Information technology has created a data explosion. We now record virtually every click of every visitor to every website, every search on Google or Bing, every transaction at every cash register, every call or text on cellphones, every inventory change in our supply chains and petabytes of other data on what we buy, sell, or even consider. This creates a level of visibility that managers and economists have never had before. And it creates enormous opportunities to use data to change the way decisions are made.
There have been some great case studies of how analytics have affected specific companies, but ironically, there has been relatively little systematic data on this question. Working with Heekyung Kim and Lorin Hitt, we sought to help address this gap in a research paper. We found that publicly-traded companies that were more data-driven were about 5% more productive than their competitors, a statistically significant difference.
I talk a bit about “big data” and how it can change decision-making in this short video that McKinsey recorded when the visited me a couple of months ago.
Is your organization using data more aggressively for decision-making? If not, what’s holding you back? If so, what have been the results?