- May 7, 2012
When it comes to predicting the future, your best resource (short of a soothsayer) is historical data. As data collection, storage and processing has become more sophisticated, the volume of data has exploded. A recent article in the McKinsey Quarterly, states that in the US, across most business sectors, companies with more than 1000 employees store, on average, over 235 terabytes of data – more data than contained in the entirety of the US Library of Congress.
What does this mean? It means that companies are sitting on a goldmine of insights for competitive advantage. The McKinsey Quarterly article mentions this example:
The top marketing executive at a sizable US retailer recently found herself perplexed by the sales reports she was getting. A major competitor was steadily gaining market share across a range of profitable segments. Despite a counterpunch that combined online promotions with merchandizing improvements, her company kept losing ground.
When the executive convened a group of senior leaders to dig into the competitor’s practices, they found that the challenge ran deeper than they had imagined. The competitor had made massive investments in its ability to collect, integrate, and analyze data from each store and every sales unit and had used this ability to run myriad real-world experiments. At the same time, it had linked this information to suppliers’ databases, making it possible to adjust prices in real time, to reorder hot-selling items automatically, and to shift items from store to store easily. By constantly testing, bundling, synthesizing, and making information instantly available across the organization—from the store floor to the CFO’s office—the rival company had become a different, far nimbler type of business.
The amount of data we produce is staggering and the underlying possibilities are incredible, but that doesn’t necessarily mean companies have the ability to extract true value from their data.
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