Are You Using the Right Data to Power Your Digital Transformation?
Most legacy firms rely on episodic data, generated by discrete events such as the shipment of a component from a supplier, or the sale of a product. The explosive power of digital platforms, on the other hand, stems from their use of interactive data, streamed by users interacting with platforms. Tapping the power of interactive data is more and more possible for legacy firms now, thanks to sensors and the internet of things (IoT). Shifting from episodic to interactive data is not easy. Yet it is an essential part of any legacy firm’s digital transformation initiatives. To remain relevant in the modern era, legacy firms must find ways to tap the power of real-time, interactive data.
Data per se is not a new, but its power to drive business value in modern times is unprecedented. This power is most evident in the business models of digital platforms such as Facebook, Amazon, and Google. But, for a vast majority of legacy firms operating with value-chain-driven business models, this newfound power of data remains untapped. A key reason that’s holding them back is their traditional approach to collecting and using data.
Most legacy firms rely on episodic data, generated by discrete events such as the shipment of a component from a supplier, or the sale of a product. The explosive power of the digital platforms, on the other hand, stems from their use of interactive data, streamed by users interacting with their platforms — such as by posting likes on Facebook or searching on Google. Facebook and Google together own almost50% of the $200 billion digital advertising market in the U.S. because of such data. And as their business models are anchored on the internet, all of their data is interactive. Not all legacy firms can expect to derive value from data the way Facebook and Google have. But they can do far more with data than what was traditionally feasible. Tapping the power of interactive data is possible for legacy firms too, thanks to sensors and the internet of things (IoT).
Sleep Number is a great example of a legacy company that’s embracing the power of interactive data. The company uses sensors in their mattresses, which generate streams of interactive data on a user’s heart rate, breathing patterns, and body movements during sleep. Using this data, the company makes its mattresses unique to each user. But sensors don’t have to be physically embedded within products to be useful — they can be web- or app-based. For example, The Washington Post generates interactive data when readers browse for news and opinion articles on their website. Allstate Insurance’s app-based sensors stream data on how users drive their vehicles. Today, sensors are ubiquitous and available in several forms, making it possible for legacy firms to capture and use interactive data in unprecedented ways.
Two attributes of interactive data make its role in modern times far more expansive than episodic data: its ability to generate a new class of insights, and its amenability for widespread sharing. Together, these attributes empower legacy firms to offer rich digital experiences and expand business value propositions.
Data has always provided insight. Episodic data on mattress sales, for instance, provides insights on what brands are selling, in which geographies, and in which segments. Typically, such insights come from analyzing aggregated after-the-fact data across categories of products, geographies, or segments. Such insights have typically been shared in daily, weekly, or monthly reports.
Interactive data, on the other hand, provides real-time insights in addition to after-the-fact insights. Interactive data from mattresses, for instance, generates insights on how well a user is sleeping in real-time. Such insight can be used to, say, dynamically adjust the contours of a mattress to improve sleep quality.
