big data @ work: Dispelling the Myths, Uncovering the Opportunities; Thomas H. Davenport, Harvard Business Review Press, Boston, MA; 2014, 225 pp.
Admittedly skeptical about big data and its surrounding hype until he began researching it in 201l, Prof. Davenport now calls its importance “substantial.” Consequently, he explains the goal of his book, due out in February, is not to sell executives on big data but to help them make effective decisions about it because “there is little doubt that analytics can transform organizations, and the firms that lead the charge will seize the most value.”
Davenport is professor of IT and management at Babson College, a research fellow at the MIT Center for Digital Business, a senior advisor to Deloitte Analytics, and the cofounder and research director of the International Institute for Analytics. He begins his 18th book by explaining why big data is important to business organizations. He continues with seven chapters on the following topics:
• What people and companies are beginning to do with big data in key industries and functions.
• How organizations can decide what business objectives to achieve with big data, whether to pursue data discovery versus production applications, and how rapidly to move on big data opportunities.
• The skills a data scientist needs and how big data will change management behaviors.
• Infrastructural technologies for managing big data, like Hadoop and MapReduce, plus useful analytical approaches such as machine learning and visual analytics.
• What organizations need—beyond smart people and new technology—to succeed with big data.
• The learning one can extract from start-ups and online firms like LinkedIn, Kyruus and Operating Analytics.
• What large, established companies like UPS, United Healthcare and Macys.com are doing with big data. This chapter also advances an idea Davenport calls “Analytics 3.0,” which describes how companies can combine the best of small data and traditional analytics with the big data approach.
Each chapter, concludes with action-oriented questions he feels management teams should be asking and answering in order to harness the power of big data.
“Mobilizing your C-suite for big-data analytics;” Brad Brown, David Court and Paul Willmott; McKinsey Quarterly Nov. 2013; www.mckinsey.com/Insights
“Today, the power of data and analytics is profoundly altering the business landscape, and once again companies may need more top-management muscle,” write these McKinsey executives. They outline the most important tasks facing corporate leaders wishing to profit from data analytics and the “critical” questions they need to answer. The tasks fall into six areas: acquiring adequate knowledge of data analytics; defining a strategy; determining what to build, purchase, borrow, or rent; securing the necessary expertise; undertaking the surprisingly “arduous” effort to mobilize human and capital resources; using frontline tools; adding new executive roles and lines of authority.
The article conclude with examples of companies that have implemented their own answers to “three key questions” the authors’ experience suggests will bring “strategic clarity to the needed organizational changes.”
“THE GLOBAL INNOVATION 1000: Navigating theDigital Future;” Barry Jaruzelski, John Loehr and Richard Holman; strategy+business Issue 73, Winter 2013;www.strategy-business.com
This ninth annual Booz & Company study of R&D spending identifies the most widely used digital tools that are transforming innovation from the idea collection stage to product launch. Its analysis of the 1,000 public companies worldwide that spent the most on R&D as of June 30, 2013 finds their R&D spending increased by 5.8% compared to 10% during the previous two years but in line with 5.5% average annual growth since 2002.
As in previous years, the top 10 companies on its “most innovative” list (led again by Apple) beat the top 10 R&D spenders in both five-year revenue and market cap growth averages — “demonstrating once again that innovation success isn’t about how much money companies spend but how they spend it.”
“Make, Buy, or Ally? Choice of and Payoff to Alternate Strategies for Innovations”; Abhishek Borah and Gerard J. Tellis; Social Science Research Network, Sept. 2013; http://papers.ssrn.com
This working paper by Profs. Borah (U. of Washington) and Tellis (U.of Southern California) analyzes the choice of and payoff to 3,522 announcements of make, buy and ally innovation strategies for 192 firms in 108 industries over 5 years. The authors found that make and ally generate positive and higher payoffs than buy, which generates a significantly negative payoff.
They define make as a firm’s announcement to develop a new product or service internally at the initiation phase of the innovation project. Make can be starting an R&D center, research laboratory or innovation center; a new process or system; a new entity or division; or a new project for developing a product or service.
Buy is the announcement to acquire a firm or a part of one explicitly for its innovation at the initiation phase. It can involve buying patents, software or technology; research personnel; or products or services that are modified or combined with current innovations. Ally is the initiation phase announcement that two or more entities are joining to develop an innovation.
Despite its negative payoff, due among other reasons to being less reversible and flexible than make or ally, buy remains the most prevalent innovation strategy. Borah and Tellis attribute this to firms having no memory of the buy payoff and to seeing it as a quicker route to commercialization.
From their study they draw the following actions that firms should take:
• Emphasize and announce internal development and alliances.
• When considering a buy, keep in mind their prior payoff from this strategy.
• If a buy seems warranted, maximize the payoff by acquiring innovations related to the firm’s current capabilities and that promise high customer benefits.
• Increase higher buy payoff by developing acquisition experience that allows the firm to learn from prior successes and failures. They cite Cisco as an example.
“Open data: Unlocking innovation and performance with liquid information”; James Manyika et al; McKinsey Global Institute Oct. 2013; www.mckinsey.com/insights/business_technology
McKinsey estimates that open and widely available (or “liquid”) data could potentially add more than $3 trillion in economic value annually across seven “domains” of the global economy: education, transportation, consumer products, electricity, oil and gas, health care, and consumer finance. In this report they identify the “levers” through which open data can create this value in each of these domains and also explore the barriers to adoption and “enablers” for capturing value by making data more open.
The authors caution that while the benefits of open data can be self-reinforcing as individuals perceive benefits from its use and help to improve the accuracy and detail of information available, “this cycle can gather momentum only if private industry and public agencies cultivate a vibrant open data ecosystem and create data policies that provide adequate protection for all stakeholders. Companies will need to put in place the technologies and talent to collect and analyze the data. Individuals—as consumers and citizens—will need to be vigilant and savvy providers and users of open data.”
“Interviews with Entrepreneurs; Khan Academy and Ewing Marion Kauffman Foundation and; https://www.khanacademy.org/r/entrepreneurship.
Personal lessons and insights from successful entrepreneurs are delivered in videos from the Khan Academy and the Kauffman Foundation. The entrepreneurs include:
- Ben Milne, CEO of Dwolla
- Elon Musk, COE of Tesla Motors
- Danny O'Neill, president of The Roasterie
- Giles Shih, president and CEO of BioResource International
- Lara Morgan, founder of Pacific Direct
- Marc Ecko, founder of Ecko Unlimited
- Philip Rosedale, founder and chairman of Second Life and founder of Coffee and Power
- Richard Branson, chairman of the Virgin Group
- T.A. McCann, founder and CEO of Gist
- Zach Kaplan, CEO of Inventables
The Kauffman Foundation intends to add new content featuring more entrepreneurs in the near future.
Global Entrepreneurship Library (GEL); http://www.unleashingideas.org/global-resource-library/
Entrepreneurs worldwide can share their knowledge, materials and resources on this online platform launched in conjunction with Global Entrepreneurship Week and the World Economic Forum’s Summit on the Global Agenda in November.
“This platform is for entrepreneurs, by entrepreneurs,” said Thom Ruhe, vice-president of entrepreneurship for the Ewing Marion Kauffman Foundation and a member of the Global Agenda Council on Fostering Entrepreneurship, creators of the GEL. “It’s a resource that we believe will empower people at the grassroots to start and grow more successful companies.”
“Lean Goes Better with Coke—the Future of Corporate Innovation;” Steve Blank; steveblank.com, Nov. 7, 2013.
Entrepreneur-turned-entrepreneurship teacher Steve Blank writes how The Coca-Cola Company’s VP of innovation and entrepreneurship David Butler “is shaping the future of corporate innovation.”
Butler describes his role as “ to build our capability in business model innovation and to build a more entrepreneurial culture.” Blank, in his blogpost, says Butler has built “a world-class corporate innovation program” around ideas from Blank and colleagues.
The steps Butler has taken follow, beginning with “Innovation isn’t the destination, it’s the journey.” He concludes with 15 lessons learned, including “Companies will have to maintain a portfolio of new business model initiatives, not unlike a venture capital firm, and they will have to accept that maybe only 1 out of 10 initiatives might succeed.”
“Transient competitive advantage in telecoms;” Rita Gunther McGrath, video interview at http://bit.ly/HJNcbJ, Nov. 5, 2013.
Columbia University Business School professor McGrath asserts that because it’s become so difficult, if not impossible, to sustain competitive advantage, managers should accept that their advantage will be short lived and, consequently, place more emphasis on innovating new business models..
She talks in this interview at Nokia Solutions and Networks about the importance of innovation, illustrating her points with examples from the telecom industry. Drawing on her book, The End of Competitive Advantage, she describes a six-point plan for how businesses can succeed in a world of transient competitive advantage. Finally, she discusses the changing role of leaders in a transient advantage economy and the personal skills they will need.