Learn how to find a purple swan with predictive analytics
*“purple swan” refers to a prospective positive scenario in the future that businesses can recognize and capitalize on.
In the dynamic world of business, predictive analytics has emerged as a powerful tool. In today’s digital landscape, maintaining a competitive edge is not just important – it’s essential. To foreseeing which colour will be in vogue this summer to which flavour of ice cream will become passe, predictive analytics has entrenched itself as an indispensable pillar of the digital business landscape.
Navigating business risks
In its early days, predictive analytics served as a pre-emptive risk evaluation measure for enterprises, guarding them against force majeure.For instance, insurers used it to assess the chances of shipwrecks with a primitive form of predictive analytics, which factored historical data with few variables, making predictions easier. Financial safety was an objective, which was achieved more often than not, for the fray of variables was small.
Emergence of predictive analytics as a potent force
Once confined to the sidelines, predictive analytics has witnessed a remarkable resurgence. In recent times, achieving profitability through this analytical approach was a concept on the fringes, often relegated to the periphery of enterprise strategies.
Forecasts and insights, despite their appeal, lacked the solidity to serve as definitive indicators of future consumer preferences. For most decision makers, “We know pumpkins will sell come Halloween”. They didn’t want to know how many more pumpkins they could have sold, or how better they could have managed price points, to capitalize on demand and supply fault lines.
Hollywood’s biographical sports drama ‘Moneyball’ ignited business executives’ creativity by showcasing predictive analytics’ potential through Sabermetrics. This technique distinctly turned around the fate of the struggling Oakland Athletics, a baseball team that had long been obscure, propelling them into the limelight with spectacular success.
Enterprises sought to emulate the success of Sabermetrics, a logical pursuit. If baseball teams could accurately foresee future player performance with modest investments, industries like retail, pharmaceuticals, and fintech began to ponder why predictive analytics couldn’t similarly guide their strategies for adapting to market fluctuations. While unforeseen events like pandemics or conflicts remain crucial considerations, they need not monopolize attention. Businesses should also train their focus on anticipating positive anomalies – referred to as “*purple swan.”
Enterprise Insights: The Purple Swan Approach
In today’s digital era, enterprises find themselves immersed in abundant real-time, relevant, and accountable data. However, the true challenge lies in translating this data into valuable forecasts that provides a competitive advantage and anticipates market shifts. The fusion of predictive analytics with Artificial Intelligence (AI) is currently catalysing a revolution. This fusion injects agility into decision-making, predicts potential successes, and unveils the enigmatic ‘purple swan’— with unexpected opportunities on the horizon.
AI’s trajectory is staggering, projected to reach a whopping $309 billion by 2026, with a resounding 44% of executives praising its influence in reshaping business landscapes.
Dynamic scenario planning: Crafting business narratives
Imagine sales strategies that adjust in real-time, responding to predictive cues, and conjuring scenarios that captivate customers. One of the world’s leading fashion retailers stands as an embodiment of this skill. Leveraging live store sales data, their engineering team introduces fresh designs and predicts inventory shortfalls. This data-powered methodology leads to producing 50% of units’ mid-season, a notable contrast to their competitors’ modest 20%. Today, this retail conglomerate proudly touts the lowest year-end inventory among its peers, paired with swift trend rollouts, culminating in robust sales turnovers.
Engineering insights: Pioneering precision through data
The synergy between predictive analytics and AI is steering us towards personalised drugs. You can picture a future where drugs are manufactured with predictive analytics supported by AI/ML models based on an individual’s genomic build. This innovation, known as Precision Drugs, where suitability, dosage and efficacy of a drug will be tailor made for a specific individual.
Proactive solutions: Navigating business waters with foresight
Predictive analytics fuels proactive and pre-emptive strategies. A leading US Bank harnessed predictive analytics to uncover hidden patterns and capitalize on untapped cross-sell and upsell opportunities. As a result, the bank’s book size swelled by ~20%, yielding a remarkable 46% increase in cross-sell conversion and a staggering 83% surge in average revenue per call.
An American multinational financial technology company’s transformation from a rule-based risk management system to a predictive, intelligent network exemplifies how predictive analytics can negate risk proactively. This led to a monumental 30X reduction in fraud transactions.
Strengthening supply chain resilience through inventory shortage forecasting
The pharmaceutical industry echoes the efficiency driven by predictive analytics. Employing stimulation models, pharmaceutical companies expedite medicine delivery, removing a crucial bottleneck from the Pharma Value Chain. Rapid pattern generation empowers smoother demand management and diminishes manufacturing risks.
Forging ahead with predictive analytics
Predictive analytics is no longer a mere auxiliary function; it’s an essential staple for enterprises eyeing competitiveness. As AI and ML techniques continually refine their prowess, this propels businesses into uncharted territories. This potent amalgamation transforms uncertainty into opportunity and equips enterprises to master chaos with capability. The journey of predictive analytics, from a risk-averse saviour to an opportunity-seeking trailblazer, exemplifies the digital evolution that defines our era.