Radical customization, constant experimentation, and novel business models will be new hallmarks of competition as companies capture and analyze huge volumes of data. Here’s what you should know.
OCTOBER 2011 • Brad Brown, Michael Chui, and James Manyika
Source: McKinsey Global Institute
Very interesting impact of technology on the fundamental way you can run your business. We must all be aware of what is possible. I strongly urge you read the full article.
"All of this new information is laden with implications for leaders and their enterprises.1 Emerging academic research suggests that companies that use data and business analytics to guide decision making are more productive and experience higher returns on equity than competitors that don’t.2That’s consistent with research we’ve conducted showing that “networked organizations” can gain an edge by opening information conduits internally and by engaging customers and suppliers strategically through Web-based exchanges of information…
…over the last few years, the volume of data has exploded. In 15 of the US economy’s 17 sectors, companies with more than 1,000 employees store, on average, over 235 terabytes of data—more data than is contained in the US Library of Congress. Reams of data still flow from financial transactions and customer interactions but also cascade in at unparalleled rates from new devices and multiple points along the value chain…
…this article, we outline important ways big data could change competition: by transforming processes, altering corporate ecosystems, and facilitating innovation:
1. What happens in a world of radical transparency, with data widely available?
As information becomes more readily accessible across sectors, it can threaten companies that have relied on proprietary data as a competitive asset.
2. If you could test all of your decisions, how would that change the way you compete?
Big data ushers in the possibility of a fundamentally different type of decision making. Using controlled experiments, companies can test hypotheses and analyze results to guide investment decisions and operational changes
3. How would your business change if you used big data for widespread, real-time customization?Customer-facing companies have long used data to segment and target customers. Big data permits a major step beyond what until recently was considered state of the art, by making real-time personalization possible.
4. How can big data augment or even replace management?
Big data expands the operational space for algorithms and machine-mediated analysis
The bottom line is improved performance, better risk management, and the ability to unearth insights that would otherwise remain hidden. As the price of sensors, communications devices, and analytic software continues to fall, more and more companies will be joining this managerial revolution
5. Could you create a new business model based on data?
Big data is spawning new categories of companies that embrace information-driven business models."