Growing opportunities to collect and leverage digital information have led many managers to change how they make decisions – relying less on intuition and more on data. As Jim Barksdale, the former CEO of Netscape quipped, “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” Following pathbreakers such as Caesar’s CEO Gary Loveman – who attributes his firm’s success to the use of databases and cutting-edge analytical tools – managers at many levels are now consuming data and analytical output in unprecedented ways.
This should come as no surprise. At their most fundamental level, all organizations can be thought of as “information processors” that rely on the technologies of hierarchy, specialization, and human perception to collect, disseminate, and act on insights. Therefore, it’s only natural that technologies delivering faster, cheaper, more accurate information create opportunities to re-invent the managerial machinery.
At the same time, large corporations are not always nimble creatures. How quickly are managers actually making the investments and process changes required to embrace decision-making practices rooted in objective data? And should all firms jump on this latest managerial bandwagon?
We recently worked with a team at the U.S. Census Bureau and our colleagues Nick Bloom of Stanford and John van Reenen of the London School of Economics to design and field a large-scale survey to pursue these questions in the U.S. manufacturing sector. The survey targeted a representative group of roughly 50,000 American manufacturing establishments.
Our initial line of inquiry delves into the spread of data-driven decision making, or “DDD” for short. We find that the use of DDD in U.S. manufacturing nearly tripled between 2005 and 2010, from 11% to 30% of plants. However, adoption has been uneven. DDD is primarily concentrated in plants with four key advantages: 1) high levels of information technology, 2) educated workers, 3) greater size, and 4) better awareness.
Four factors are driving data-driven decision-making:
IT: DDD is more extensive in firms that have already made significant IT investments. Quite intuitively, firms make better use of DDD when they have more sophisticated IT to track, process, and communicate data. Likewise, they enjoy higher returns from IT when it guides decision-making and action at the firm.
College degrees: Having a larger share of workers (including both managers and non-managers) with Bachelor’s degrees also predicts the use of DDD. This may reflect the way formal education can make people more comfortable with quantitative and data-centric ways of understanding the world.
Size: Both single-plant firms, and those with multiple plants are increasing their reliance on DDD at roughly the same rate. However, single-plant establishments are still at less than half the adoption level of their bigger brethren (see Figure 1). That’s no surprise — plants that belong to larger, multi-unit firms have the advantage of being able to learn from each other and share infrastructure.
Awareness: Last but not least, even DDD-ready firms may lag behind due to a simple lack of awareness about its benefits. In order to adopt DDD, firms first have to learn about emerging practices and how they might work (or not) in their particular organization. Plants that report a larger number of opportunities to learn about new management practices – like hearing about it from other units of the same firm, from outside consultants or new employees, or from trade associations or supply chain partners – are far more likely to report being at the frontier of data-driven decision making. If you share this article with your co-workers, you might see your own firm’s use of DDD jump up a notch.
For all its benefits, DDD may not be the path to salvation for every firm. Even managers who have received the DDD gospel may oversee environments that do not permit reliable data collection. For many types of decisions, especially those for which little quantitative data exist, the broader knowledge and experience of leaders still outperforms purely data-driven approaches. Furthermore, the costs of moving to the DDD frontier are not trivial, and may outweigh the benefits – particularly if the scale of operations is just too small.
That said, the tripling of DDD rates in just five years suggests that firms are overcoming any implementation barriers quite rapidly. Our analysis sheds considerable light on what makes DDD a good fit for a wide range of firms. Yet even among plants that are, on paper, likely adopters, only a minority had adopted DDD by the end of our sample period in 2010. We expect adoption to continue to trend upward, as technology costs fall, management practices evolve, and awareness spreads.
Our follow-on research is focused on pinning down how much firms may expect to benefit from DDD, and on discovering the ingredients for success in different settings. No doubt the hype surrounding big data and analytics is great. However, our results offer objective empirical evidence that there is something beyond the hype: firms are rapidly adopting DDD and fundamentally changing how they approach management in the digital age.
As we know, the cloud is a platform that allows you to store and process data away from your personal device. The resulting information can then be presented to that or other devices. This is not a new concept. It’s the way computing originated. Programs originally ran on mainframes, mirroring sessions to terminals throughout an organization. But these were expensive options. In the very early days of personal computing, businesses could only afford to provide CFO’s and controllers with spreadsheet applications and $10,000 PCs.
Over time, technology improved, speed increased and costs fell. And just as these lowered costs helped usher the PC into the modern office, so too has the falling cost of cloud storage led to its widespread adoption. Since 2005, the cost per gigabyte of cloud storage has fallen from fifteen cents to less than a penny (see graph below). And the cloud has become a ubiquitous part of our lives, both personal and business.
Nobody could have predicted the personal computing boom and how it would affect the business world. So what more can we expect in the future from the cloud, and how will it change your business? The sky’s the limit, but here are three observations about where we might be headed:
The algorithm rules
More and more, jobs that were previously staffed by human beings have been rendered obsolete via automation. And rudimentary and rote business activities are being superseded by the cloud.
Consider Accounts Payable. As algorithms supplant approval processes, and electronic payments become widespread to the point of being universal, there will be reduced need for human oversight, let alone envelope stuffing. Many of these functions, previously conducted by staff, can be handled with a single algorithm.
The death of the cubicle
With a wholly mobile workforce, a physical presence is less and less required. Business cycles will still be normal, 24/7 affairs, but we’ll be selling from the beach, presenting from the living room and securing shipments in the den. These traditional office functions will not need an office presence.
Home office? No. Everywhere office? Yes — an office in the cloud.
Breaking down hierarchies
This is the most significant benefit of ubiquitous cloud computing: everyone will have access to everything from everywhere — and the elimination of information silos.
What’s next for your business
The new world of work has the power to flip hierarchies on their head, giving workers the power to decide when we work, where we work from and who we work with. And it can give businesses a new type of workforce — a more productive, specialized workforce. It’s due to the mobility provided by the cloud, and our ability to better share and act on critical business information.
Ready to migrate to the cloud and organize your data and work flow? Contact Us.
The headlines blare: “59 Best Productivity Apps!” “20 Great Productivity Apps for Android, iOS and the Web.” Then there’s the more subtle: “The Best Apps for People With Too Much to Do.”
These articles are wildly popular. Time-strapped people hoping to ‘hack’ their work processes click, read… and download. This doesn’t thrill the IT department. Tech folks have no objection to employees wanting to be more productive, but when each individual mingles dozens of outside devices, tools, and platforms with the corporate network, it can be chaotic.
Showered with productivity and collaboration tools
People love discovering clever, useful applications. If it makes their job easier, good luck getting them not to use it. Here are some of the most widely used, consumer-driven applications.
- Dropbox. This is cloud-based storage and file synchronization that gives you access to your files from any personal computer or device. People love this because documents are no longer stored on multiple computers. It’s also a great way to instantly share documents, pictures, or videos with anyone else.
- Google Drive. This is also remote storage of documents that (with companion apps Google Docs and Google Spreadsheets) lets you simultaneously co-edit a document with numerous other people. There is also chat and note sharing from within a document.
- Evernote. This app is built to capture ideas. It lets you jot down notes, capture images, record meetings, mark up PDFs. Its mastery is storing your ideas in any form, and letting you retrieve them from anywhere.
- Skype. This is video conferencing from any device connected to the Internet. It doesn’t have to be video, many people use the VoIP (voice over IP) service to make cheap long distance calls, leave voice and video messages, and share their screen.
- LinkedIn. This is the number one professional networking site on the web. It is used to develop all kinds of relationships from finding jobs to job candidates to sales leads to interacting with industry forums. LinkedIn functions for personal career growth as well as often being deeply integrated into corporate functions.
For each of the applications mentioned above – and hundreds of others as well — IT is concerned about everything from information silos (processes that are not streamlined across departments, thereby cutting off collaboration) to security breaches on sensitive corporate information.
But trying to fend off the onslaught of consumer productivity applications is futile. Here are some important guidelines your IT department can consider when balancing this tricky equation:
Get educated on the popular applications
IT organizations must understand those applications that are capturing the imagination of their employees. What function are those apps fulfilling? It is only then they can assess the security, reliability, ease of use, and integration into the existing infrastructure. Don’t guess what people are using ask them.
Coordinate cross-functional groups
It’s important to understand how different departments are using popular applications. To streamline processes, you can’t assume that everyone is using LinkedIn or Google Drive the same way. Gathering a cross-functional working group across departments and functions will give a much better picture of how important it is to integrate certain applications over others.
Explore integration tools
Time for some introspection. How easy is it to fold outside apps onto the network? What about streamlining them across teams and departments? Social networks for example, are crucial business tools for market research. But if they aren’t connected to marketing, CRM and other business-critical systems, valuable insights might not be shared with everyone. Integration platforms are worth investigating. They are helping pull in unstructured data from social networks and other databases and made available on the corporate network.
Mobile, mobile, mobile
Most employees use one smart phone for work and play: their own. The vast majority of companies have made both policy and software changes because of this. Should IT have an inventory of apps running on mobile devices? Should there be a blacklist? It’s worth investigating Mobile Application Management (MAM) tools that help IT support consumer applications while maintaining enterprise security, through authentication, access policy and enforcement, encryption, monitoring and other features.
Managing a network requires gatekeeping, facilitating the common language and workflow within the organization, and of course an eye on security. Fortunately, with some guidelines and possibly new integration technology in place, IT can keep the network humming, productivity up, and employees free to explore better ways to work.
Without a combined effort, strengthening IT security isn’t just difficult, it’s virtually impossible.