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There are many ways to think about the recent explosion of digital technologies and data. Not surprisingly, the ubiquity of personal information that can be easily and cheaply collected from online and offline transactions, social media and sensors embedded in a growing array of physical objects such as TVs and smartphones, can trigger suspicion, anxiety and fear.
Organizations that sweep up, store and analyze that information are often unsure how to use it.
The leaders of some of the world’s top firms who gathered for the spring 2016 Innovators’ Roundtable approach the vast quantities of unstructured data — often called “big data” — as an opportunity to create value for their customers and, in the process, unlock new ways to grow their businesses.
The roundtable, hosted by Darden’s Batten Institute for Entrepreneurship and Innovation in Washington, D.C., brought together senior leaders from 3M, Abundant Power, Capital One, Celgene, Corning, Danaher, Eastman Chemical, IBM, Recast Energy, Siemens and Smithfield.
Led by Darden Professors Rajkumar Venkatesan, Yael Grushka-Cockayne and Ed Hess, the executives explored the use of data and analytics to make faster decisions, lower costs, predict and better meet customer needs, and create innovative products, services and business models. They also discussed the challenges their organizations and industries face as they become increasingly data-driven.
Several best practices emerged from the daylong discussion.
It’s easy to get caught up in the hype surrounding the unprecedented volume of never-before-examined data and be dazzled by this “new, shiny thing,” as one executive put it. “Too often, big data becomes the goal.”
Big data is touted as a way to boost innovation. However, before business leaders start capitalizing on the insights gleaned from the torrents of data they collect and analyze — and before they innovate — they should have a clear understanding of the “why.” As one executive noted, “all efforts should connect to the purpose of your company. Why do you innovate? Toward what end are you using data? Does it really serve your purpose?” In other words, big data is most effective when it’s tied to the company mission and aligned with its strategy.
For example, Celgene’s mission is to deliver innovative, life-changing drugs to its patients. Therefore, using data to dramatically cut drug development time and cost makes perfect sense.
Digitization of data enables companies to innovate not only their products and services but also their business models. For example, firms that used to make money selling and servicing industrial equipment can now rethink their customer value proposition. In addition to selling reliable jet engines, gas turbines and medical equipment, they can offer customers all kinds of efficiencies and performance improvements by combining data generated by that equipment with advanced analytics.
Take Siemens. The company’s industrial data analytics platform called Sinalytics generates new value for its customers by predicting and preventing equipment faults, thereby saving energy, reducing costs and increasing operating efficiency. One of Siemens’s customers, a Spanish railway company, operates more than 20 Siemens high-speed trains. As a result of predictive maintenance, the trains running between Barcelona and Madrid have achieved a punctuality rate of 99.9 percent.
Innovation requires the right culture.
While startups, by their very nature, are innovative, large established corporations that are good at strategy execution are notoriously bad at out-of-the-box thinking. They also are less agile than startups. Companies trying to leverage data and analytics to drive innovation should be able to quickly respond to data-driven insights. Therefore, leaders in large firms need to work hard to build an entrepreneurial culture that fosters agility and innovation.
Senior leaders from Siemens, IBM and Capital One talked about the mechanisms their organizations use to promote collaboration, creativity and entrepreneurship.
Siemens holds hackathons, where even the most junior employees win innovation awards. Respect for innovative ideas, however crazy they may seem, permeates its culture.
Capital One took steps to build an agile, entrepreneurial culture by creating small, five- to eight-member squads that operate like mini startups. While the leaders figure out which problems to solve, squads collaborate with each other to figure out the best solutions to those problems. Even though squads have the high degree of decision-making autonomy, which is highly motivating, they are tightly aligned with Capital One’s mission.
And IBM has an internal crowdfunding mechanism iFundIT to pitch and fund new ideas. Employees are given $2,000 of “IBM money,” which they can use to fund the projects they believe have the most potential.
Digital data is here to stay. It’s reshaping businesses and industries, changing the ways companies create and capture value. To compete in a data-driven economy, business leaders must become savvier about where data fits into their businesses. They must learn how to convert the torrent of data flowing from every part of the global economy into actionable insights. And last but not least, they must build a culture that encourages and rewards the use of data to drive innovations aligned with the company purpose.
Gosia Glinska is associate director at Darden’s Batten Institute for Entrepreneurship and Innovation.
Venkatesan is an expert in customer relationship management, marketing metrics and analytics, and mobile marketing.
Venkatesan’s research focuses on developing customer-centric marketing strategies that provide measurable financial results. In his research, he aims to balance quantitative rigor and strategic relevance.
In 2012 Venkatesan published “Coupons Are Not Just for Cutting Prices” in Harvard Business Review. He also co-wrote “Measuring and Managing Returns From Retailer-Customized Coupon Campaigns,” published in the Journal of Marketing in 2012. He is co-author of the book Cutting-Edge Marketing Analytics: Real World Cases and Data Sets for Hands-on Learning.
B.E., Computer Science, University of Madras, India; Ph.D., Marketing, University of Houston
Grushka-Cockayne’s research and teaching activities focus on decision analysis, forecasting, project management and behavioral decision-making.
As an expert in the area of project management, she has served as a consultant to international firms in the aerospace and transportation industries. She is the secretary/treasurer of INFORMS Decision Analysis Society, a U.Va. Excellence in Diversity fellow and member the Project Management Institute.
B.Sc., Ben-Gurion University; M.Sc., London School of Economics; M.Res., Ph.D., London Business School
Hess is a top authority on organizational and human high performance. His studies focus on growth, innovation and learning cultures, systems and processes, and servant leadership.
Hess has authored 13 books, including The Physics of Business Growth: Mindsets, System and Processes, co-authored by Darden Professor Jeanne Liedtka; Grow to Greatness: Smart Growth for Entrepreneurial Businesses; Learn or Die: Using Science to Build a Leading-Edge Learning Organization and Humility Is the New Smart: Rethinking Human Excellence in the Smart Machine Age (January 2017), co-authored by Katherine Ludwig. His newest book is Hyper-Learning: How to Adapt at the Speed of Change (September, 2020). He has written more than 160 practitioner articles and 60 Darden cases, and his work has appeared in more than 400 global media publications.
B.S., University of Florida; J.D., University of Virginia; LLM, New York University
Data, Data Everywhere: How Top Companies Find New Opportunities to Innovate
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