New MIT CISR research reports leading “real-time” businesses had 62% higher revenue and 97% higher profit margins
15 Agosto 2024 - 9:00AM
New MIT CISR research reports leading “real-time” businesses had
62% higher revenue and 97% higher profit margins
Data shows excellence in four capabilities associated with high
achievement
CAMBRIDGE, Mass., August 15, 2024 —The MIT Center for
Information Systems Research (CISR) has published a new report
identifying four capabilities that companies described as
“real-time” businesses (RTBs) combine to achieve top performance.
The findings are based on a research study by Peter Weill of MIT
CISR with Insight Partners.
The researchers defined RTBs as those companies that
respond immediately to opportunities and challenges by executing
key business processes through automated digitized operations and
employee-made data-driven decisions, supported by governance and
risk guardrails. The study showed that top-quartile RTB companies
had 62% higher revenue growth and 97% higher profit margins than
bottom-quartile RTBs. Top-quartile RTBs were also 20% better at
innovation, 22% better at operational efficiency, and 17% better at
managing risk.The MIT CISR research briefing, titled “What’s Next:
Top Performers Are Becoming Real-Time Businesses,” explores the
next step for companies that have gone through a digital business
transformation and describes what it takes to become an RTB. A case
study of United Airlines, Inc. (United) helped illustrate this
journey. The findings were based on a survey of C-suite leaders at
259 global companies in multiple industries with an average revenue
of $10 billion and in-depth interviews at three companies.
“There is no longer time to pass decisions up and down the
traditional hierarchy to receive permissions or approvals,”
said Peter Weill, the report’s co-author, MIT Sloan School of
Management senior research scientist, and chairman at MIT CISR.
“Operating in real time helps companies sense and respond to
changes in an increasingly volatile business environment—and
customers and employees are more likely to be satisfied by
immediate action.”
Key findings included:
1. Trust in data is the basis for RTB success
Trusting vetted data across the company reduces the need for
double checking, which improves operational efficiency and enables
better risk management. Most importantly, both customers and
employees are more likely to be satisfied when answers, actions, or
both are immediate.
2. Four capabilities combined distinguish leading
real-time businesses
- Real-time data for decision-making: At the
foundation of an RTB is having easy access to trusted real-time
data for use as inputs to automated decision-making and in
decision-making by employees and systems, tracking company
performance on key metrics, and real-time governance and risk
management.
- Integrated customer experience: Real-time
decision-making enables digital customer journeys that are more
seamless, provides self-service, and supports customers in
accessing and easily combining assorted company products to fill
specific needs.
- Business agility: An RTB’s distinguishing
attribute is the ability to sense a threat or opportunity and
change direction without getting multiple approvals or undergoing a
reorganization. The combination of real-time data and simplified
governance empowers people at all levels of the company to identify
opportunities and issues.
- High-quality employee experience: RTBs use
real-time data to create a better employee experience and transform
jobs. Automating tasks allows people to spend far less time doing
repetitive and often paper-intensive work and instead focus on
improving processes and innovating. Using real-time data in
dashboards enables employees to better understand how the company
is doing and how they contribute to the company’s performance.
3. A mindset change is required to become a
top-quartile real-time business
Most companies need to move from relying on gut feelings and
experiences to evidence-based decision-making, with high levels of
trust in and empowerment of employees, along with increasing
automation and the use of AI, such as by alerting customers to a
potentially fraudulent banking transaction.
Case study: Real-time business at United Airlines
United invested heavily in making trusted real-time data
available to its workforce to help them make better decisions about
flight routes, diagnose reasons for delays, support passengers in
making their connections, and find ways to be more fuel efficient.
The MIT CISR report describes that in 2023 United achieved one-year
revenue growth of 19.5% and a net margin of 6.3% (versus an
industry average of 4%). The company’s customer experience, based
on a net promoter score of 50, was also nearly double the industry
average.
United’s goal is to use the data not only in real time but also
to anticipate what will be needed in the future and make an offer
in advance of the need for customers. For example, if United knows
that a passenger’s flight might be delayed, and observes that this
passenger takes this flight regularly, they can anticipate their
need to rebook the flight and offer real-time booking changes in
response to the delay.
“Companies who want to become RTBs should start by focusing on
data related to customer and employee experience, along with making
the business more agile such as by simplifying governance,” said
Weill. “It’s not necessary to have all data available initially —
you need just enough to begin making decisions in real time. Early
successes will build confidence and pave the way for integrating
more real-time data for increasingly real-time decisions.”
- How To Gain A Competitive Edge
Casey Bayer
MIT Sloan School of Management
914.584.9095
bayerc@mit.edu
Patricia Favreau
617-595-8533