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Crunching Numbers

When in doubt, let the data tell you what to do.

This story appears in the May 2007 issue of Entrepreneur. Subscribe »

We've got all this data. Now let's do something with it. In Competing on Analytics(Harvard Business School Press, $29.95), entrepreneurship professor Thomas H. Davenport and researcher Jeanne G. Harris show how high-performing companies use quantitative analyses of data to drive decisions. Wal-Mart's work with logistics and Capital One's work with credit card marketing are among the examples they cite. They then call for more businesses to apply similar analytical rigor to more areas, including HR, finance and operations.

Competing on analytics starts with cleaning out and organizing your data. Next, choose a place to start. Then get your staff behind the concept, hire the right people and roll it out in stages. The authors concede that analytical advantage is likely only temporary, and when you're pressed for time or have inadequate data, it may be best to go with your gut. But it's hard to argue with their basic premise: Decisions based on empirical facts and calculated probabilities will, over the long haul, lead to better performance.

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