To Compete, Companies Need To Use Data Better

Corporations have to decide what they want to be when they grow up, said Oliver Ratzesberger, EVP and chief product officer of Teradata. They need to learn how to incorporate data in their corporate strategy and decision-making, added Ratzesberger, co-author with Northwestern University professor Dr. Mohan Sawhney of a new book, “The Sentient Enterprise”,

The Sentient Enterprisewhich looks at how leading companies are doing just that. Their examples include Wells Fargo, Verizon, Dell, Siemens and General Motors.

“We wanted to put concepts of data agility in the hands not just of top executives, but any business user who interacts with data and wants to improve that interaction,” Ratzesberger wrote in a blog post.

Ratzesberger, who was a leader in eBay’s pioneering use of Teradata, said that incorporating data into the core of a corporation’s takes time and C-suite commitment

“Mohan and I are trying to advance an idea where data and analytics can do more than just act as a bean counter of what’s happening within a company . The sentient enterprise actually does some of the understanding itself and takes on aspects of operational decision-making, freeing the human mind to focus on high-level strategic analysis and creativity,” he wrote on Teradata’s Forbes page recently.

Disruptive technology won’t succeed if executive protect their profitable business from the potential change said Ratzesberger.

“Too many executives are telling teams not to cannibalize their high margin business,” he said during at interview at the Teradata Partners conference. “That leaves a company open to disruption from the outside.”

He likes P&G as an example of a company that is using technology to get closer to customers, although the only example he cited was an electric toothbrush that links to a mobile phone and can show a user which parts of his mouth he is neglecting. Apps and links to phones can help even a company that sells through retailers to connect directly to customers more effectively than trying to track them with coupons. A big wholesaler like P&G didn’t have direct customer data for analytics 10 years ago and has recently faced startling competition from such innovators as online razor blade sellers.

Oliver sees an organizational issue here…a company has to pay attention to its culture, its people, and process change and learn to become agile at scale, with governance built in. They also need to think long-term — 5 to 10 years out — to build sustainable change.

The Wild West works — for 30 to 90 days — and then crashes down like a house of cards, he added. “We talk to C-level executives and ask how they are thinking about their roadmap and disruption in their companies.”

He said they need “faster collaboration, learn to build at scale and get algorithms which will change business processes such as supply chain.”

When companies are faced with exabytes of data, they need to to something smart.

“At eBay, where the company had 800 analysts there was still too much data and we would miss changes in the market.”

Fortunately new capabilities are coming together, he added.

“Most corporations aren’t ready for data — they have silos and data drift. They often argue and can’t agree on even basic data such as their number of customers.”

Leading companies have learned what can be done with data such as Kaizen, Six Sigma and Lean to predict certain outcomes.

“We’ve learned in the last decades…that a you can predict certain outcomes very well.”

For Maersk, the huge global shipping company, when engines break at sea it is a big problem.

“With enough sensors you can predict failures and change pistons while the ship is in port.”

Artificial intelligence (AI) is a popular term these days, but Ratzesberger warned that the intelligence is only as good as the data, citing that old warning: Garbage in, garbage out.”

Chief Data Officers

In a corporation, “Chief Anything” doesn’t amount to much, Ratzesberger said.

“You see Chief Data Offices everywhere; the big new title is Chief AI officer. But
Chief whatevers are powerless offices; they are not Level 1. They are below the CIO or CFO. Many companies lie to themselves when they have a CDO who can’t change anything — it just turned into a blame game…they’ll just blame the CDO. The CEO needs a person who works directly for him and can make decisions [based on data] that may be disruptive. Boards around the world need to challenge the CEO on what they are doing with data, it is often just a check-the-box exercise.”

For company, becoming data-driven is a journey, he added.

“GE is getting it, Siemens knows they have to disrupt themselves. There are new kinds of companies that are based on this — banking, telecom, retailers — are starting to wake up. Technology is pushed by Walmart, they know they need to do things differently, often their tech leadership sits in Silicon Valley. I think most companies get a B- at best. eBay was great; now it is a legacy company. “

“Using data well is a board-level topic — how to build the next generation platform that leverages data at its core.”

Not everything can be based purely on data, he added. People can mis-interpret that data and confuse correlation with causation.

“Companies need to define their strategy and leverage data whenever possible. Data alone won’t make a strategy.”

About Tom Groenfeldt

I write - mostly about finance and technology, sometimes about art, occasionally about politics and the intersection of politics and economics. My work appears on Forbes.com and International Finance Magazine. The Financial Brand ranked me 20 on a list of the top 25 global influencers in financial services and Jay Palter included me in his list of 250 fintech influencers to follow in 2016 http://bit.ly/1SSRXC6
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