By Lisa Spencer, EVP Sales & Marketing, MindStream Analytics
Simply put, Big Data opens the door to monitor, measure, and know, radically, more about your business and directly translate that knowledge into improved decision-making and performance.
Take retail, for example. In the past, booksellers in physical stores were able to track which books sold and which did not. If they had a loyalty program, they could tie some of those purchases to individual customers, but that was about as far as they could go with analysis. Online shopping increased visibility dramatically. Online retailers could track not only what customers bought, but also what else they looked at; how they navigated through the site, how much they were influenced by promotions, reviews, and page layouts; and, similarities across individuals and groups. Before long, they developed algorithms to predict what books individual customers would like to read next—algorithms that performed better every time the customer responded to or ignored a recommendation. Traditional retailers are simply unable to access this kind of information, let alone act on it in a timely manner. Amazon is great example of the power of informed data, digital born companies have accomplished what business executives could only dream of a generation ago.
As the tools and philosophies of big data spread, they will change long-standing ideas about the value of experience, the nature of expertise, and the practice of management. Smart leaders across industries will see using big data for what it is: a management revolution. But as with any other major change in business, the challenges of becoming a big data–enabled organization can be enormous and require hands-on—or in some cases hands-off—leadership. Nevertheless, it’s a transition that executives need to engage with today.
Big Data and Analytics?
Business executives sometimes ask us, “Isn’t ‘big data’ just another way of saying ‘analytics’?” It’s true that they’re related: The big data movement, like analytics before it, seeks to glean intelligence from data and translate that into business advantage. However, there are three key differences – the three V’s of Big Data:
According to computer giant IBM, 2.5 exabytes—that’s 2.5 billion gigabytes (GB)—of data was generated every day in 2012 and that number is doubling every 40 months or so. That’s big by anyone’s standards. About 75% of data is unstructured, coming from sources such as text, voice and video.
For many applications, the speed of data creation is even more important than the volume. Real-time or nearly real-time information makes it possible for a company to be much more agile than its competitors. Rapid insight provides any business the ability to analyze and act fast.
Big data takes the form of messages, updates, and images posted to social networks; readings from sensors; GPS signals from cell phones; and, many more. The huge amounts of information from social networks, for example, are only as old as the networks themselves; Facebook was launched in 2004, Twitter in 2006. As more and more business activity is digitized, new sources of information and ever-cheaper equipment combine to bring us into a new era: one in which large amounts of digital information exist on virtually any topic of interest to a business. Google’s director of research, Peter Norvig, says it best: “We don’t have better algorithms. We just have more data.”
The evidence is clear: Data-driven decisions tend to be better decisions. Leaders will either embrace this fact or be replaced by others who do. In sector after sector, companies that figure out how to combine domain expertise with data science will pull away from their rivals. We can’t say that all the winners will be harnessing big data to transform decision making. But the data tell us that’s the surest bet.