Big data, the next opportunity or just a fad?
I’ve realised the value of information since early in my career. In a gap year before uni as the Office Assistant in a small owner run wholesaling business, stock not being correctly counted, shelved and invoiced meant accounting or customer problems down the track. The importance of information was not limited to stock numbers; fully calculating costs and correctly setting prices were also essential. I came to similar conclusions about the value of information at British Petroleum since part of my management accounting role was stock valuation at BP wholesaling facilities and at every BP petrol station in New Zealand. And I still remember a human resources uni paper with an open topic about work where I chose to write about the ‘information age’ and leisure time. While the common predictions at that time of the information age allowing people more leisure time have not exactly eventuated, the wise use of information has supported good decision making in many organisations and spurned the development of some major sectors. The challenges are to understand the difference between data and information, and to find the appropriate balance between information gathering and decision making.
Data comes from Latin meaning ‘a thing given’, the sense of something of value being handed on. Nowadays the common understanding is a ‘body of facts or information.’ Somewhere over time, perhaps when data became a commodity, that thing of value drifted away. Many organisations interrogate data thoughtfully to arrive at helpful insights which they then use to make informed decisions. Some other firms, though, aren’t able to translate data to information and sometimes make poor gut decisions, choose pathways based on only part of the picture or become paralysed with never ending analyses.
Most of us accept that an organisation without direction is bound to fail. But how do you work out where you’re going if you don’t understand where you’ve been? As Winston Churchill said, “However beautiful the strategy, you should occasionally look at the results.”
After 15 years in multinationals, when I moved to the small-medium sized sector I was surprised by the perceived lack of value of information – and I’ve noticed this too in the charity sector. I suspect a combination of things are at play – the belief that information doesn’t exist or is costly, that the staff don’t have the analytical skills, that action must be taken now, that thinking or ‘theory’ don’t cut it in the real world. In large organisations while budgets may be large, so are the potential costs including lost opportunities of making the wrong decision, even if that decision is to do nothing. This is actually the same in smaller organisations but a historic lack of analysis can bring a lulled sense of security of ‘what we don’t know can’t hurt us’.
What I found, though, is that often good raw data exists in these organisations, and that it’s just a matter of thinking through what needs to be reviewed, how to analyse and communicate, and what conclusions and recommendations can be made. Collating information from industry surveys, financial reports, sales systems, digital metrics and other sources can provide valuable insights on which to build strategy.
While some organisations do not really appreciate information, there are others who are obsessed by information. These firms can become swallowed in myriads of data, with significant resources devoted to continually generating reports, information being a crutch and inaction the result. The concept of big data can be empowering and valuable to those organisations resourced and knowledgeable to effectively use the data – particularly those firms where the raw data is very sound and where the systems of data collection and reporting have been well established. For the firms, though, who don’t have the resources or expertise to collect, manage and report on large amounts of data, the experience of ‘big data’ can be overwhelming.
Big data is a buzz term at the moment. There are many articles and conferences about the topic with some proclaiming the value of big data and reporting tools like desktop dashboards. My view is that the information should match the organisation’s capabilities. Of course, all organisations should make informed decisions. First, though, before purchasing industry reports, commissioning research or investing in new systems, a review of existing information sources and reporting requirements should be undertaken. There are many free or low cost industry studies and your organisation is bound to have its own multiple data sources. Spending some time collating and deeply analysing this information and identifying what to communicate to senior management, both as an ad hoc review and as an ongoing report, will be a good first step. It needs more, though, to make a start on the journey to a thinking organisation. Incorporating information analysis and reporting into all position descriptions is part of the process. Rewarding insights based leadership and accountability is another part. And for organisational leaders, walking the talk and sharing key insights and resulting actions will play an important role in transitioning the culture to an open, learning and forward oriented culture.