439. Big data - 1 : The next frontier for innovation, competition, and productivity

Big data:

The next frontier for

innovation,

competition,

and

productivity

 

The amount of data in our world has been exploding, and analyzing large data sets—so-called big data—will become a key basis of competition, underpinning new waves of productivity growth, innovation, and consumer surplus, according to research by MGI and McKinsey's Business Technology Office.
Leaders in every sector will have to grapple with the implications of big data, not just a few data-oriented managers. The increasing volume and detail of information captured by enterprises, the rise of multimedia, social media, and the Internet of Things will fuel exponential growth in data for the foreseeable future.

Deep analytical talent: Where are they now?

1. Data have swept into every industry and business function and are now an important factor of production, alongside labor and capital.
2. There are five broad ways in which using big data can create value.
First, big data can unlock significant value by making information transparent and usable at much higher frequency.
Second, 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, and therefore exposes variability and boost performance. Leading companies are using data collection and analysis to conduct controlled experiments to make better management decisions; others are using data for basic low-frequency forecasting to high-frequency now-casting to adjust their business levers just in time.
Third, big data allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services.
Fourth, sophisticated analytics can substantially improve decision-making.
Finally, big data can be used to improve the development of the next generation of products and services. For instance, manufacturers are using data obtained from sensors embedded in products to create innovative after-sales service offerings such as proactive maintenance.

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Distilling value and driving productivity from mountains of data

3. The use of big data will become a key basis of competition and growth for individual firms. From the standpoint of competitiveness and the potential capture of value, all companies need to take big data seriously. In most industries, established competitors and new entrants alike will leverage data-driven strategies to innovate, compete, and capture value from deep and up-to-real-time information.
4. The use of big data will underpin new waves of productivity growth and consumer surplus.
5. While the use of big data will matter across sectors, some sectors are set for greater gains.
6. There will be a shortage of talent necessary for organizations to take advantage of big data.
By 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.
7. Several issues will have to be addressed to capture the full potential of big data.