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Big Data, Insights and Decision Making

Today, we are living through an explosion in the amount and quality of all kinds of available information. Society is facing a deluge of data and there isn’t even a slight indication that this information glut will soon be halted.

The below statistics on data creation evidently highlight the fact that no one is going to stop creating information.

As of 2013, experts believed that 90% of the world’s data was generated from 2011 to 2012.

In 2018, more than 2.5 quintillion bytes of data were created every day.

At the beginning of 2020, the digital universe was estimated to consist of 44 zettabytes of data.

By 2025, approximately 463 exabytes would be created every 24 hours worldwide.

As of June 2019, there were more than 4.5 billion people online.

80% of digital content is unavailable in nine out of every ten languages.

In 2019, Google processed 3.7 million queries, Facebook saw one million logins, and YouTube recorded 4.5 million videos viewed every 60 seconds.

Netflix’s content volume in 2019 outnumbered that of the US TV industry in 2005.

By 2025, there would be 75 billion Internet-of-Things (IoT) devices in the world.

By 2030, nine in every ten people aged six and above would be digitally active.

Source: SeedScientific

In the US, private companies now collect and sell as many as 75,000 individual data points about the average American consumer. And that number is miniscule compared with future expectations.

Why so much interest in customer data? Because the right data can tell business decision makers which customers to avoid and which they can exploit based on the company’s strategy and its stated objectives.

While it’s important to appreciate the benefits of data, we also need to acknowledge and respond to its drawbacks.

Just as people often confuse credit cards for currency, information alone is futile. The process of creating intelligence is not simply a question of access to information.

Rather, it is about asking the right questions, and collecting the right data.

You need a lot of pixels in a photo in order to be able to zoom in with clarity on one portion of it. Similarly, you need a lot of observations in a dataset in order to be able to zoom in with clarity on one small subset of that data.

Source: Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are by Seth Stephens-Davidowitz.

Your business performance will not improve through Big Data alone. You need Rich Data. Deep Data. Even if it comes in the form of Small Data.

The biggest reason investments in data analytics fail to payoff, though, is that most companies are choking on data. They have lots of terabytes but few critical insights.

Instead of being adequately informed, they are exceedingly informed because they are taking much of what they already have for granted.

We are exceptional at storing information but fall short when it comes to retrieving the same information. As a result, we get overloaded.

Some important questions to consider before investing in new data:

  • Is more information necessarily good?
  • Does it really improve the decision-making process?
  • Can you extract value from the information you already have?
  • Are you overwhelmed but underserved by today’s information sources?
  • How much of the data under your possession is useful, and how much of it gets in the way? That is, what is your data’s Signal-to-Noise ratio?

What are the ensuing problems of information overload?

  • Indecisiveness due to paralysis by analysis. The endless analysis is so overwhelming making it difficult to know how and when to decide.
  • Endless argumentation. In the era of limitless data, there is always an opportunity to crunch some numbers, spin them a bit and prove the opposite.
  • A total reliance on evidence-based decision making can undermine logical approaches to deliberation and problem solving. The solution is not always Big Data. The judgement of humans and small data is often necessary to help. We cannot just throw data at any question. Data, whether Big or small, and humans compliment each other.

The growth in the amount of data without the ability to process it is not useful in and of itself. Once data has been analyzed, it needs to be summarized in an easy-to-understand way and presented visually to enable decision makers apply their own expertise and make their own judgements.

Although Big Data offers us an opportunity to analyze new kinds of information and identify trends that have long existed but we hadn’t necessarily been aware of, there are a few things that it does not do well.

  • Data analysis is quite bad at narrative and emergent thinking.
  • It fails to analyze the social aspects of interaction or to recognize context. Human beings are undoubtedly good at telling stories that incorporate multiple causes.
  • Big Data also fails to identify which correlations are more or less likely to be false. The larger and more expansive the datasets, the more correlations there are, both false and true.

Correlation versus Causality is a huge issue in data analysis. The mere fact that two random variables are correlated does not automatically imply causation.

To test for causality, not merely correlations, randomized, controlled experiments (also called A/B Testing) are necessary.

  • People are divided into two groups.
  • The treatment group is shown and asked to do or take something.
  • For the control group, the status quo is maintained.
  • Each group is monitored how it responds.
  • The difference in the outcomes between the two groups is the causation.

Undertaking controlled experiments help us learn interventions that work and those that do not, and ultimately improve our decision making.

As you can see, the power of data lies in what business teams do with it. Clearly define enterprise data-use cases, aligning them with business strategy.

You don’t always need plenty data to create key insights that inform decision making. You need the right data blended with other insights and observations gathered offline.

Information is now plentiful and inexpensive to produce, manipulate, and disseminate. Almost anyone can add information. The big question is how to reduce it and base critical decisions on only a tiny sampling of all available data.

Thanks for sharing:

Related posts:

  1. Building Trust in Your Data, Insights and Decisions
  2. Converting Data Into Insights: The Right Technology Alone is No Guarantee of Success
  3. Finance Analytics: Using The Right Data to Generate Actionable Insights
  4. Turning Information into Knowledge for Better Decision-Making
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Leading in Uncertain Times

One of the biggest challenges facing business leaders today is making the right decisions that will ensure their organizations succeed, survive, and remain competitive in an increasingly uncertain and complex environment.

A recent post, The best way to lead in uncertain times may be to throw out the playbook, by Strategy+Business has several good points.

The article is about the COVID-19 pandemic, how global companies navigated through the crisis, and how best to prepare for future disruptions. Here are some key points and my comments.

  • Rather than follow a rigid blueprint, executives must help organizations focus on sensing and responding to unpredictable market conditions.
    • Comment: Senior leaders play a vital role in providing clarity about the organization’s strategic direction, creating alignment on key priorities to ensure the achievement of enterprise objectives, and ensuring the business model is continuously evolving to create and capture value in the face of uncertainty. They must not rest on their laurels and stick to the beliefs and paradigms that got them to where they are today and hope they will carry them through tomorrow. Regulatory changes, new products, competition, markets, technologies, and shifts in customer behavior are upending many outdated assumptions about business success. Thus, the businesses you have today are different from the ones you will need in the future hence the importance of continuously sensing changes in the global economy. Employees and teams often feed off the energy of their leaders and tend to focus their attention where the leader focuses attention. If the leader is comfortable with current business practices and rarely embraces the future or challenges the status quo, then the team is highly likely to follow suit.
  • When it became clear that supply chains and other operations would fracture, organizations began scenario planning to shift production sources, relocate employees, and secure key supplies.
    • Comment: Instead of using scenario planning to anticipate the future and prepare for different outcomes, it seems most of the surveyed organizations used scenario planning as a reactionary tool. Don’t wait for a crisis or a shift in the market to start thinking about the future. The world is always changing. As I wrote in The Resilient Organization, acknowledge that the future is a range of possible outcomes, learn and develop capabilities to map out multiple future scenarios, develop an optimal strategy for each of those scenarios, then continually test the effectiveness of these strategies. This does not necessarily mean that every change in the market will impact your business. Identify early warnings of what might be important and pay closer attention to those signals. In other words, learn to separate the signals from the noise.
  • The pandemic forced the organization’s senior management team to re-examine how all decisions were made.
    • Comment: Bureaucracy has for a very long time stood in the way of innovation and agility. To remain innovative and adapt quickly in a fast-changing world, the organization must have nimble leadership and an empowered workforce where employees at all levels can dream up new ideas and bring them to life. Identifying and acting on emerging threats and potential opportunities is not the job of the leader alone but every team member. To quote Rita McGrath, in her book Seeing Around Corners, she writes, “Being able to detect weak signals that things are changing requires more eyes and ears throughout the organization. The critical information that informs decision-making is often locked in individual brains.” In addition to the internal environment, the leader must also connect with the external environment (customers, competitors, regulators, and other stakeholders), looking for what is changing and how.
  • It’s worthwhile for leaders of any team to absorb the lessons of sense-respond-adapt, even if there is no emergency at hand.
  • Sensing: Treat the far-flung parts of your enterprise as listening stations. The question leaders must ask is, “What are we learning from our interactions beyond the usual information about costs and sales?” Train your people to listen for potentially significant anomalies and ensure that important information is not trapped in organizational silos.
    • Comment: Cost and sales data are lagging indicators that reveal the consequences or outcomes of past activities and decisions. Although this information can help leaders spot trends by looking at patterns over time, it doesn’t help understand the future and inform what needs to be done for the numbers to tell a different story. In addition to lagging indicators, pay attention to current and leading indicators and understand the relationship between these indicators and outcomes.
  • Responding: Improve communication across intra- and inter-organizational boundaries. Leaders should view business continuity as an essential function that acts as connective tissue for the enterprise.
    • Comment: In addition to creating mechanisms that allow the free flow of information both inside and outside the organization, decision-makers should also be comfortable receiving information that challenges their personal view of the world, even if it’s not what they want to hear. Create a culture of psychological safety where people are not afraid to share bad news for fear of getting punished, but rather are acknowledged and rewarded for speaking up. Leveraging the diversity of thought enables leaders to anticipate the future as an organization, decide what to do about it collectively, and then mobilize the organization to do what’s necessary.
  • Adapting: Challenge assumptions, and question orthodoxies. There’s always the temptation to mitigate threats simply by applying existing practices harder and faster. One way to get at those deeper issues and encourage double-loop learning is to ask, “What needs to be true for this to be the right approach?”
    • Comment: In an increasingly uncertain environment, it’s difficult to survive and thrive with an old business model or outdated technologies. Many businesses fail because they continue doing the same thing for too long, and they don’t respond quickly enough and effectively when conditions change. As a leader, stay curious and connected to the external environment, look for market shifts, understand what needs to be regularly refreshed and reimagined, adopt new technologies and capabilities, and adapt in ordinary times but also during times of transition. Unfortunately for many leaders, it’s just more convenient for them to continually downplay the fact that conditions are changing than take the appropriate course of action that drives business success.

How are you preparing your organization for potential future disruptions?

Thanks for sharing:

Related posts:

  1. Reimagining Forecasting in Uncertain Times
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The Collaborative Organization

These days the term collaboration has become synonymous with organizational culture, creativity, innovation, increased productivity, and success.

Let’s look at the COVID-19 pandemic as an example. At the peak of the crisis, several companies instructed their workers to adopt remote working as a health and safety precautionary measure.

Two years into the pandemic, they are now asking their employees back to the office full time or are planning to adopt a hybrid model.

The need to preserve our collaborative culture and accelerate innovation are two of the top benefits being cited by organizational and team leaders for bringing workers back.

Collaboration is indeed essential for the achievement of team goals, functional objectives, and the overall success of the organization.

Today’s breakthrough innovations are emerging from many interacting teams and collaborative relationships.

When teams, functions, and organizations collaborate, the whole is greater than the sum of its parts; group genius emerges, and creativity unfolds.

But, what makes a successful collaboration? What are the key enabling conditions?

  • It extends beyond the boundaries of the organization. Business success is a function of internal and external relationships. Instead of viewing your business in vacuo, understand that you are part of an ecosystem. External to your organization, who do you need to partner with to enhance your value creation processes, achieve/exceed your objectives, or successfully execute your strategy?
  • Ensure the objectives are clear and there is shared understanding by everyone. Unclear objectives are one of the topmost barriers to team and organizational performance.
  • Foster a culture that encourages opinions and ideas that challenge the consensus. People should feel free to share their ideas and not hold back for fear of others penalizing them or thinking less of them. Collaboration is hindered when one or two people dominate the discussion, are arrogant, or don’t think they can learn anything from others.
  • Groups perform more effective under certain circumstances, and less effective under others. There is a tendency to fixate on certain topics of discussion amongst groups which often leaves members distracted from their ideas. To reduce the negative effects of topic fixation, members of the group should be given periods to work alone and switch constantly between individual activity and group interaction.
  • Effective collaboration can happen if the people involved come from diverse backgrounds and possess complementary skills to prevent conformity. The best collective decisions or creative ideas are often a product of different bodies of knowledge, multiple opinions, disagreement, and divergent thought processes, not consensus or compromise.
  • New technologies are making collaboration easier than ever, enabling us to increase our reach and broaden our network. Although new technology helps, it will not make your organization collaborative without the right culture and values in place. First, define what you want to achieve through collaboration then use these tools to promote creative collaboration.

How else are you championing collaboration within your organization to create value and succeed?

Thanks for sharing:

Related posts:

  1. Mapping the Organization’s Operational Processes
  2. Identifying Your Organization’s Critical Success Factors
  3. Improving Process Effectiveness In A Complex Organization
  4. The Resilient Organization
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Preparing for Geopolitical Shocks

Geopolitical instability has steadily increased over the past years, and uncertainty in the global economy is at an all-time high. Thanks to globalization and advances in technologies, we now live and work in a tightly interconnected world, one in which the boundaries that previously separated domestic from global issues have disappeared.

Threats are no longer confined to traditional political borders, social structures, and geographic boundaries. Geopolitical shifts have dramatically altered the global economic landscape and brought politics and business together.

The rise of China as an economic and politically influential power has threatened the dominance of the United States as the world’s largest economy. Although the opening of China and a market of 1.4 billion people have benefited both countries, it has also intensified competition and sparked U.S. economic and technological espionage accusations against China, leading to strained relations between the two giants.

U.S. companies operating from China have felt the impact of this tense relationship. The opposite is true for Chinese companies in the U.S.

Across Europe, national populism is on the rise and now a serious force. In 2016, the United Kingdom shocked the world when it voted to leave the European Union, generating reverberating effects across markets.

Banks and financial services companies that once benefited from the EU passporting system have had their cross-border banking and investment services to customers and counterparties in the many EU Member States impacted, causing them to reimagine their value proposition models.

The recent invasion of Ukraine by Russia is another example of a geopolitical event that has had devastating effects on human livelihood and businesses. Although the conflict between the two countries has risen over the years, I think it’s fair to say that few political analysts, governments, and businesses predicted a war to happen.

The war has created a humanitarian crisis, rattled global commodity and energy markets, caused prices to soar, and forced many international companies to temporarily suspend their Russian activities or completely cut ties with the country.

Global supply chains which are already fragile and sensitive due to the COVID-19 pandemic are now facing new challenges in the aftermath of the Russia-Ukraine crisis. Multilateral economic sanctions have been imposed on Russia. A state of affairs that was unthinkable months ago and is now threatening to derail the nascent global economic recovery from the COVID-19 pandemic.

Given the global domino effect of geopolitical events and the shrinking of the distance between markets and politics, the need to better understand and more effectively mitigate geopolitical risk has become more urgent. The business impacts, whether direct or indirect, vary by company type and industry sector.

Your company may not be able to prevent wars between nations, but you can anticipate and better prepare for geopolitical shocks:

  • Integrate strategy, risk, and performance decision-making. Consideration of risks to business success is an important part of the strategy selection and execution process, not an afterthought.
  • Develop a better understanding of geopolitical trends and how they are changing. For example, what are the megatrends in business, politics, and technology that are making geopolitical risks more diverse, prevalent, and consequential?
  • Assess the links between these geopolitical events and business performance. What are the events that matter most to your business? For example, how might current global political trends pose physical, business, and reputational risks to your parent organization?
  • Anticipate how these trends are likely to play out in the short, medium, and long terms, and develop mitigation strategies for each geopolitical scenario. Proactively anticipate and plan for radically different worlds, instead of reacting to problems as they arise
  • Review your mitigation strategies as the world changes. Are they effective enough in case of a major shock?
  • Develop capabilities for continuous learning to anticipate, address, and recover from geopolitical crises.

What do you think?

Thanks for sharing:

Related posts:

  1. Preparing for and Responding to Disruption
  2. Understanding Political Risk
  3. Globalization and Emerging Risks (Part 1)
  4. Developing the Organization’s Risk Profile
READ MORE

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