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The Predictive Revolution – Transforming the Company with Anticipatory Knowledge

Category : Business Insights

“Our abilities to capture, analyze and recognize patterns in dynamic data have reached critical mass and now provide us the ability to anticipate future business events with a high degree of probability. When combined with the flexibility and agility to act before an event occurs, this creates a powerful new way of conducting business.”
This is essentially the message of the book. The author compares the impact of predictive business to that of corporate networks linking desktop computers and servers in the 80’s.

Vivek Ranadive is Founder and CEO of TIBCO, a business integration and process management software company located in Palo Alto, California. His earlier book THE POWER of NOW, published seven years ago, was a New York Times business best seller. This is a take-off on that book.

Real time business enables companies to see changes as they happen and react to them fast. The POWER of NOW talked of companies that used it to manage their current operations better by understanding current needs. In the 90’s, Ranadive’s company , with its software solution, THE INFORMATION BUS, established Wall Street as an efficient, real-time industry.

That, he says, is pretty insignificant compared to the transition we are now witnessing –from real- time business to predictive business. We now have the software solutions to take this big leap forward.
“Real- time business was about doing things faster. Predictive business is about doing things that you could not do before.” Predictive business will transform the way companies are managed.

Predictive business is the result of a trend that started with the supply chain concept – build it and the customer will come. The customer did not come in many cases. CISCO, for example, had to write off inventories worth $ 2.2 billion. And then there was the demand chain concept—build it when they come. (E.g. Dell, auto industry). This only threw the inventory burden on the supplier. In contrast, the predictive business concept is – build it because you know they are coming.

Predictive Business is about looking at uncertainty in terms of events over which we have some control, analyzing past and real-time events to recognize patterns and taking corrective action to reach a desirable outcome in the future-in effect, to reduce uncertainty to “manageable proportions”.

The benefits are many. The company can improve profitability through better customer retention, proactively improve product and service levels, seize new opportunities and avoid risks that might cost them millions of dollars.

Look at the success of Wal Mart. They attribute it not to size or better supplies but to the way in which massive historical and current data are mined to predict consumer buying patterns. Even smaller retailers are using it . The impact of Amazon .com on retailing, the ability of smaller banks to improve branch banking, the use that FEDEX is putting it to, South West Airlines’ current initiatives , and the examples of Pirelli, Adidas-Solomon are sufficient to induce one to work towards predictive business .If this were not enough, we have business leaders like Indra Nooyi, Rajat Gupta, Mukesh Ambani and Charles Phillips, the President of Oracle vouching for its transformational power.. and a Foreword from Nandan Nilekani of Infosys who says the book is a handbook for the 21st century business.

In a fast paced business environment where CEOs are tired of hearing the oft repeated cliché “ the only certainty is that nothing is certain” this book will come as a revelation and a relief.

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