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The Gold In Your Data
Recognising data’s commercial and operational potential, leading-edge companies today are spending same time and effort and dollars to build an advantaged data supply chain as their physical supply chain.
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Are you obsessing about your company’s data? You should be.
Traditionally, companies didn’t pay data much attention, regarding it as a kind of by-product that emanates from what really matters—their core operations. Sure, they used data to chart their progress and hold themselves accountable, but that was about it. Data was fragmented, localized, and hard to access—responsibility of IT and MIS teams far away from the center of action.
For leading-edge companies today, data collected and used in real time is becoming core to the delivery of value. This is the fourth key paradigm shift described in our book Beyond Great out of the seven described in this article series. Previously we discussed the exciting, new value propositions companies are offering via servitization and personalization. Well, what do offerings such as connected cars, tractors, wind turbines, and medical equipment all rely on? Data—massive amounts of it collected globally.
In the past, companies didn’t make more of their data because they couldn’t—they lacked the technical capacity. That has changed. Digital sensors attached to physical objects are cheaper than ever, as is broadband connectivity. Global population is glued to their smartphones and devices which become cheaper by the day. Cloud infrastructure? It’s cheaper and more accessible thanks to companies selling digital infrastructure as a service (IaaS). Growth of AI and ML make data ever more useful and valuable. Data is becoming ubiquitous, growing at a ferocious pace.
In addition to using data to drive new offerings, companies are making use of it in a variety of ways to transform their operations and make them more resilient. With data at their fingertips, leaders today can keep tabs on their stores, factories, fulfillment centers, and other operations in real time, no matter where in the world they happen to be. They can react quickly to changes in markets or the external environment, moving people and other assets around as needed to exploit opportunity or reduce risk. Data flows in turn allow those assets to communicate seamlessly with one another, and in today’s COVID context, to work remotely.
Recognising data’s commercial and operational potential, leading-edge companies today are spending same time and effort and dollars to build an advantaged data supply chain as their physical supply chain. And it’s not just the Facebooks and Amazons of this world who are doing it. In our book, my colleagues and I profile the farm equipment manufacture John Deere and its recent efforts to digitize and servitize its offerings. Transforming what was hitherto a low-tech industry, John Deere’s tractors are ‘intelligent’, continuously beaming data from sensors and cameras to the farmer and John Deere (with farmer’s approval). The farmer uses MyJohnDeere digital platform (or from other providers’) which combines multiple sources of data to make better decisions to improve profitability per hectare pf his farm.
To make such nextgen offerings possible, John Deere has invested big in tech. Its Intelligent Solutions Group, charged with developing digital offerings, is like a Silicon Valley startup inside the company with a presence in the Valley via its John Deere Labs. To build its sophisticated data model, powered by Amazon Web Services, it has gone much beyond its own intelligent machines to partner with players for agronomic data analytics, soil sensors, field mapping using drones, yield monitors, etc. Farmers on John Deere’s platform can share their data with third parties, increasing the value they obtain.
As my colleagues and I argue, incumbent companies seeking value from data are taking different strategic tacks. Most common is to digitize key parts of their businesses. Many consumer companies have built digital platforms to seek insights that can help customize and improve offering to their customers. Others like Siemens are developing digital platforms that allow them to co-create new solutions with their customers, and/or selectively share data with partners with specific capabilities to develop innovative solutions like Schneider, the global automation and energy efficiency company, has done. Opportunities are many.
Whichever way you slice it data today is no longer a largely valueless by-product. It’s a hidden source of gold. To succeed in the years ahead, you’ll want to do what today’s leading-edge companies are doing. Stop ignoring data and start obsessing over it.
|Boardroom comments from Rama Bijapurkar, Independent Director and Professor of Business, IIM Ahmedabad|
The easy part for India Inc. is installing sensors and acquiring data mining tech and talent. The hard part lies in making data the life blood of the organization, carrying the oxygen of data-led insights 24x7 to every function and decision node. This requires the slog of designing new organizational arterial and nervous systems. Without it, data becomes like gold locked in the vaults of Indian temples – valuable but not of real value.
Even companies claiming sophisticated data usage environments tend to use data in “batch processing of decisions” or “user query” mode (for better cross selling, pricing, credit decisions, downtime measurement, revenue forecasting etc.), all of which is still in the basement of data-use maturity.
Many new economy “digital native” start-ups do have data at the heart of their revenue generation and the way they deliver their customer promise, profitably. However, many take the easy (and risky) way out of building their business by plugging into and leveraging someone else’s customer or vendor base (think credit disbursing fin-techs). Those that choose to build customers ground up and own them and their data have the reverse challenge of old economy companies, they must learn how to build businesses.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.