Led by three McKinsey directors Richard Dobbs, James Manyika and Charles Roxburgh, the team note in their report, Big data: The next frontier for innovation, competition, and productivity, that there has been a proliferation of information owing to the abundant use of computers, mobile phones, and networked sensors in products as diverse as automobiles to washing machines. Making sense of this Himalayan mountain of information, they claim, will become a new source of competitive advantage. Capturing the trillions of bytes of information about customers, suppliers and one own operations is daunting but necessary.
CEOs at all company levels and industry sectors are affected. But tools exist to help. This is one of many ways cloud computing can be put to good use, but beyond the mining itself there is the challenge of analytics. MGI’s analysis shows that business leaders must “tackle significant hurdles to fully capture big data’s potential. The U. S. alone faces a shortage of 140,000 to 190,000 people with analytical and managerial expertise and 1.5 million managers and analysts with the skills to understand and make decisions based on the study of big data. Companies and policy makers must also tackle misaligned incentives around issues such as privacy and security, access to data, and technology deployment.”
The report identified five broadly applicable ways to leverage big data:
- Make big data more accessible and timely. Transparency, enabled by big data, can unlock a great deal of value. In the public sector, increasing access to data across separate departments can sharply reduce search and processing times. In manufacturing, integrating data from R&D, engineering, and manufacturing units to facilitate concurrent engineering can cut time to market.
- Use data and experiments to expose variability and raise performance. As organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to sick days.
- Segment populations to customize. Big data allow organizations to create ever-narrowing segmentations and to tailor services precisely to meet customer needs. This approach is well known in marketing and risk management but can be revolutionary in areas such as the public sector.
- Use automated algorithms to replace and support human decision making. Sophisticated analytics can substantially improve decision making, minimize risks, and unearth valuable insights that would otherwise remain hidden. Such analytics have applications from tax agencies to retailers.
- Innovate with new business models, products, and services. To improve the development of next-generation offerings and to create innovative after-sales services, manufacturers are leveraging data obtained from the use of products. The emergence of real-time location data has created a new set of location-based mobile services from navigation to people tracking.