The best companies are analytical

There is a new survey out from IBM which has found:

Top-performing companies were 15 times more likely to apply analytics to strategic decisions than their underperforming peers

and:

In addition, top performers were 22 times more prepared to challenge the status quo in their organizations, rethink current strategies and business processes, and aggressively apply and act on new insights derived from analytics.

The conclusion is nothing new, but I was surprised how stark these results are.

For Internet companies in particular good management is all about analytics, insight and gearing the organisation to a set of metrics.

One of the best people I know in this regard is Will Reeve. In addition to being a venture partner at DFJ Esprit he founded Lovefilm and is chairman of our portfolio company Graze. In those companies customer lifetime value and customer acquisition costs are key metrics. They are tough to estimate, particularly before the business is old enough to have good data on churn and Will is all about dilligence in doing this as well as possible and driving the business based on the results. Similarly when considering the Graze investment we took a lot of comfort from the way Graham Bosher (CEO) talked about his production line KPIs and where he was driving them.

As we all know only too well startups are resource constrained and in this area as with all others there is a balance to be struck between thoroughness on the one side and speed/capital efficiency on the other, and most of the companies in our portfolio aren’t taking the use of data and analytics as far as IBM. That said they are all doing more and more, and this is one of the dimensions where the best entrpreneurs are really pushing the envelope.

I’ve blogged this from an iPhone app I just bought called iBlogger which has limited formatting capabilities, so apologies if this doesn’t look great. I’m not sure I’ll be writing from here that often.