Is your business addicted to data?
The digital lives we lead create mountains of data, from the exercise stats compiled by our wearable devices to the trails we leave as we click, tap, type and swipe our way around the internet. The search terms we enter and the transactions we make online are sliced and diced by firms eager to understand our preferences and point us towards yet more content that might satisfy these.
If the proliferation of data continues at its present rate, it’s likely that more than a yottabyte (a million trillion megabytes) will be generated annually by 2030.
But, even though 97% of businesses have invested in big data applications, the average company analyses only about 40% of the data it collects. According to a recent European survey by cloud computing firm VMware, 83% of business leaders believe that their firms have more data than they need.
How to get more from data
As a recession looms, these executives are worried about getting lost in the weeds. They fear that their inability to unlock the full value of all the material at their disposal is making their enterprises less innovative and reducing their ability to spot new growth opportunities.
“Clients are becoming addicted to data,” reports Ben Gallagher, co-founder of B+A, a strategic consultancy and research provider. “Given the growth of ecommerce and direct-to-consumer channels, there’s a belief that you have to track everything to hyper-target shoppers. But this notion serves as a safety net for firms rather than necessarily clarifying any business decisions they make. The problem is that the data tells us only what’s happening right now. That changes all the time in practice, so businesses feel that they have to keep gathering more data to keep abreast.”
Marc Warner is the co-founder and CEO of Faculty, a specialist in artificial intelligence. He believes that business leaders are being naive when it comes to data collection.
“There’s a prevailing wisdom that more data leads to better decisions. But, if we have 50 times more data than we did in 2010, why aren’t we making decisions that are 50 times better?” Warner says. “Businesses collect a load of data, which doesn’t give them the insights they were hoping for, so the answer from their tech teams is ‘collect even more of it’. If you’re looking for a needle in a haystack, there’s no point in making the haystack bigger. We’ve even heard from CEOs, surrounded by 50 flashing dashboards, that they can’t say ‘no’ to their tech teams. They don’t want to be seen as dinosaurs.”
Combining quantitative and qualitative data
Gallagher argues that it’s a good time for leaders to take a fresh approach, given the seemingly unpredictable turn the world has taken in recent years.
“Which data analyst foresaw Brexit, Covid or the rise of Trump? These events have shown that the human condition is way more unpredictable than the data allows for,” he says. “We do need baseline data and analysis, but we also need to focus on why people are motivated to take action and why they make specific choices. If I’m a tea-bag manufacturer and my data tells me that most people like a cup of tea at 9am, for instance, then I need to join them, make a cuppa and find out why.”
Indeed, Gallagher has encouraged his staff to “get out into the world” and try to make sense of it using as many stimuli as possible.
“I want them to develop their intuitive muscles so that we can develop strategies in tune with where the world is and where it’s going,” he explains.
This more intuitive approach to analysis has also found a champion in Euan Andrews, CEO of digital consultancy xDesign.
His advice to businesses would be to “take the time to work out what insights you’re looking to gain from data collection and build out your strategy and processes from there. Then just collect what you need. I don’t think we need a data detox, but we do need an insight resurgence. We need to think of data as just one powerful strand in the decision-making process.”
That data doesn’t have to be tech-based. It could be the learnt experiences of employees or the reporting of respected publications, says Andrews, who adds: “It’s only by gathering all these strands together that you can make informed decisions.”
Do you need a data detox?
Although it’s clearly still vital for businesses to gather and analyse data, a partial detox to clear employees’ heads wouldn’t hurt, according to Warner.
That matters, because the human brain has its limits, he notes. “It can only consume so much data. Once you get past that point, you lose all understanding.”
With this in mind, Faculty has created AI-based software that’s designed to help organisations sift through the mass of irrelevant material.
“Its users can determine which data is important by unpicking the cause-and-effect relationships in their business,” Warner says. “We start with a decision that an organisation will have to make – for instance, how many hospital beds the NHS could expect to need during the Covid crisis. You figure out what data you require to inform that decision, rather than compiling several data sets that don’t closely relate to it.”
Organisations that have spent heavily on data collection and analysis are particularly eager to see a return on that investment, he adds, predicting “a huge trend over the next few years in how they best make use of their assets – through both data and gut instinct”.