of Qatar. In order to reach its global mission of “Healthier Children, A Better World,” the Toronto hospital, which had an international reputation for excellence in pediatric medicine, had established an arm called SickKids International. In addition, it was anxious to find new ways to recover from an operating deficit caused by the aftershock of the SARS outbreak. Hamad Medical Corporation, a major state hospital medical supplier in Qatar, was looking for international centres that would want to partner with it in the development of what it hoped would become the best children's hospital in the Middle East. The vice-president understood the enormous benefits that the partnership had to offer but recognized the need for a comprehensive strategy to mitigate all of the associated risks, such as the difference in cultures between Canada and Qatar, the pressure on the Toronto hospital’s staff to make the project successful and the uncertain political and business environment in the Middle East. Should she recommend to her executive team that they go ahead with their first international request for proposal?

This is an MIT Sloan Management Review article. The way health care is billed in the U.S. system is part of the reason costs are so high. WellPoint, one of the largest providers of health care benefits and insurance in the U.S., is using analytics to change its provider payment system. The goal: promote a health care system based on value, not the volume of services. This Data & Analytics Case Study takes an in-depth look at how WellPoint went from idea to implementation, working with physicians and IT staff to build its Enhanced Personal Health Care program.

This is an MIT Sloan Management Review article. Chinese companies are opening up a new front in global competition based on reengineering R&D and innovation processes to make new product development dramatically faster and less costly. This new emphasis is unlikely to generate stunning technological breakthroughs, but it allows Chinese competitors to reduce the time it takes to bring innovative products and services to market. It also represents a different way of deploying Chinese cost and volume advantages in global competition. Chinese companies, including manufacturers such as Lenovo Group Ltd. and Guangzhou Pearl River Piano Group Co. Ltd. and Internet players such as Tencent Inc., are pioneering new ways of industrializing innovation. They are pushing the boundaries of simultaneous engineering, leveraging rapid "launch-test-improve" cycles and combining vertical hierarchy with horizontal flexibility. For example, when Lenovo acquired IBM's personal computer business in 2005, its new product development cycle was 12 to 18 months. Since then, Lenovo has managed to cut that cycle in half. Accelerated innovation and many of the processes and techniques it draws upon are not unique to Chinese companies, authors Peter J. Williamson and Eden Yin concede. What's noteworthy is how Chinese companies have learned to accelerate innovation across a wide range of industries, using rapid scale-up, low cost and "good enough" quality. Even if the results don't lead to breakthroughs, the innovations can powerfully disrupt incumbents' profit models. The authors describe three ways that non-Chinese companies can respond. The first way is to reengineer the company's own innovation processes based on the principles pioneered in China. The second way is to task their R&D units in China to focus on time-sensitive projects and by hiring local staff. The third approach is to develop alliances with Chinese players in order to tap into accelerated innovation know-how.

Corporate "lean" programs, often modeled after the Toyota Production System, can be powerful instruments for improving the performance of manufacturing plants. They help to emphasize parts of the production process that add the most value and eliminate those that don't. However, misplaced expectations can make implementation difficult and reduce the benefits. The authors argue that if managers better understood the expected rates of improvement, then implementations would go more smoothly. The authors studied the implementation of the Volvo Group's production system. Volvo Group, a leading maker of trucks and other heavy vehicles. The company introduced the Volvo Production System in 2007, and since then has been implementing it in its factories around the world. The authors visited 44 of Volvo's 67 plants and interviewed 200 managers. They found that there were four distinct stages of change in the rate of performance improvement and that there was a strong relationship between a plant's maturity in a production system implementation and its performance; progress roughly followed the shape of an S-curve: a plant's rate of improvement changes in the shape of a bell curve as the plant becomes more mature in implementing the production system. Performance improves slowly at first, and then at an increasing rate before the improvement rate gradually decreases. To measure the performance of the plants, the authors focused on nonfinancial metrics related to the quality, cost, delivery and safety of the plant's output. They then used statistical methods to find patterns. Volvo's assessment process provides a structure to help local managers compare their plants. It also provides a mechanism for transferring expertise and best practices. The assessments have a strong symbolic impact: They communicate the company's commitment to the production system. Implementing a production system is a long journey, but the authors conclude that it's a worthwhile endeavor.

This is an MIT Sloan Management Review article. In May 2013, software giant SAP announced plans to hire hundreds of people diagnosed with autism, with a target of having people with autism represent 1% of its work force by 2020. Companies don't typically seek out people with developmental disorders. But SAP took a different view. The company had discovered that some people with autism were well-suited to performing some vital information technology tasks. SAP's move embodies an emerging management principle - the authors Robert D. Austin and Thorkil Sonne call it "the dandelion principle" - and suggests an alternative way of thinking about human resources management. It turns some of the basic tenets about how to recruit and manage people inside out. The authors use the dandelion as metaphor because, they note, dandelions are actually nutritious - but are seen as weeds. In the industrial economy, companies sought to win by operating more efficiently than rivals, the authors note. But today, that's no longer enough. Faced with lower-cost competition from developing countries, companies also need to innovate, to offer products that are better than what's available from competitors. That involves finding new and better ideas and using new processes. Managing innovation, the authors say, is less about averages and more about understanding outliers and how they can add value. In an innovation-oriented economy, technology companies can benefit from accommodating employees with different perspectives. Traditional HR practices begin with fixed strategies and hiring and developing people to fit defined roles. The dandelion principle calls for hiring people with potentially differentiating skills and talents, assessing the skills carefully, organizing the work context around the people to maximize their ability to create value, and then developing the inherent talents to enlarge the potential for future, unanticipated forms of value creation.

This is an MIT Sloan Management Review article. Despite China's long and established demand for high-technology products, many leading global companies have become increasingly wary about operating in the Chinese market. They see unfair competitive practices, discriminatory regulation and intellectual property theft as part and parcel of the Chinese experience. Authors Edward S. Steinfeld and Troels Beltoft acknowledge that some of these concerns are valid. However, they focus on a different side of China, one that requires foreign companies to remain actively engaged. Their research describes unique forms of China-based technology innovation, mastery of which is becoming increasingly indispensible for any company aiming to succeed in the global market. The authors concede that China today may not yet be the place to go for path-breaking R&D or radical new invention. But it's becoming the place to go if you want to learn how to make new ideas commercially viable. The authors provide detailed examples involving wind turbine manufacturing and semiconductor design. They group China-based knowledge into four categories: capabilities for rapid tempo operations and speed to market, accommodation of unique customer preferences, world-leading capabilities for cost reduction and capabilities for new forms of networked production. In China, the authors note, many people worry that their society's focus on manufacturing has come at the expense of innovation. Conversely, many in the West believe that the migration of manufacturing to offshore locations has impeded their innovative capacity. But the authors say that both views miss the mark, noting that even the most groundbreaking ideas are devoid of commercial value unless they can be delivered as products in a manner, at a price point and within a period of time that suits the preferences of customers.

Intellectual property protection is the No. 1 challenge for multinational corporations operating in China. According to the U.S. government, China accounted for nearly 80% of all IP thefts from U.S.- headquartered organizations in 2013, causing an estimated $300 billion in lost business. For European manufacturers, the loss of IP in China reduced potential profits by 20%. The effects from IP leakage are visible in counterfeited items including toys, luxury goods and automotive and aircraft parts. But IP violations go beyond products to include pirated operational processes and entire business and service models. For many multinational corporations, IP leakage becomes a barrier to integrating Chinese sites and partners into global activities. IP leakage frequently occurs through staff transfers or shared practices from foreign multinationals to local joint ventures or supply chain partners. For multinationals, this type of IP leakage is often a calculated risk worth taking. However, unintended IP leakage can affect a company's reputation and profitability, and can create powerful local or even global competitors. In studying more than 50 multinational corporations, authors Andreas Schotter and Mary Teagarden identified nine IP protection practices for use in China. Four of the practices are defensive and externally focused; the others are proactive and internal. Together, they create what the authors call the "IP protection web," which allows corporations to (1) expand faster within China and in other emerging markets; (2) improve performance; and (3) enhance local and global innovativeness. Most of the companies the authors studied learned to protect their IP through trial and error. The changing composition of IP risk creates a need for ongoing reconfiguration. Indeed, as Chinese companies become more skillful at absorbing leaked IP, international companies must develop more sophisticated responses and develop new ways to engender loyalty.

As businesses have entered new geographies, developed new products, opened new channels and added more granular customer segments, they have made their offerings more complex with the intention of adding value. But, as a seemingly inevitable consequence, companies also have made it more difficult for customers to interact with them and more unwieldy for their employees to get things done. For organizations, there has thus been a trade-off between good and bad complexity. In the digital economy, however, companies can finesse this trade-off and increase value-adding complexity in their offerings while keeping processes simple for customers and employees. Consider Amazon.com Inc.'s 10 million products, which create value without confusing customers, thanks to simple customer-facing processes that use digital tools such as search, recommendations, customer reviews and seller ratings to help site users choose among the many available products. Another example is Royal Phillips, which uses and reuses digitized platforms -and is able to offer locally differentiated products in 60 categories in more than 100 countries. The authors explain how companies can achieve their "complexity sweet spot"in the digital age -that is, the maximum value from varied and integrated product offerings with the simplest processes. The authors'research suggests that companies operating in this complexity sweet spot outperform their industry competitors on profitability. There are several routes to the sweet spot. One of the biggest decisions is who will lead and manage a company's complexity, as no one executive (save the CEO) really oversees all product and service development and operations. Whoever is leading a company's search for the complexity sweet spot needs to lead a cultural change to embed complexity management into the company's DNA. The good news, according to the authors, is that there are almost always quick wins, and the rewards are, well, sweet.

This is an MIT Sloan Management Review article. For most companies, pricing has always been a sensitive, private affair. This article is directed at managers who seek to profit from product differentiation and take maximum advantage of their ability to stand out. Instead of leaving good money on the table and struggling to convert product differentiation into revenue, the authors argue, companies should consider enlisting the pricing help of their customers. Outsourcing pricing isn't an all-or-nothing proposition. Managers can select pricing models ranging from complete oversight to complete delegation. Citing examples from companies including Google, Uber, Orbitz, Volkswagen, Coca-Cola and Humble Bundle, the article integrates classic views on pricing with the latest research and practice to develop a simple framework to help managers decide how much pricing control they should retain and how much they should relinquish to customers. For most businesses, the default approach is having a single fixed price and selling to anyone willing to pay that amount. However, authors Marco Bertini and Oded Koenigsberg argue that this is economically inefficient: Those prepared to pay more in effect receive a discount; those willing to pay less (but an amount that's still profitable) are turned away. For companies interested in interactive approaches to pricing, the authors discuss three collaborative models: auctions, name-your-own-price auctions and negotiations. In the authors'view, asking customers to weigh in on price can have benefits that go beyond promoting greater efficiency. It can promote customer engagement, provide opportunities for customization, allow managers to signal information about their company or product and open up opportunities for increasing market share.

This is an MIT Sloan Management Review article. Since China began its economic reforms in 1978, it has transformed itself from an economically impoverished and politically unstable country to the second-largest economy in the world. But China faces monumental challenges, both economic and political, in the years ahead, notes author Yasheng Huang. One thing we know about economic growth is that it typically slows down after a period of robust performance. It is much more difficult for a country to grow at a sustainably fast pace when the per capita GDP is high than when per capita GDP is low. Despite more than three decades of reforms, Huang argues, China is still substantially statist in its basic orientation. The result is that for each percentage point of GDP growth, China requires more and more energy and investments, with worrisome implications for its environment and the health status of its population. There is increasing evidence that China is seeing diminishing returns with its existing growth model. Research shows that fast growth at an extremely low income level is relatively easy. However, Huang notes, being able to grow from what is known as "middle-income status" (between $6,000 and $8,000 dollars per capita, a level that China has just about reached) is much harder. Can China avoid the middle-income trap and grow at a sustained rate for another decade or more? Huang believes it can, but only if it undertakes significant reforms, especially political reforms. At GDP of $700, Huang argues, China didn't need to innovate-it could simply copy and transplant the technology and production methods of other countries. But it now needs to transition to a stronger, market-based economic system, a political system that is more open and democratic, and a legal system that is rule-based and offers strong IP protection. In other words, Huang says, China needs political reforms as well as economic reforms to enter the next stage of its growth model.

This is an MIT Sloan Management Review article. Based on a global executive survey with 2,000+ respondents and interviews with more than thirty executives, MIT Sloan Management Review and SAS Institute Inc. report that analytics has become a common path to business value. Organizations are now being challenged to step up their use of analytics, whether they are just getting started or are seasoned practitioners. The implications for industry competition are coming into focus-companies that incorporate analytics into their culture are finding success in the new digital era.

A former Wall Street analyst, Girsky learned the importance of synthesizing all the messages coming out of a company into one strong story line. "You'd be surprised," he writes, "how many companies change their messages often or present differing agendas to different audiences."

More and more companies recognize the importance of corporate responsibility to their long-term success--and yet the matter gets short shrift in most boardrooms, consistently ranking at the bottom of some two dozen possible priorities. Many years ago labor conditions in Asian contract factories prompted Nike board member Jill Ker Conway to lobby for a board-level corporate responsibility committee, which the company created in 2001. In the years since, the committee has steadily broadened its purview, now advising on a broad range of issues including innovation and acquisitions in addition to labor practices and resource sustainability. A close examination of Nike's experience has led HBS professor Lynn S. Paine to conclude that a dedicated board-level committee of this sort could be a valuable addition to many if not most companies in at least five ways: as a source of knowledge and expertise, as a sounding board and constructive critic, as a driver of accountability, as a stimulus for innovation, and as a resource for the full board. In an accompanying interview with Paine, Conway discusses the committee's creation and provides an insider's perspective on what has made it so effective.

Yang assumed the reins at Lenovo (formerly known as Legend) in 2001, when the company's founder, Liu Chuanzhi, moved on to become chairman. He served as CEO for three years before succeeding Liu as chairman, and he and Liu engineered the stunning 2005 acquisition of IBM's personal computer business, which suddenly made Lenovo the world's third-largest computer maker. In 2009, after the company had begun to falter during the global recession, the board asked Yang to return as CEO, a post he's held ever since. Pursuing a strategy the company calls "protect and attack"--defending its core market in PCs (Lenovo is now the world's number one manufacturer) while moving into new growth areas such as mobile and the cloud--Yang has turned things around. Earlier this year Lenovo spent $2.3 billion to acquire IBM's low-end server business and $2.9 billion for Google's Motorola Mobility unit. He talks here with HBR's editor in chief about Lenovo's innovations, competitors, acquisitions, and more.