Recent outburst of digital data is changing the way businesses are ran. McAfee and Brynjolfsson stressed that because of big data, managers can measure, and hence know, radically more about their businesses, and directly translate that knowledge into improved decision making and performance.
Long before, organisations depended on analytics to make predictions, decisions and understand their business performance. However, the big data of this revolution is far more powerful than the analytics. Organisations can measure and therefore manage more precisely than ever before and make better predictions and smarter decisions. Also can target more-effective interventions, and can do so in areas that so far have been dominated by gut and intuition rather than by data and rigor.
Consider retail giants like Waterstones, which sells books and stationaries both in physical stores and online. McAfee and Brynjolfsson pointed that via digital data Waterstones could always track which books sold and which did not. If they have a loyalty program in place, they could tie some of those purchases to individual customers. Customers activities online can be tracked not only
What customers bought, but also what else they looked at; how they navigated through the site; how much they were influenced by promotions, reviews, and page layouts; and similarities across individuals and groups.
Now we recognized the impact big data are having on organisations and their activities. The question one would ask is “Where’s the evidence that using big data intelligently will improve business performance?” Well, according to a research led by McAfee and Brynjolfsson it revelled, not every companies was embracing data-driven decision making but companies that characterized themselves as data-driven obtain better operational results and performed better on objective measures of financial. On average, these companies were 5% more productive and 6% more profitable than their competitor.
McAfee, A., & Brynjolfsson, E. (2012). Big data: the management revolution. Harvard business review, 90(10), 60-66.