There are many ways to think about the recent explosion of digital technologies and data. Not surprisingly, the ubiquity of personal information that can be easily and cheaply collected from online and offline transactions, social media and sensors embedded in a growing array of physical objects such as TVs and smartphones can trigger suspicion, anxiety and fear.
Organizations that sweep up, store and analyze that information are often unsure how to use it.
The leaders of some of the world’s top firms who gathered for the spring 2016 Innovators’ Roundtable approach the vast quantities of unstructured data — often called “big data” — as an opportunity to create value for their customers and, in the process, unlock new ways to grow their businesses.
Business leaders must learn how to convert the torrent of data flowing from every part of the global economy into actionable insights.
The roundtable, hosted by the Batten Institute in Washington, D.C., brought together senior leaders from 3M, Abundant Power, Capital One, Celgene, Corning, Danaher, Eastman Chemical, IBM, Recast Energy, Siemens and Smithfield.
Led by Darden Professors Rajkumar Venkatesan, Yael Grushka-Cockayne and Ed Hess, the executives explored the use of data and analytics to make faster decisions, lower costs, predict and better meet customer needs, and create innovative products, services and business models. They also discussed the challenges their organizations and industries face as they become increasingly data-driven.
Several best practices emerged from the daylong discussion.
Know Your Purpose
It’s easy to get caught up in the hype surrounding the unprecedented volume of never-before-examined data and be dazzled by this “new, shiny thing,” as one executive put it. “Too often, big data becomes the goal.”
Big data is touted as a way to boost innovation. However, before business leaders start capitalizing on the insights gleaned from the torrents of data they collect and analyze — and before they innovate — they should have a clear understanding of the “why.” As one executive noted, “all efforts should connect to the purpose of your company. Why do you innovate? Toward what end are you using data? Does it really serve your purpose?”
Rethink Your Business Model
Digitization of data enables companies to innovate not only their products and services but also their business models. For example, firms that used to make money selling and servicing industrial equipment can now rethink their customer value proposition. In addition to selling reliable jet engines, gas turbines and medical equipment, they can offer customers all kinds of efficiencies and performance improvements by combining data generated by that equipment with advanced analytics.
Create an Entrepreneurial Culture
Innovation requires the right culture.
While startups, by their very nature, are innovative, the large, established corporations that are good at strategy execution are notoriously bad at out-of-the-box thinking. They are also less agile than startups. Companies trying to leverage data and analytics to drive innovation should be able to quickly respond to data-driven insights.
Siemens holds hackathons, where even the most junior employees win innovation awards. Respect for innovative ideas, however crazy they may seem, permeates its culture. Capital One took steps to build an agile, entrepreneurial culture by creating small, five- to eight-member squads that operate like mini startups. And IBM has an internal crowdfunding mechanism iFundIT to pitch and fund new ideas.
To compete in a data-driven economy, business leaders must become savvier about where data fits into their businesses. They must learn how to convert the torrent of data flowing from every part of the global economy into actionable insights. And last but not least, they must build a culture that encourages and rewards the use of data to drive innovations aligned with the company purpose.