Data, Data Everywhere: Just What a CEO Needs to Know
In this new world of big data and analytics, CEOs have the opportunity to make better decisions. But they must first get comfortable with the uncertainty that comes with it.
By Kara Sprague and Steve Van Kuiken
Over the past decade, the power of data-driven decision making has fundamentally changed how organizations operate. The best companies now understand that data is at the heart of every competitive advantage; they know how to use it to develop deeper insights about their customers, markets and businesses; and they are investing in their analytic capabilities so they can turn those insights into actions.
A recent survey of more than 1,000 senior executives by MIT Sloan Management Review and Deloitte confirms the growing importance of data and analytics for business performance. It found that companies leading their industries in terms of financial performance were nearly twice as likely as laggards to say analytics is a very important part of their strategic decision making.
So it’s not surprising that a CEO’s ability to leverage data-driven insights is quickly becoming a defining characteristic of leadership. In fact, according to our research, CEOs who rely more on intuition than on analytics tend to be less confident about their company’s strategy. And 70 percent said they would
Data, Data Everywhere: Just What a CEO Needs to Know.
It’s no surprise that data analytics is changing the world. The rise of “big data” and companies like Tableau Software (NYSE:DATA), which went public last year, are just two examples. But big data isn’t just an issue for Wall Street investors or Silicon Valley entrepreneurs. It can also play a key role in the success of more traditional businesses. And if you’re a CEO or another business leader, it’s time to get up to speed on what big data can do for your organization.
The value of analytics
Let’s begin by defining our terms. “Big data” is a term used to describe massive amounts of information that can be analyzed for trends and insights. Big data can include everything from credit card transactions and Twitter feeds to purchasing habits or other customer behavior. But its real purpose is to help businesses make better decisions by looking for patterns in our society — specifically in the way we consume goods and services.
To be clear, big data doesn’t tell us anything we didn’t already know was possible using more traditional forms of analysis. For example, we’ve long known that people tend to eat ice cream more in the summer when it’s hot outside than they do in the
Data, Data Everywhere: Just What the CEO Needs to Know
The number of blog posts and articles about data has grown exponentially over the past few years. These blogs and articles can be found everywhere, from LinkedIn and Forbes to The Wall Street Journal and The New York Times. The amount of data that is being generated is now measured in zettabytes (about a trillion gigabytes). That’s a lot of data!
How much data is there?
IBM estimated last year that 90% of all the world’s data had been created in just the past two years. And according to IDC, there will be 35 zettabytes generated by 2020. That’s 35 with 21 zeros after it.
How are we using it?
According to a recent article in CIO Magazine, companies are using this data in three ways: 1) first-party data, 2) third-party data, and 3) open source data. First-party data is what companies have collected on their own customers through sales transactions, social media interaction or website activity. Third-party data is information about customers that companies purchase from others. And open source data comes from public sources such as social media posts, news articles and government information.
In the words of the noted philosopher, Yogi Berra: “The future ain’t what it used to be.” In other words, times have changed and you had better change with them.
So what does this mean for a CEO? It means that you need to get smarter about data.
I don’t mean simply data about your business but data in general. You need to learn how to make good use of all the data that is becoming available. And not only how to make use of it yourself but also how to instill a culture within your organization that will embrace the opportunities presented by this new source of knowledge.
There are four key reasons why CEOs need to become more familiar with data:
The business world is awash in data. But what do you do with all that information? How do you know it’s the right stuff or even accurate? What should you be asking for? And how do you manage your data supply chain? In this blog, I hope to answer some of these questions and to get conversations going about the business value of data, its management, and its use.
For starters, I think we need to recognize that we’ve moved from an age of information scarcity to one of information surfeit. That’s not necessarily a good thing. “It’s easy to get a data dump,” says Michael Schrage, research fellow and innovation guru at MIT Sloan School’s Center for Digital Business. “The real challenge is getting actionable insight.”
In today’s business world, data is omnipresent. It has quickly become a valuable resource for every company to tap into.
But as the amount of data in existence continues to grow exponentially, it becomes increasingly difficult for companies to manage and effectively use the data they have.
Some companies opt to hire a chief data officer (CDO) to handle this task but are finding that this person often needs a very diverse skillset. According to The Economist, in the past, a CDO “might have been expected to understand databases and SQL queries, but now he or she also has to know about natural-language processing, machine learning and deep learning.”
The ideal candidate will ideally have strong leadership skills in addition to an analytics background. The Economist also describes how many of these skills are not easily found in one person.
“So who should be a CDO? It is hard to find someone with the right combination of business acumen and technical expertise,” the publication says. “In most cases, those with strong programming skills lack experience leading large organizations; those with management experience lack the coding chops.”
One way that companies have chosen to deal with this problem is by hiring a team of data scientists instead of appointing one individual as chief data officer. This team can
The role of the CEO is ever changing. As the world becomes increasingly digital, CEOs must deal with a host of new challenges. One of these challenges is how to best use data analytics and technology for growth, efficiency and cost reduction.
Data analytics can provide a CEO with a wealth of information about their business, customers and competitors. For example, data from call centers can be analyzed to find ways to improve customer service, loyalty and retention.
However, too often, companies are sitting on mounds of unstructured data that they aren’t sure how to best use or even what questions they should ask. It’s important that the CEO work with their team to decide which kinds of data will provide useful insights and then figure out how best to analyze them.