Features
Feature
Sharing the wealth of data drives success.
by Cheryl D. Krivda
At the dawn of the big data era, Teradata Executive Vice President Applications, Business Development and CMO Darryl McDonald recognized a new business imperative: The Socialization of Data. To educate organizations about this concept, McDonald enlisted the assistance of Andreas S. Weigend, Ph.D., the former chief scientist of Amazon.com, who facilitated that company’s customer-centric, measurement-focused corporate culture. Now teaching at Stanford and consulting worldwide, he talks about the irreversible impact of the social data revolution. In this dialogue, the two thought leaders discuss what businesses must do to survive the data explosion.
{DM} Andreas, you have been on the forefront of the data revolution. As you help companies better understand the socialization of data, how do you frame the discussion?
{AW} In the era of social data, companies are using new and nontraditional sources of data to create value for their customers, to delight them with innovative products and services based on social data. I work with companies to help them absorb these insights to generate measurable results.
{DM} Organizations and individuals increasingly generate and consume more information every year. How much data are we talking about?
{AW} In 2011, more data will be generated by individuals than in the entire history of mankind through 2010. Think of it this way: The amount of data that people create doubles roughly every 1.5 years. In five years, it’s a factor of 10. And in 10 years, it’s a factor of 100. By 2021, it will take less than a minute to create the amount of data generated in hours today.
{DM} We define the socialization of data as the merger of tremendous volumes of data from new channels with companies’ transactional and operational data, all to gain enhanced insight. With such huge volumes in play, some might resist embracing socialized data. What would you say to them?
{AW} The changing economics of storage, communication and collaboration have made it easy for customers to create and share data, and for companies to take action. Previous obstacles, such as the lack of computational power and data, have been overcome. Everybody understands that a company needs computers. I would argue that, in the early 21st century, it would be foolish to run a business without making use of social data. When you take advantage of the insight social data offers, you aren’t just doing the same thing a little differently or somewhat faster. You are doing something different. This is big!
“We’re on the edge of an incredible evolution. Not only are the current channels of new information here to stay, but more are bound to appear in the future. Companies that avidly embrace the socialization of data will be the ones to benefit first.”
—Darryl McDonald
{DM} I find that many people think the socialization of data is all about social media, such as content from Twitter.
{AW} That’s a common misunderstanding. Social media is just a small part of the social data universe—one of the many data sources that represent the front end of the process. The back end is when you bring together the data from different sources. And it is a social playground where customers create and share data that we can then analyze to gain a better understanding.
{DM} How can socializing Web, sensor or social media data enhance understanding?
{AW} The social data revolution represents a shift in the mindset of customers. In essence, people are willing to share data about themselves when they see that sharing creates a benefit without obvious risks. To cite a simple example, Netflix lets users contribute movie ratings. When people share their judgments about movies they have seen, they benefit by getting better recommendations. And, of course, the company learns which films they enjoy, and can build better recommender models with that data. More generally, sharing data changes the way we view ourselves, interact with each other and make decisions.
{DM} Can you provide an example of how this enhanced understanding would help a business?
{AW} Think about the product development process. Most companies begin by writing specs. Now leading companies go further, creating playgrounds where customers interact with each other. It’s not an experimental setting in a lab or a formal focus group. It is a public space where people share, and companies, just like other customers, can see how the product gets used and talked about—in a playful way. If you incorporate this data into your product development flow, you get a much faster feedback loop and a richer ideation process than you do simmering it in your own juices.
{DM} This is a radical change in the relationship between business and customer, isn’t it?
{AW} Yes. In this model, the customer is there to help you. Companies must stop seeing them as their enemy! And by helping the business, customers help themselves, too.
“It would be foolish to run a business without making use of social data. When you take advantage of the insight social data offers, you aren’t just doing the same thing a little differently or somewhat faster. You are doing something different.”
—Andreas S. Weigend, Ph.D.
{DM} But it’s different from traditional approaches, where business strives to manage the customer relationship.
{AW} It’s a new way of thinking about the customer. Instead of explicitly requesting consumer input, you create opportunities for people to lightheartedly share whatever they feel like, including unstructured data. It is up to you to use whatever information people will share.
{DM} What’s the first step when you are considering a socialization of data initiative?
{AW} First, shift your mindset to a focus on customer-centricity. In the past, companies made money based on information asymmetries—they knew something that the customer didn’t. After the social data revolution, companies will make money by creating trust and removing those asymmetries.
{DM} This requires a huge cultural change, doesn’t it?
{AW} Absolutely. It really comes from the top of the company. Take Jeff Bezos as a great example: He opened up Amazon.com to include product reviews, including negative ones. Why? Because it helps people make better decisions. That is an example of customer-centricity enabled by social data. That relentless focus on the consumer usually resolves any ambiguity about which changes a company should embrace.
{DM} So, customer-centricity is an important consideration. What else?
{AW} Beyond helping people make better decisions, I focus on behavior change. Each morning, I step on a scale that tweets my weight. My trainer follows this on Twitter and more than once, after a trip, I’ve heard, “Andreas, what I am seeing doesn’t make me happy. Today, it’s stairs for the first half hour!” Socializing personal data and getting feedback helps change behavior.
{DM} You teach courses on the social data revolution and e-commerce at Stanford. How does the Social Data Lab you’re launching there fit in?
{AW} The Social Data Lab helps traditional companies take advantage of innovative social and mobile technologies, and immerse in the ideas emerging in social data startups. Our goal is to help companies harness the digital experiences and work style of the next generation to create thought leadership and develop relevant insights.
{DM} Do younger people have a lot to share with experienced businesspeople?
{AW} I learn from the students. There is a huge difference in the way they see socialized data as opposed to people in their 40s or beyond. That’s why I advise business executives to engage in “reverse mentoring.” The idea is to meet regularly with individuals in their 20s and learn from them how they think about social data. Very quickly, executives come to understand that the next generation has a very different perspective on privacy and identity, and the use of social data in their decision making than they do.
{DM} Do cultural differences exist in the way people perceive socialized data?
{AW} Most definitely! I also have a home in Shanghai, and at People’s Square there, eager matchmaking parents advertise their adult children. They “socialize” pictures, information about their child’s salary and other personal information that would be unthinkable to share in the West. That way, potential marriage partners know what they’re getting.
{DM} But it’s not that way everywhere.
{AW} No. In Germany, privacy laws created overnight allow citizens to opt out of the Google Street View service that displays photos of homes. There are hugely different attitudes toward privacy and social data, depending on where you are.
{DM} Yet it seems most people are willing to give up some of their privacy if they get something in return.
{AW} Yes. But you have to understand how to ask users for information. You cannot ask, “Would you rather have more privacy or less privacy?” In that case, the answer will be “more privacy.” The more realistic question is, “In a given situation, where are you comfortable in the trade-off between privacy and convenience?” In the right situation, they will share their data. When you think about it, the current degree of personalization would have been unthinkable just 15 years ago. People implicitly and explicitly share their data all the time. What used to be the dream of marketers is an everyday reality now.
{DM} Can you sum up what the socialization of data will mean to business?
{AW} People share data, not for us, but for themselves, and give us access until we screw up. It’s not a matter of making decisions differently—it’s about making different decisions. I see it as a radical change that can create unprecedented opportunities.
Cheryl D. Krivda writes about the intersection of business and technology for publications and corporations around the world.