Exploiting vast new flows of information can radically improve your company’s performance. But first you’ll have to change your decision-making culture.
Big data, the authors write, is far more powerful than the analytics of the past. Executives can measure and therefore manage more precisely than ever before. They can make better predictions and smarter decisions. They can target more-effective interventions in areas that so far have been dominated by gut and intuition rather than by data and rigor. The differences between big data and analytics are a matter of volume, velocity, and variety: More data now cross the internet every second than were stored in the entire internet 20 years ago. Nearly real-time information makes it possible for a company to be much more agile than its competitors. And that information can come from social networks, images, sensors, the web, or other unstructured sources.
The managerial challenges, however, are very real. Senior decision makers have to learn to ask the right questions and embrace evidence-based decision making. Organizations must hire scientists who can find patterns in very large data sets and translate them into useful business information. IT departments have to work hard to integrate all the relevant internal and external sources of data.
The authors offer two success stories to illustrate how companies are using big data: PASSUR Aerospace enables airlines to match their actual and estimated arrival times. Sears Holdings directly analyzes its incoming store data to make promotions much more precise and faster.
Buy Copies“You can’t manage what you don’t measure.”
A version of this article appeared in the October 2012 issue of Harvard Business Review.
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Practical ways to improve your decision-making process. Start CourseAndrew McAfee is the cofounder and co-director of the MIT Initiative on the Digital Economy and the inaugural visiting fellow in Google’s Technology and Society group. He is the author of the new book, The Geek Way, and coauthor with Erik Brynjoflsson of The Second Machine Age.
Erik Brynjolfsson is the director of the Stanford Digital Economy Lab, a professor at the Stanford Institute for Human-Centered AI, a research associate at the National Bureau of Economic Research, and a cofounder of Workhelix, which creates generative AI strategies and implementation plans for companies.
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