You’ve no doubt heard the oft-repeated refrain about the importance of big data. In fact, your business probably has data collection and analysis strategies in place already. But before you lean back in your executive’s chair and put your feet up on your desk, thinking your work here is done, think again.
In the world of big data, things are continuing apace – CPUs are becoming faster; data storage is becoming cheaper; and proliferation of smartphones and the Internet of Things (IoT) allows us to collect more data more easily than ever before. If you’re not keeping up, you’ll be left behind in the dust as your competitors outstrip you.
Heed the following cautionary tale, which we like to call …
The Woeful Account of People Express Airlines
People Express Airlines (PEA) was once a highly successful and growing airline, focused on people skills, visionary leadership and maximising revenue. All of which sound like good elements of a profitable business, right?
Sadly, these qualities alone were not enough. PEA was put out of business in less than 3 months, because its competitors were using what PEA’s founder and CEO called “sophisticated computer programs”, which could immediately match or undercut PEA’s prices. PEA simply could not respond to this onslaught by big data.
So how do you avoid being another cautionary tale? Ask yourself: are you doing everything you could be with your data to keep your competitive edge?
What should you do with your data?
The beauty of big data is that its possibilities are endless. You could, for example:
- Use information about worker productivity or product inventories to improve efficiency
- Tailor your products and services more specifically to your customers
- Use analytics to assess risk and improve decision-making
And that’s just to name a few.
The flip-side of having endless possibilities, however, is that it can be difficult to decide where to focus your efforts – and your dollars. Those reams of numbers and spreadsheets can easily become overwhelming. But before you run for the hills, Hilary Mason, founder of Fast Forward Labs and co-author of Data Driven: Creating a Data Culture, has three simple questions that can help you formulate a plan with actionable results, and avoid the trap of analysing data simply because it’s there.
- What data do you have?
- What data should you have?
- What assumptions do you have about your business that you can validate with your data?
As Stephen Covey says in his book The 7 Habits of Highly Effective People, “Begin with the end in mind.”
Here are some examples of firms that have used big data in effective – and perhaps unexpected – ways to their competitive advantage.
A Starbucks on every corner
Ever wonder how so many Starbucks can exist so close to each other? It’s not just dumb luck, or Starbucks playing the numbers game. Starbucks uses big data – location-based data, street traffic analysis, demographic information and data culled from other locations – to work out what precisely makes a great location, and uses that information to pinpoint the location of each Starbucks and ensure every outlet remains profitable – even if they are only a block apart from each other.
Google and “people analytics"
It will come as no surprise that Google is all about big data. In fact, they are so into data, their HR department is called “People Operations”, and every people decision is made using data and analytics, including recruitment and management. Google has developed an algorithm for predicting which candidates have the best chance of succeeding when hired; they’ve developed an algorithm to predict which employees are most likely to be a retention problem, so they can address the problem before there is one. They’ve even found ways to maximise fun in the workplace – having proved (using data, of course) that fun is a major factor in talent attraction, employee retention and workplace collaboration.
This might seem counter-intuitive for a department that typically relies on trust and relationships, which are not so measurable in numbers. But at Google it is showing measurable results, with each employee on average generating $1 million in revenue. And when you consider your employees are your number-one resource, it’s a no-brainer to do as much as you can to attract and keep the right talent.
T-Mobile reduces churn rate by 50%
Telecom companies collect swathes of information on their customers – how long our calls are and when we make them; how many hours we binge-watch Netflix; how often we text our mates during said binge – all of which amounts to a huge collection of data. But American company T-Mobile has put this data to good use, and as a result reduced churn rates by 50%.
They’ve achieved this remarkable reduction in turnover by identifying their most highly influential customers – those with large social networks, who could potentially lead others in their network to switch providers if they decided to do so – and giving them perks. They also stay on top of usage trends by region, customer service inquiry patterns and purchases by location.
What does this look like in practice? Let’s say a highly influential customer has moved house, and the data shows they are experiencing more dropped calls from their mobile phone than usual. A company representative can reach out to the customer and offer them a femtocell and a bill reduction before they’ve even complained.
By providing a personalised, tailored service that rewards customer loyalty and proactively addresses their customers’ concerns, T-Mobile has managed to leapfrog Sprint to become the second biggest telecom company in the US.
"Begin with the end in mind"
In all three examples, these companies have heeded Covey’s words, and begun with an end result in mind – Starbucks wanted to learn what made a winning location; Google went in with the goal to attract and retain the best employees possible; and T-Mobile aimed to reduce customer turnover.
So what do you want to achieve in your business, and how can big data get you there? Leave your thoughts in the comment section below.
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