Trending

Filed under: News | Technology News

 

5 Things About The Big Data Economy that Managers Should Know

Jan 27 2014, 4:13am CST | by

11 Updates
5 Things About The Big Data Economy that Managers Should Know
 
 

YouTube Videos Comments

Full Story

5 Things About The Big Data Economy that Managers Should Know

At the turn of the 20th century, most people lived as they had in the middle ages.  Almost half of the US population was employed in agriculture.  Life expectancy was less than 50 years. Indoor plumbing was rare, as was telephone use.  There were very few cars and no airplanes.

The rise of big organizations changed all that.  They enabled large concentrations of capital, which led to large scale transformations like the Interstate Highway System and the Hoover Dam. This was an environment in which modern corporations thrived.

The 21st century economy, however, will be dominated by bits and not atoms. The change will be much larger in scope, but almost imperceptible in physical scale.  The result is that we can no longer continue to manage our enterprises as we did in the industrial age and there is a widening gap between companies that can survive in a data economy and those that can’t.

1. We Now Create Knowledge Without Expertise

The economy of atoms was a knowledge economy.  People strove to learn a trade because what you knew determined your worth.  A good mechanic, for example, could always expect to earn a living.  Armies, both military and corporate, could not run smoothly without skilled mechanics.

Today, physical capital itself is becoming intelligent. UPS used to perform routine maintenance on its delivery trucks, whatever their condition, to avoid breakdowns on the road.  Now, however, the vehicles are equipped with sensors that monitor 200 key data points without a mechanic ever opening the hood.

But its not just blue collar tasks that are being automated.  Google flu trends uses an analysis of search terms to track outbreaks and outperforms the CDC’s vast network of doctors.  Scanadu’s personal tricorder can monitor your vital signs and IBM’s Watson system can diagnose cancer better than a human can.

The bottom line is that many jobs that used to require a high level expertise can now be done by machines with data.  That’s scary and is going to require big changes in how we recruit, train and manage talent.

2. We Can Attain “Scale Without Mass”

The industrial era was driven not just by machines, but by processes.  Huge factories were like elaborately choreographed ballets, where thousands of workers coordinated with the physical plant to push out product with incredible efficiency.  In the later part of the 20th century, supply chains also became highly optimized.

Unfortunately, creating efficiency isn’t the same as creating value.  Costs of retooling were high, stifling innovation and promoting rent seeking behavior. Yet retooling bits is far easier than retooling atoms. Changes in data driven processes can be replicated throughout an organization instantaneously, with perfect fidelity.

As Erik Brynjolfsson and Andrew McAfee argue in a Harvard Working Paper, this allows organizations to innovate at “scale without mass.”  Their analysis suggests that more rapid innovation helps to create a “winner take all” environment, because now a valuable new idea can take off much more quickly.

However, they also find that any advantage is also more transitory.  Now you truly are only as good as your last idea and your competitors can always come up with a new one that surpasses it.  The result, as Rita Gunther McGrath describes in her new book, is the end of competitive advantage.  Managers will have to learn to seek agility rather than stability.

3. Data Is The New Capital

Google makes a bundle on its search engine.  However, the company also provides a number of services seemingly unrelated to search, like Gmail, Google Docs and Google books.  To an outside observer, the company’s strategy can seem hopelessly muddled.  Yet, looks can be deceiving.

The Economist reports that Google uses those services to give its search business a leg up on would-be competitors.  When a word is misspelled in a document or e-mail, Google suggests a correction.  When the user chooses a correct spelling, that data can then be used to provide better results for typo-laden searches.

Technologists call this phenomenon data exhaust and its quickly becoming recognized as a valuable resource.  It’s one of the reasons why Amazon is happy to sell Kindles at a rock-bottom price (to better understand consumers’ reading habits) and Microsoft has created an entire marketplace for data sets.

In their book Big Data, authors Viktor Mayer-Schönberger and Kenneth Cukier argue that data is quickly becoming its own asset class and that ownership of it will become a key driver of value.  They point to entire services, such as FlyOnTime.us that are wholly built on data collected for one reason that was repurposed for another.

4. Privacy Will Become A Brand Value

We are largely creatures of habit, meaning that our actions are rarely one-offs, but complexes of cues, actions and rewards.  The New York Times reports that firms are increasingly using data to correlate sets of seemingly unrelated behaviors to predict future actions.

In effect, big data allows organizations to predict our private lives by observing our very public actions.  For example, one father found out his teenage daughter was pregnant only when Target started sending her coupons for baby products.  In a similar vein, most people were startled that the NSA keeps records of normal phone calls to fight terrorism.

This is obviously a great opportunity, but also a great challenge.  Most consumers are delighted to receive offers based on previous purchases, but understandably freaked out when data is used to decipher their private lives and positively enraged when they discover that these insights are sold on the open market as a commodity.

Obviously, people’s lives are very different than pork bellies or soybeans.  So it’s important to treat their data with respect, rather than just numbers on a screen.  With the power of big data comes the responsibility to use it wisely. Brands that don’t, will eventually be found out and there will be a price to pay.

5. The Semantic Economy

In the 20th century, business strategy was built on the edifice of two far reaching concepts:  Coase’s Nature of the Firm and Porter’s value chains.  Both assumed that scale had inherent informational advantages, which allowed you to cut costs by improving your negotiating position and increasing operational effectiveness.

However, digital technology has steadily increased permeability, not only within organizations and industries, but across them as well.  Big data is magnifying this trend and helping to create a truly semantic economy, where owning assets is not nearly as important as being able to access them.

And today, access is becoming universal.  Just about anyone can have an idea at breakfast, design it with online CAD software, produce a prototype on a 3D printer, receive financing and marketing analysis from a crowdfunding site, rent supercomputer time from Amazon, contract a manufacturer and be done by lunch without even leaving the table.

The era of big data will be one in which competitive advantage is not sustainable, but transient and value will not be something we will be able to extract, but something we will have to create.

Source: Forbes

 

You Might Also Like

Updates


Sponsored Update

Update: 11

Africa: Big Data: Excitement Tempered by a Dose of Reality

Source: AllAfrica.com

[SciDev.Net]Big data is a relative newcomer to development discourse. It has gathered interest quickly, aided by the UN high-level panel's call for a 'data revolution' last June that made big data central to debates over the ...
Source: AllAfrica.com   Full article at: AllAfrica.com 1 day ago, 9:55pm CDT
 


Advertisement


Update: 10

Microsoft's Azure Tackles Big Data to Aid Science

Source: eWeek

Dow Falls As Technology Sector Stocks Tumble
The software giant encourages researchers to let its cloud make short work of massive sets of scientific data and unea ...
Source: eWeek   Full article at: eWeek 2 days ago, 3:35pm CDT
 

More From the Web

Update: 9

Industry voice: Making the most of data: from experimentation to action

Source: Tech Radar

Ross Duncan of Scotland in action
Wherever you look, there is no shortage of statistics or analysis pointing to the global explosion in data growth. According to CSC Insights, data production is expected to be 44 times greater in 2020 than it was in 2009, with business data volumes doubling globally every 1.2 years.However, the problem in making the most of this increasingly valuable asset is not the larger volume of data but the complexity of getting most value from it. Most of this growth is from ...
Source: Tech Radar  Full article at: Tech Radar 2 days ago, 4:00am CDT
 

Update: 7

Flytxt signs up with VoltDB for faster data ‘triggers’

Source: The Hindu

Dow Falls As Technology Sector Stocks Tumble
Flytxt, provider of Big Data analytics solutions with a development centre here, is tying up with US-based VoltDB that specialises in high-speed data processing and real-time analyti ...
Source: The Hindu   Full article at: The Hindu 3 days ago, 10:27am CDT
 

Update: 6

IBM Smarter PlanetVoice: Five Ways Companies Can Compete Using Big Data and Analytics

Source: Business Balla

By Inhi Cho Suh, Vice President of Big Data, IBM Big data is just that–big–and it’s getting bigger. According to the research firm IDC, the worldwide big data technology and services m ...
Source: Business Balla   Full article at: Business Balla 3 days ago, 8:51am CDT
 

Update: 5

IBM Smarter PlanetVoice: Five Ways Companies Can Compete Using Big Data and Analytics

Source: Forbes

By Inhi Cho Suh, Vice President of Big Data, IBM Big data is just that--big--and it's getting bigger. According to the research firm IDC, the worldwide big data technology and services market will grow at a 27 percent compounded annual rate, to exceed ...
Source: Forbes   Full article at: Forbes 3 days ago, 8:22am CDT
 

Update: 4

Fujitsu develops 40Gb/s data search software

Source: Tech.co.uk

SKOREA-ECONOMY-COMPANY-TECHNOLOGY-SAMSUNG
Fujitsu has developed a new software technology that can perform data searches as fast as 40Gb/s –– an important step forward in managing an ever-increasing volume of information.The Fujitsu technology can perform high-speed capture, accumulation and searches at super-fast speeds, thanks to a combination of servers for scalable disk capacity and parallel-input performance, with a stream-analysis unit for sequentia ...
Source: Tech.co.uk   Full article at: Tech.co.uk 3 days ago, 7:50am CDT
 

Update: 3

Big data drives 47% growth for top 50 public cloud companies

Source: NetworkWorld

Big data analytics are driving rapid growth for public cloud computing vendors with revenues for the top 50 public cloud providers shooting up 47% in the fourth quarter last year to $6.2 billion, according to Techn ...
Source: NetworkWorld   Full article at: NetworkWorld 3 days ago, 3:25am CDT
 

Update: 2

Big data drives 47% growth for top 50 public cloud companies

Source: NetworkWorld

Big data analytics are driving rapid growth for public cloud computing vendors with revenues for the top 50 public cloud providers shooting up 47% in the fourth quarter last year to $6.2 billion, according to Technology ...
Source: NetworkWorld   Full article at: NetworkWorld 3 days ago, 1:10am CDT
 

Update: 1

BI Summit Roundup: Big Data Confusion Reigns

Source: Gartner Inc.

Alibaba To Kick Off IPO In U.S.
The Gartner BI Summits are an ideal venue to connect with vendors and end users not just in BI, but also the general Big Data space. Last week in Las Vegas I led two great roundtable discussions on the the Big Data Ecosystem. Interest was high: I was supposed to have a total of 28 attendees, but had 43. End users were happy to sit on the floor just to be part of the discussion. The roundtables were als ...
Source: Gartner Inc.   Full article at: Gartner Inc. 6 days ago, 12:23pm CDT
 

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Comments

blog comments powered by Disqus

Latest stories

Religious Leaders Converge to Hold Interfaith Service in Honor of Kansas Shootin
Religious Leaders Converge to Hold Interfaith Service in Honor of Kansas Shooting Victims
Religious leaders gather at a Community Center to mark the first interfaith service for Overland Park, Kansas shooting victims. So far, one person is under custody pending more investigations.
 
 
Mrs. Doubtfire sequel is on its way
Mrs. Doubtfire sequel is in the works
The writer of Elf, David Berenbaum is going to write the script for the sequel.
 
 
John Mellencamp spied out on the town with Meg Ryan
John Mellencamp spied out on the town with Meg Ryan
Mellencamp is set to enter the studio soon
 
 
American Actress, Hayden Panettiere Finally Speaks on Her Lifestyle
American Actress, Hayden Panettiere Finally Speaks on Her Lifestyle
Hayden Panettiere comes out to answer questions concerning her lifestyle. Hayden is an American actress, singer, and activist among others.
 
 
 

The Hottest Photos of Victoria's Secret Fashion Show 2013