A couple of months back, the McKinsey Global Institute published a defining paper on the role of Big Data in business. What I like about this particular report is not that it gnashes teeth about the huge volumes of Big Data and how we are going to manage and store it – very legitimate concerns at this point, by the way – but what kinds of opportunities for innovation and business growth Big Data represents. And the opportunities far outweigh any costs for harnessing or taming Big Data.
The report’s seven authors, led by James Manyika, make the point that “there are many ways that Big Data can be used to create value across sections of the global economy. Indeed, our research suggests that we are on the cusp of a tremendous wave of innovation productivity, and growth, as well as new modes of competition and value capture – all driven by big data as consumers, companies and economic sectors exploit its potential.”
Could Big Data help re-energize the economy? Yes — mot only in terms of improving decision making, but creating new jobs. Manyika and his co-authors cite estimates that there are not enough people with the skills to effectively leverage the power of Big Data – to the tune of 140,000 to 190,000 jobs requiring deep analytical skills as well as 1.5 million management and analyst positions.
Manyika and his team explain how Big Data can give companies a tremendous edge within their market segments:
Create transparency: “Simply making Big Data easily accessible to relevant stakeholders in a timely manner can create tremendous value. In the public sector, for example, making relevant data more readily accessible across otherwise separated departments can sharply reduce search and processing time. In manufacturing, integrating data from R&D, engineering, and manufacturing units to enable concurrent engineering can significantly cut time to market and improve quality.”
Enable experimentation to discover needs, expose variability, and improve performance: “As they create and store more transactional data in digital form, organizations can collect more accurate and detailed performance data (in real or near-real time) on everything from product inventories to personnel sick days.”
Segment populations to customize access: “Big Data allows organizations to create highly specific segmentations and to tailor products and services precisely to meet those needs.”
Replace or support human decision making with automated algorithms: “Sophisticated analytics can substantially improve decision making, minimize risks, and unearth valuable insights that would otherwise remain hidden. Such analytics have applications for organizations [such as] retailers that can use algorithms to optimize decision processes such as the automatic fine-tuning of inventories and pricing in response to real-time in-store and online sales.”
Innovate new business models, products and services: “Big Data enables companies to create new products and services, enhance existing ones, and invest entirely new business models. Manufacturers are using data obtained from the use of actual products to improve the development of the next generation of products and to create innovative after-sales service offerings. The emergence of real-time location data has created an entirely new set of location-based services from navigation to pricing property and casualties insurance based on when, where and how people drive their cars.”
Big Data may present some big headaches, but the opportunities make it worthwhile. And it may one of the forces that pulls our economy into a new era of expansion. The availability of huge volumes of data is changing the way organizations shape their futures. “Decision making may never be the same,” Manyika and his co-authors say.