Whether or not you’ve heard the term “Big Data” before, it is hardly something that’s new to the scene. The compilation of large, complex data sets is all around us, from professional sports to big business. The question is: will it filter down to you?
In a Motley Fool article, it was estimated that nearly “2.5 quintillion bytes of data are created” every day, with the data coming from “sensors used to gather climate information, posts to social media sites, digital pictures and videos, purchase transaction records, and cell phone GPS signals.”
This is why Warren Buffet took a 5.4% stake in IBM. When the Oracle invests, you can see the writing on the wall.
For some real-world examples of Big Data, take a look at the sports world:
• Racecar drivers, such as McLaren driver Lewis Hamilton, are using multiple data points to drive his car at optimal speeds.
• The San Francisco 49ers entered into a partnership with SAP. The 49ers are combining with SAP’s expertise in analytics, mobility and real-time data systems to, among other things, improve the fan experience. (Note SAP also works with Lewis Hamilton.)
But hold the phone, everyone. Listen to statistical analysis Nate Silver, the stats wunderkind who has correctly predicted the last two president elections, calling all 50 states correctly in this year’s election.
In a recent interview on Fresh Air, he said, “We’re not that much smarter than we used to be, even though we have more information – and that means the real skill now is learning how to pick out the useful information from all that noise.”
So how do you develop that “real skill” and crunch the right data points? I would offer the following two pieces of advice:
1. Create the Ideal System.
You want to find the key financial metrics from your company. I would recommend a cash flow analysis, and using key financial ratios such as the current ratio, the quick ratio and the sales/receivable ratio.
But don’t just track yourself. Establish competitive benchmarks of your peers, so you can get a sense of what it truly takes to compete in your industry.
2. Learn to Accept the Data.
Oh, if I had a dollar for all the financial and marketing research that’s been created and subsequently ignored in the world. It’s one thing to sift through all the big data. It’s another to accept the facts and adjust your strategy accordingly.
Big data holds great potential for our industry. Finding your key data points, and learning from them, is the only way that potential will be fulfilled.