Essay: Big data

Tim McGuire, an Ivey Business Journal reporter in his work “Why Big Data is the new competitive advantage”, defines the use of big data as “large pools of data that can be brought together and analyzed to discern patterns and make better decisions (par. 1). He argues that adoption of data collection techniques will become a major determinant of competition leading to the enhanced productivity, increased quality and a wiser use of resources. McGuire refers to a research from the McKinsey Global Institute (MGI) and McKinsey & Company’s Business Technology Office which concludes that the use of data has become a fundamental part of economic success not only for businesses but also for non-profit organizations and governments. Big Data fosters innovation and increases productivity. Hence, “All companies need to take Big Data and its potential to create value seriously if they want to compete” (par. 5). According to the Ivey Business Journal reporter, there is an evidence that some businesses managed to increase their sales margins by sixty percent by encouraging data analysis.

 

How the information collection techniques are used to gain competitive advantage? For example, in medical sector data usage enables management to discover patterns of “risks and benefits” that had not been available before (par. 6). According to McGuire, others use sensor installed in the products to mine the valuable information; the recognized “knowledge then informs the creation of new service offerings and the design of future products” (par. 6). Moreover, such variety of information available will introduce “new opportunities for growth” and increase performance (par. 7). The author emphasizes that most of the companies experiencing the mentioned above benefits will be those that exist in the middle of the data flow. In my opinion, retail chain stores such as Safeway would be in this category. Furthermore, McGuire affirms that the last but not the least important gain from the Big Data would be “nowcasting” – a real-time analysis of performance such as usage of data dashboards that would enhance management’s decision-making abilities.

The Ivey Business Journal reporter proposes 5 dimensions to “leverage big data”:

• Digital information will make information more accessible

• Data in digital form will have the enhanced correctness and trustworthiness

• Big data creates opportunities for a deeper analysis of the desired field of study

• “Sophisticated analytics can substantially improve decision-making, minimize risks, and unearth valuable insights that would otherwise remain hidden” (par. 12)

• Big data encourages development of new products and ideas

According to the author of “Big Data is the new competitive advantage”, the technological “era” requires the implementation of “new management principles” (par. 23).

First factor affecting innovation is the fact that valuable data became accessible. The transparent digital information can influence sectors such as real estate that “trades on information asymmetries” by providing access to the purchase information. McGuire claims that several real estate companies have already started to “exchange perspectives on the value of properties and creating parallel sources for real-estate data” (par. 24). The wide variety of information available fosters competition, as McGuire noted, that companies are beginning to penetrate into their rivals’ “expansion plans or business constraints as revealed by facility capacity, shipping movements” (par. 25). The author claims that collaboration tends to be increased in the contemporary digital world as large corporations have noted that it is more efficient to gather information from multiple sources.

Moreover, McGuire acknowledges that with the implementation of data collection and analysis techniques it is possible to test various patterns of employees and consumer behavior. For example, McDonalds tracks the ordering preferences and flow of customers. It allows the management to test hypotheses, make better investment decisions and determine the cause of the detected behavior.