How to fuel your innovation with data
Futurist Chris Riddell and Lumachain Founder and ex-CIO of Qantas Jamila Gordon spoke at this year’s Market Connections Forum about the power of data. Inspired by their insights, we look at how data is driving innovation and how businesses can take advantage.
“Data is the fuel for innovation in business today”, says Futurist Chris Riddell. “As consumers we generate vast amounts of data every day on our phones or computers, and there are smart companies everywhere using it to create new business models and growth.”
Before the advent of algorithms and the compute power to apply them, a lot of data, particularly unstructured data such as images or audio, was not captured or analysed. Now artificial intelligence enables data-led businesses to derive huge value from data. It’s no surprise that many of the most valuable public companies are data-hungry giants.
Amazon uses data to inform dynamic pricing, changing prices on its sites over two million times a day, and offering highly personalised recommendations. Facebook is monetising its data through partnerships with businesses. Microsoft is applying data to its productivity suite and business intelligence applications. Netflix uses data to shape its production and increase customer retention. Google integrates data from search, maps, photos, email and more of its products to supercharge its advertising propositions. Collectively, these companies have led the surge in tech stocks during 2020; by the end of the year Facebook, Apple, Microsoft, Amazon and Google parent company Alphabet were, on average, up 44% on their value at the start of the year.
This growth demonstrates how the COVID-19 pandemic increased the importance of data and the AI (artificial intelligence) technologies organisations need to realise the value of data. Research from McKinsey found that organisations benefiting most from data analytics and AI are planning to invest even more in AI in response to the COVID-19 pandemic and its acceleration of all things digital.
We are all in the data business now
Data is not just for technology giants. Organisations of all types are employing data strategies to improve operational efficiency and drive growth. Typically, businesses are using data to get a better understanding of their customers and users, improve service and product quality and improve business decision-making.
For example an NHS Trust in the UK is using data to identify patients who are medically fit to leave hospital but cannot be discharged for other reasons, and thus enabling them to address the reasons and free up resources. Rentokil, also in the UK, is combining IoT (Internet of Things) sensors in mousetraps with data analytics to measure and improve their effectiveness.
In Australia, Lumachain, founded by Jamila Gordon, former CIO of Qantas, uses IoT, AI, blockchain and computer vision to transform the food chain by making it safer for workers, and improve the quality of food production and transportation. Jamila says being a smaller business is far from a disadvantage. “I could not have founded Lumachain if I was at a large established business because they don’t have structures to support disruptive business models.”
While Chris Riddell believes data is the fuel for innovation, he adds that it’s the experience organisations deliver that makes them stand out. “Uber is a classic example of a company differentiating on the basis of its experience. It accesses data sets such as location data through Google Maps, but the value it offers is in the experience it delivers to consumers.”
Chris says smaller businesses can take a leaf out of Uber’s book and use APIs to connect to other services and build better experiences. He believes privacy is going to be an important area where businesses can gain an advantage. “Privacy is going to be the biggest topic we will see for the next decade, when it comes to consumer experiences and information. And businesses that lead with that as a priority will do exceptionally well.”
Leading data-enabled innovation
It has become something of a truism that every business is now a technology business these days (the correct quote is in fact “every company is a software company”, attributed to pioneering software engineer Watts S. Humphrey and oft-repeated by Microsoft CEO Satya Nadella).
If so, perhaps every organisation should see itself as in the data business, and leaders should be asking themselves how well they are set up to compete in this new market.
McKinsey’s research suggests companies seeing the highest bottom-line impact from data and AI exhibit overall organisational strength, including having a data and AI strategy aligned to the wider corporate strategy with the full support of the senior management.
Chris says leaders can think about their competitiveness in terms of two clocks. “One clock is inside your business, it’s the speed at which you move. The second is outside your business and is set by your competitors and other digital leaders. If your internal clock is not running the same speed as the external one, you will be in trouble.”
Both Jamila and Chris suggest a business’ attitude is as important when it comes to data-led innovation as hard data science skills .
“It’s a mindset shift. Leaders seeking a point of difference have to be ok with mistakes and occasional failures,” Chris says. “After all you won’t create life-changing opportunities by doing the same thing as your competitors.”
Jamila agrees change is not always easy for those leading it. “You have to continuously put yourself in uncomfortable positions to challenge yourself and create something new. You’ll need reserves of resilience and positivity, but the rewards are great.”