Babette Bensoussan: Big Data Does Not Make Your Smarter [Nor Is It Necessarily Useful]

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Mutters – Big Data Doesn't Make You Smarter

Have you heard ….. big data relies on a very big assumption: that having more data gives organisations better understanding of their environment. The apostles of big data preach that it will make organisations smarter. In fact, the opposite is true: big data dulls an organisation's strategic senses. Here's how…

1. Much of the quantifiable data is not strategically useful: Today we accumulate extraordinary amounts of quantified data, but how much of that data helps us understand a complex and rapidly changing environment, where by definition data is always ambiguous and lagging? During the Cold War, the US Government looked at USSR military capability as a signal of economic success. When the USSR economy collapsed, they realised that the number of missiles was not a true reflection of the strength of their economy at all, it was a huge drain on their financial resources. The US realised they were making strategic decisions based on the wrong data.

2. A lot of the information which is strategically useful is not quantifiable: Nokia in the 1990's didn't rely on scientific data to understand the mobile phone market. They sent teams of executives and engineers into three special places in the world: Venice Beach, California, King's Road in London, and Tokyo's nightclubs. Nokia realized from this research exercise that mobile phones had exceeded their utility status to become fashion accessories. Hard data couldn't have provided this important insight that underpinned their success for the next 20 years. Ironically Nokia today is struggling to survive in the iPhone dominated mobile market as a result of becoming a more typical well-managed company that is a prisoner of scientific data.

3. Data, big or small, is only as useful as the questions you ask it: Big data produces myopia, or “tyranny of small decisions” where responding to the short-term pressures that ultra-fine data produces lays the groundwork for much bigger problems later. For example Ford, GM and Chrysler got into trouble in the 1970's because they obsessively watched each other and missed the strategic threat of Toyota and Nissan. All the data in the world won't help if the right questions aren't asked, and big data does not generate such questions, or even contribute to their formulation. Nevertheless, organisations keep accumulating data and there is no denying it can be useful. It is essential to question and make explicit the core assumptions held by analysts and managers, because these assumptions will drive the search for and analysis of data. These assumptions are a reflection of our personality, biases and beliefs. How you see the world will determine the questions you ask and those you don't ask.

Big data is useful when it is non-ambiguous: web-site connection logs for fraud detection, gene sequencing, sales statistics etc. Big data will keep your engineers busy, and make IT vendors rich, but because data is always backward looking, it will not deliver a vision of the future. So what should you do?

Keep in touch with the field and the plant floor, and avoid quasi-scientific detachment from the top of the executive office;
Know when “scientific” data is useful and relevant, and when it is deceptive and dangerous;
Interrogate your hypotheses or assumptions with at least twice the rigour with which you question your data.

In a complex and uncertain world, these tips might help you avoid unexpected surprises in a way that big data won't.

Adapted from: Three Reasons Why Big Data Doesn't Make You Smarter – Lessons From the World of Intelligence by Milo Jones and Philippe Silberzahn, Forbes