The age of big data allows companies to collect unprecedented amounts of information on everything from production activity through the supply chain, to customer interactions and even clicks on a website.
It can be a gold mine. But, says Keith Carter, senior visiting fellow at NUS Business School, you need to know how to use it.
According to IBM we generate around 2.5 billion gigabytes of data every day. That’s a lot of hard drives.
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But the value of big data doesn’t lie in its big-ness. Indeed, size is in many ways the problem with it – there’s simply so much data that many companies don’t know how to handle or manage it to extract useful information.
Carter says big data means nothing unless it is answering a strategic business question and putting the user in the right position to take action. In his words it’s about acquiring “actionable intelligence.”
“Actionable intelligence is about having the right ecosystem in place to answer strategic business questions with facts and then deliver results,” he says.
In his recently published book on the subject, “Actionable Intelligence: A Guide to Delivering Business Results with Big Data – Fast!” Carter shows how several multinational corporations have used the strategy to deliver a broad range of business benefits.
Starbucks for example can use its customer loyalty card to track user transactions and actually track the user if they opt into that data-sharing feature.
Why not take it further, Carter asks, to collect data on how long the customer stays in the store and what they do while there?
Carter has seen the “action” part of actionable intelligence first-hand, when he was an executive at Estee Lauder. After the devastating earthquake and tsunami hit Japan in 2011, the key strategic question for the company was how many of its products would be impacted by disruptions at Japanese suppliers?
It took less than a day for his team to find the answer – more than 10,000 products would have a problem. That was equivalent to half a billion dollars worth of business at risk.
With that information in hand they were able to focus on the suppliers that needed help the most.
For actionable intelligence to be effective, Carter says, it’s important that the company culture is fact-based and willing to share information.
“It’s about having a belief from the top that if I make a decision, I should make it with shared facts. It’s no longer as much by gut.”
The small startup has more on the line because when they make a mistake it could kill their company
Carter also says it’s not just the big guys that benefit from big data. Startups and SMEs can take advantage too.
“When we come to making fact-based decisions the small startup has more on the line because when they make a mistake it could kill their company. So with the data that’s available now a small company has access to millions of pieces of information that they used to have to pay for,” he says.
“Small business owners know more now than ever before.”
The biggest mistake Carter sees companies making with big data is simply collecting it and putting in in a big warehouse.
“All they’ve done is copy the data from one place. They still haven’t validated it,” he says.
The right move is to formulate the strategic question, then acquire the data from inside and outside the company that answers that question.
“Be ready to do it rapidly and iteratively, because as soon as you provide the first answer then the person who’s asking the question will realise there’s a deeper question – and then you’ll go and get more and as a result make an even better decision.”