Data as Driver for Decisions - For the Business and for the Managers

Faculty Article

Data as Driver for Decisions- For the Business and for the Managers

Saurav Sanyal Associate Professor and Dean, Corporate Relations

“Not everything that counts can be counted and not everything that can be counted counts.” Albert Einstein The obsession over data could certainly harm an organization, the statement of W Edward Deming should be seen in the right context and spirit. No one would be allowed or rather should get away with the sweeping statements about what needs to be done in a situation without backing them with facts and data and hence, the data and decisions are critically linked for better outcomes. The quality of decision making is dependent on the quality of inputs. While all of us are aware that GIGO (Garbage in, Garbage Out) could be true in any sphere, the same applies in business as well where better or worse decisions mean the difference between survival and death of a venture, an organization no matter how mature. As usage of data gets increasingly more and more important, the above quote (Deming) on importance of data is an excellent starting point for any corporate meeting or intense academic discussion in 2019 and beyond. Business and industry is also waking up to this new reality. As an example the data oriented culture from India, IT behemoth Infosys continues to drive data oriented thinking. Data today is a reflection of the overarching need than a passing trend. Wave of investments in new technologies made by the pioneers in technology space as well as technology led industries that are in various stages of transformation are now aware that these are necessary investments. India’s IT Industry which has been a beacon of global excellence in the past couple of decades continues to create customer value across industries by advancing the frontiers of future technologies in data, analytics and AI space. From a learner’s perspective as significant volume of work has already materialized in the area of data, there is already huge information overload for business leaders as well as the aspiring ones. A glimpse of learning implications from a data oriented perspective in organizational context in 2019 (both for academia and Industry) need a rider especially with two landmark events that have forced us to take a completely different view of data as a source of value creation in business. The first event was the implementation of GDPR (General Data Protection Regulation) implemented by 25 May 2018 which multinational companies implemented given the significance of global data protection regulation adopted by European Union. The second event is the ramifications on Data Privacy due to Supreme court ruling Upholding the Validity of Aadhaar Scheme (UIDAI) and making it unconstitutional for private companies to seek Aadhaar data from consumers as KYC Authentication. Significantly, I have observed it from close quarters being a part of corporate world in 2018. Though the two events are not connected, it does give the data professional room to understand the far reaching impact on private companies. While experts mine, debate and conclude that data is the new oil, the immediate implications have a lot of insights for business professionals in the next 3-5 years. What are the important learning implications in the managerial domain? Driving the CEO mandate of growth: In a situation where data oriented thinking and technology has made is made crucial impact on strategies, the companies that stay ahead are different from those in the leaders pack couple of decades back. The market capitalization of Top five Organization in the year 2016 (Forbes Ranking by market capitalization) will reveals they are very different from those in 2000. Driving growth means the corporate boardrooms and managers just cannot ignore and keep data at a distance.

These top five companies (Forbes Ranking by m.cap in 2016) shows technology companies such as Google, Apple, Facebook are in the Top five where they did not exist in the space two decades back (excluding Microsoft). All these companies do have enough case studies to showcase that data is indeed the new oil as they moved past Exxon Mobil, GE and Walmart in the annual Forbes charts on Market Capitalization. IT spends (e.g. in Infrastructure, Security, Business Driver, Data Science) are on the rise and so is the strategic impact on the outcomes for product or value driven organizations. Data is a significant value driver: In view of evolving data policy, standard regulations across large economies (US, EU, China, India) and given the regulatory framework that companies will have to adopt as part of the EU Law data is the new wealth creator and therefore to be seen as value driver. Several managers in the industry will concur that the standardization of data privacy laws are already a reality since Mid-2018. Implications on businesses due to the lack of

Institute) and continues to be a top agenda for CIOs in the next couple of years. Analytics Concepts across Domains: The utility of data analytics is a growing field with the business needs growing due to the launch of new tools and technologies that is making availability of personalized data points and thus empowering the consumer. Personalization of Business is a reality. All the top technology companies (including the Top five of Forbes 2016 m.cap. list) have data at the centre of their thinking right from Google utilizing usage data to attract advertisers on their platform, to Apple’s interconnected devices utilizing new launches to improve interoperability among their users across B2B and B2C platforms. The level of personalization has now gone into a competitive mode with the dawn of commercialized technologies e.g. Alexa. Today, regardless of the business unit/department of business, data driven decision making is definitely here to stay and driving outcomes is more crucial to business than just top line. Analytics and data driven

compliance to data privacy can run into several hundred million dollars. Therefore the value creation process in businesses in 2019 is going to be very different from pre -2018. Consumer and people oriented models will result in significant outcomes. Further deep dive in technology and corporate world shows increasing investment trends, positive impact on outcomes that are linked investments from the data. In terms of business implication of data oriented thinking and value creation an emerging area of focus is Artificial Intelligence (AI). It is estimated that AI investments and adoptions in industries continue to be on the rise over the last 2-3 years as more than $39B investments happened in the areas of AI (Refer to the chart, McKinsey Global

metrics will therefore be key drivers from middle management to senior management roles in corporations. Competitive Forces in the age of Data and AI: Large companies continue making investments in new technologies and resources (HPCC, Cloud Computing, AI, Data Mining Research and Tools) that can allow them to stay ahead in the age of Industry 4.0. A well- known example from industry is Watson which is IBM’s flagship offering in AI space and created waves when pitted against World Chess Champions has impacted several domains of multiple industries from Healthcare to Consumer Goods and Marketing. Of late though (refer to IBM results in 2018), despite big expectations, the revenue expectations for seems to plateau as Amazon has gained ground from Watson’s losses. AI, apart from being a multi-billion dollar category that will continue to provide business opportunities despite the growth challenges from competition (Amazon Web Services (AWS) from Amazon, Cortana from Microsoft have continued to chip away at IBM’s Watson). What is in it for the future management professionals and academicians in this domain? Given the tremendous impact of data oriented technologies which are impacting every aspect of industries – right from technology producers to technology consumers, it is important for management professionals and business leaders to review the collaboration opportunities. Impact on business models and creation of new ones: At the top, while Alphabet Inc (Google) continues to effectively monitor and monetize significant number of initiatives as part of its annual plans, there are business case studies that speak about the impact of people analytics at the heart of how Google works and succeeds through people analytics. Examples can be seen from the way technology companies are using the data from Google searches to help advertisers and spawn new business models to IP protected proprietary resources in product organizations. This is also an opportunity for management professionals to embark upon a learning model at the heart of academia’s interaction with the technology industry to understand and create new business models in partnership. Impact on employees’ roles in future: As we understand and discuss the impact of Industry 4.0 on employee roles in future, it important for us to develop a deeper understanding of the long term impact. McKinsey Global Institute which has studied the reports on Global Level and mentioned the possibility of 800 million jobs being created globally against 400 million jobs will be lost (estimated by around 2030). Impact could be as much of 10% of India’s workforce population and 15-17% in China. The positive impact that will come out in terms of jobs in the areas of Data Analytics, Cyber Security Jobs, Data Generation, Data curation, data storage etc. At the other end of the ageing population he also mentioned about the recent conference on Robots for assisted living, Spain where Humanoid Robots role is being looked at. We are seeing increasing number of reports showcasing the requirements of data scientists (2016 industry estimate at 1 million) to jobs that currently that do not exist. Skill Sets will be more in numbers and requirements will keep changing: Skilling and re-skilling at the entry level roles are crucial as the Jobs of 21st Century will be led by Data Experts, Scientists, Machine Learning and Deep Learning. Even at India’s policy making level, India’s NITI AAYOG is a very proactive department from the current government which has created the focus on the impact from the future technologies on Future of India’s Economy. It is therefore an immediate need to create resource centres at Institutions for the creation of new skills and knowledge. In conclusion, ignorance about data is not bliss. As content in the business and academic world continues to grow at a rapid pace, the doubling of knowledge is happening in a time range of 12 hours to 73 days to 18 months (the knowledge doubling time varies depending on sector/domain of study). This has an impact across all the various learning and business models in organizations and institutes. New insights will continue to emerge and data as a domain will continue to be a hot topic to tap into for researchers across corporations as well as academics. There is hardly any doubt that vast amount of data and the impact of artificial Intelligence on humankind’s future will be significant. If handled well by the stakeholders the potential for business leaders and managers is significant. There is a high probability of mass unemployment where skills are replaceable by machines and worries on ethical aspects including possible use in undermining fundamental rights, the positive implications also remain extremely interesting. Data could be the harbinger of a new industrial revolution. We just need to keep in mind what Nobel Laureate Physicist Richard P Feynman said in his report on NASA space shuttle Challenger disaster in 1986 “For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.”