October 7, 2017

Big Data Is a Driver of Growth and Change, but Don't Assume Its Value Is Automatic

Image: http://ow.ly/rWA930fIvq8
When my colleagues and I at ROI3 were developing our initial mobile apps for English language learners to learn English terminology for special purposes, people asked about what data we were planning to collect. In trying to answer the question, I learned that we should not collect for the sake of doing so, but identify the type of data that is available to collect and then prioritize how this data will allow us to improve our service to provide the best experience for our customer.

In a blog post, Alex Brooks, founder and CEO of AE Brooks, LLC (d/b/a Entreprov), a Seattle-based firm advising clients on machine learning and business strategy, wrote: "Companies that continue to succeed in today's market will have an effective strategy for collecting relevant data about their customers." Without a proper understanding, however, big data may confuse business executives and become an impediment in growing their business into a successful venture.

SAS Institute, a North Carolina-based analytics firm, explains that big data as a term describing "the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis. But it's not the amount of data that's important. It's what organizations do with the data that matters. Big data can be analyzed for insights that lead to better decisions and strategic business moves."

In an article, "Data is giving rise to the new economy," The Economist asserts: "Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and—crucially—new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways." Furthermore, data "changes the rules for markets and it demands new approaches from regulators. Many a battle will be fought over who should own, and benefit from, data."

Image: The Economist
The article also explains that "the quality of data has changed, too. They are no longer mainly stocks of digital information—databases of names and other well-defined personal data, such as age, sex and income. The new economy is more about analyzing rapid real-time flows of often unstructured data: the streams of photos and videos generated by users of social networks, the reams of information produced by commuters on their way to work, the flood of data from hundreds of sensors in a jet engine."

While big data is becoming ubiquitous in today's global economy, risks remain in properly determining its value. In an article for TechCrunch, Jon Evans writes:
I'm not saying data is valueless. I'm not saying analytics are completely unimportant. But I am saying that before you obsess about them — and believe me, with far too many of the clients I've had, 'obsess' is the right word — ask yourself what questions you will ask of your analytics data, and what value you expect to receive. Don't assume that its value is automatic, and just needs to be mined, when all too often it is fool's gold at best. Don't collect data for its own sake, collect it to answer specific questions — and know what those questions are well before you launch.
How is your company collecting and using big data?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

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