What do Babylon Health, WeWork and Netflix have in common? Three seemingly unrelated companies, working in three different industries. Healthcare, Real Estate and Entertainment. Not much to connect them, except they’re all using data to become extraordinarily profitable.
They’re among the best examples of data-driven businesses, and they’re all reaping the rewards today. Forrester says that data-driven companies are growing 8x global GDP. This article sets the scene for you to become part of that group.
In my mind, there are three areas that companies should focus on to become data-driven: Productivity, Prediction and Personalisation. Applicable across industries, these three pillars should be front of mind for any CEO that wants to be more profitable.
Babylon Health know more about interpreting health data than anyone else, leading to higher productivity. They’ve automated the triage process, directing people to the correct care, and given doctors more time to focus on the difficult problems and the human connection. They’ve licensed their AI software in deals worth $100M while only employing 500 people. This is a side benefit, not their business model, and yet each employee contributed $2M to the deal. Staggering, really.
Gone are the days where cheap labour means that it’s possible to throw more people at a problem. Your competitors aren’t. How many people-hours are wasted each year in your business performing routine tasks? How many of those could be automated? I’d wager, quite a lot! The scaremongers regularly write headlines about what percentage of jobs are going to replaced in the next 5 years. It’s not jobs that will be replaced but tasks. By taking away the menial work, employees are free to focus on creativity (something computers aren’t gifted at).
WeWork knows more about how people use offices than anyone else, leading to better predictions. At the time of writing, their market cap is $20B dollars and they have less than 200,000 desk subscribers. If this valuation was based purely on the number of desks they fill, everyone would need to remain a customer for 19 years! Something else is contributing to this valuation. They’re hoovering up companies that let them gather more data and are capitalising on the knowledge they’ve acquired.
If you’re still making best-guess predictions, you’re behind your competitors. What do you know that no-one else knows? What could you know, if you knew where to look? Accurate predictions lead to fewer wasted resources (people, stock, space, etc.). Smart companies look inwards as well as outwards to solve their challenges.
Netflix knows more about how people watch TV than anyone else, leading to better personalisation. They’ve mastered the art of convincing you to watch just one more show. They haven’t built one product for 150M customers, they’ve built 150M products for one customer — you. In 2018 they made 50% more profit per employee than Sky TV, a company that has been running twice as long and with far more customers.
Today’s customers are picky and want a tailored experience. If you don’t provide it, your competitors will. How can you make your customers feel special? What would your product looked like if you designed it for one person instead of everyone? The good news is that if you have customers using your products and you know what they like, you can start personalising your product. I wrote about personalisation if you want to read more.
Is your business as profitable as you’d like? I’m sure everything is ticking over nicely, otherwise you wouldn’t have time to read an article about AI. But think for just a second. Could you be more profitable by improving productivity, prediction or personalisation?
I’m founder of Pritchatts Consulting Ltd. We make companies more profitable by making their data work for them. We’re experts in Artificial Intelligence, with a proven track-record of delivering measurable results.
To learn more, visit www.pritchatts.com.