NZIM: Big Data: Management's New Big Gun; Big Data Is Revolutionising Management. Leadership, Talent Management, Decision Making, Technology Use and Company Culture Are Being Transformed by Executives Who Harness the Data Flood and Think Analytically. the Impacts, Implications and Opportunities Big Data Delivers Are Both Profound and Imperative. by Reg Birchfield
Byline: Reg Birchfield
Advanced weaponry will, more often than not, underpin a successful revolution. And make no mistake, big data's addition to management's performance-effectiveness arsenal is just such a killer application.
Organisations that understand and effectively deploy the torrent of statistics they can now harness, are capturing competitive territory. On the other hand, executives that cling to old-fashioned and often flawed methods of metric choice will inevitably follow the cavalry into the Valley of Death.
Thorsten Engel, Wellington-based consulting partner and leader of Deloitte New Zealand's enterprise information management team, believes big data is revolutionising management and having a "massive" impact on organisational culture. "Big data challenges managers to be more fact based and savvy about the decisions they make."
Britain's Economist magazine's Intelligence Unit's survey of big data in 2012 concluded that the global business landscape is "being shaped by data as never before". The sheer magnitude of data being produced is staggering. Google's chief executive, Eric Schmidt, believes the world creates 5 exabytes of data every two days. That's roughly the same amount created between the dawn of civilisation and 2003. And as the volume of data generated accelerates exponentially, so the cost of data storage plummets.
America's Massachusetts Institute of Technology academics Andrew McAfee and Erik Brynjolfsson, believe smart leaders are using big data to drive a management revolution. "It is a transition that executives need to engage with today," they say. But they also concede that, as with any revolutionary change, becoming big data-enabled presents some significant management challenges.
And managers wedded to decision-making based on gut, intuition and inflated belief in past practice are foremost among the resistors to change. "In an organisational culture where the loudest voice wins the argument and decisions are made intuitively, adopting an evidence-based approach and leveraging big data can be a huge challenge," says Deloitte's Engel.
Big data tools are designed to support decision-making, not replace personal judgement, he says. "The tools are fed and informed by big data concepts that help managers make more consistent and sound judgements. Like an automatic pilot in a plane, they serve as back-up to ensure that things stay within a given set of parameters."
Businesses of almost every scale and size can utilise big data concepts, he says. "Even if you only sell coffee and snacks or run a franchise operation, it's not uncommon to seek answers in big data on say, peer profitability, foot traffic and conversion ratios or how rental costs and overheads might compare."
Engel concedes that New Zealand managers' response to big data is somewhat mixed. "Many managers pride themselves on their kiwi ingenuity and don't always use deep analysis to find answers to complex questions. They are comfortable making decisions based on gut-feel and intuition."
But where Deloitte has introduced companies to big data techniques or undertaken deep analytics, it often finds that commonly held, existing beliefs are incorrect. In those cases, the consultancy corroborates intuitive assumptions with hard facts to both quantify and monetize the findings.
McAfee and Brynjolfsson wrote in Harvard Business Review http://hbr. …