Houston Rockets General Manager, and a pioneer in the application of sophisticated analytics to professional basketball, Daryl Morey wrote a short blog post yesterday for the Harvard Business Review.
In that post, Morely claims that success--whether in the boardroom or the athletic arena--is more influenced today by the degree to which organizations can capture proprietary data rather than the quality of those analyzing the data.
Here's a direct quote:
I see a world teeming with really good analysts. Fresh analytical faces are minted each year and sports teams are hiring them in larger numbers. If talented analysts are becoming plentiful, however, then it follows that analysts cannot be the key to creating a consistent winner, as a sustainable competitive edge requires that you have something valuable AND irreplaceable. If better analysts won't create an edge, however, what will?
The answer is better data. Yep, that's right. Raw numbers, not the people and programs that attempt to make sense of them. Many organizations have spent the last few years hiring top analysts based on the belief that they create differentiation. Smart companies such as Google believe they need savants to crunch those numbers and find the connections that regular humans could not. But my experience, and what I'm hearing from more organizations (sports and non), shows that real advantage comes from unique data that no one else has.
I couldn't agree more with Morey. I also couldn't disagree more.
Morey has an excellent point that, to some extent, the world is teeming with great analytical minds. And if competitors are able to hire analysts that are just as good as yours the competitive advantage you have built up can quickly evaporate.
As an example, Morey cites the way in which big market teams in baseball were quickly able to close the analytical gap on the Oakland Athletics.
A more sustainable advantage, claims Morey, is to develop your own proprietary data set. The best analysts in the world can't analyze something they don't have access to.
That's a fair point as far as it goes. But what Morey is doing when he makes his claim about the superiority of data is assuming that every organization understands what information it needs to gain that comparative advantage.
Yes, assuming all else is equal, if one can assemble a proprietary data set they should gain an advantage over other teams. But just understanding what additional data should be collected, how to collect it, and then making sound decisions based on the data is not something we should assume is constant in terms of the talent level across organizations nor in practice. That takes talented analytical minds. The quality of the people matter here, more than Morey seems to acknowledge. Yes, the quality of data is very important, but so too is the quality of analysts and those making decisions based on the analysis. It isn't plug and play.
This is issue is magnified in fields where "league" data is not easily accessible. In most business, if you come up with a custom data set it is unlikely you will be able to obtain similar data across your competitors. That means you have to rely on talented analysts to get creative with what's available, what else might be used as a proxy for your proprietary data within and across competitors, and to make sound interpretations of what amounts to messy data.
There is a famous dictum in management that what gets measured gets done. I would qualify that by saying what gets measured, and valued, gets done. Someone has to determine what should be valued.
Data does not speak for itself, even the most proprietary.