Most people don’t understand how this concept could signal a paradigm-shifting opportunity. CEO of Renegade shares his thoughts.
The term “Big Data” has quickly become the buzzword du jour garnering its own Wikipedia page and showing up in 21 million search results. Pardon the run-on cliches but truthfully at this moment no self-respecting forward-thinking technology company can present their vision without espousing upon the extraordinary potential of Big Data. That said, for the average Joe (including this author) it takes hearing a few real world examples before you can truly grasp, dare I say, this paradigm shifting opportunity.
Fortunately for me, I got a chance to hear professor/author David Rogers speak about the potential of “Big Data” at the recent Columbia Business School Brite Conference. Rogers explained how IBM’s Watson (artificial intelligence computer system) has been fed exabytes of medical information that it can sift through in seconds to help doctor’s all over the world more accurately diagnose and treat patients. Another example Roger’s mentioned is Waze, a mobile map app with 30 million users, that gets real world traffic information from users and then processes that information to re-route other users in real time. Wanting to know more, I caught up with Rogers after the event yielding this informative interview:
Leaders have always been challenged to get the right information to make good decisions. How do modern leaders take advantage of the excess of data available to find the truth they need?
There is actually no excess of data. That’s a myth attached to the term “big data.” Digital data has been growing exponentially since the birth of the computer era. Before that, recorded data grew exponentially since the invention of human writing. I don’t think Napoleon complained that there was “too much data” as he pored over reports of historic battles to conceive his next campaign strategy. What he needed was insight, and the right questions to ask of the data available.
The amazing challenges and opportunities of the Big Data era really don’t stem from the sheer quantity of data. They come from the new kinds of data that we are getting, and our new tools for analyzing them – especially for analyzing unstructured data like video, images, and social media conversations.
My first advice for business leaders is: don’t meet with anyone who wants to sell you some great juicy set of data they’ve got. Don’t be that sucker. Only work with people who want to help you solve a genuine problem, or capitalize on an exciting opportunity, using data.
I think it was Einstein who said, “information is not knowledge.” Can you provide a real world example (or two) of how this data/info is being harnessed by marketers right now?
Sure, data is now being used to answer many of the most critical questions that marketers face. Who should I market to? When and where should I spend my budget? Which are my most valuable customers? How should I personalize my offer? What impact did I get from my marketing?
Many of these answers are coming from the domain of predictive analytics. When a customer makes their very first purchase on an ecommerce site, it is now often possible to predict, with decent accuracy, how many more purchases she will make this year, her total spend, and if she fits in the top 5% of your customer base in terms of lifetime profit to the firm. You might be wrong on a given customer, but on average over the entire behavioral segment, you’re quite accurate. That’s extremely powerful.
Are these Big Data technologies going to be used just by big companies? Will they pose a competitive disadvantage for small and mid-sized businesses?
Not necessarily. One of the key drivers of the big data revolution is cloud computing and the SaaS (software as a service) model. That means that hospitals around the world will be able to start accessing IBM’s Watson, the most powerful natural language processing algorithm in the world, to assist in their cancer diagnostics. Watson is an incredible supercomputer, but your local oncologist will just access it over the web via an app of their tablet.
In the marketing space, the startup Optimizely is providing incredibly cheap entry points for small business to start using its web-based tools to test and gather data on the effectiveness of direct response marketing. You don’t have to be the big boys to start reaping the benefits of the Big Data era.
Bringing it back to the C-suite, what do you see as the challenges for leaders adapting their skills, and their teams, to the “Big Data” era?
Firstly, formulating the right questions to ask of data will be a key leadership skill for the future. That also means knowing when and how to balance intuition and judgement versus data-driven decision-making.
CMO’s in particular will need to hire some new talent – data scientists who can apply these emerging data tools to unlock value for the enterprise. There will be a lot more math PhDs in the marketing divisions of firms, and not just where you used to find them, in the market research companies. But CMOs also need to train the rest of their team – the creative copyrighters, the ethnographic insight hipsters – to be facile with the world of big data, so they know what questions they should be posing to the data geeks in the next room. It’s really going to be a cultural change as much as skill training.
What about the CEO and strategy? You said at the BRITE ’13 conference that leaders need to see data as a strategic asset. Can you explain?
Yes, truly successful leaders will see data not just as a tool to assist decision-making, but as a core strategic asset.
Think about e-tailers like Amazon or media companies like Netflix. They have spent the last few years building amazing data sets about the behaviors and preferences of consumers. These are incredibly valuable assets, just as much as their hardware, their software, and their licensing and partnership deals. Amazon is using its data assets to not only improve its core retail business, but to offer incredible targeting to marketers. Netflix has used its immense data on what stories, actors, and creative teams its viewers have preferred, to plan and commission entire new TV series, like “House of Cards,” without having to go through the normal process of paying for a bunch of pilot shows and options with no clear idea which one will resonate in the market place. That’s a huge market advantage and risk reducer. The best leaders in every industry will be those with a strategy for building powerful datasets around their markets and customers – and then leveraging these assets to drive innovation and value creation for customers.
David Rogers is founder of Columbia Business School’s BRITE conference on brands, innovation, and technology, and author of “The Network Is Your Customer: 5 Strategies to Thrive in a Digital Age.” His next book will show why businesses that use big data effectively will survive in an era of disruptive change.