Big data, big questions

Data is everywhere. Collected, collated, but used for what and for what purpose? Boardroom explores the risks and opportunities and what commentators are saying here and abroad about our data-driven future.

What does it mean?

‘Big data’ was added to the Oxford Dictionary in 2013

Extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions.

How much data?

2.5 quintillion (that’s 18 zeros…) bytes of data are created every day (Source: IBM)

There’s some big talk around about big data and the benefits it could provide to businesses – from increased revenue, improved customer awareness and more efficient ways of operating.

The possible uses for the data coming from the information gathering devices imbedded in our daily lives ranges from development of new products and services, greater individualisation of marketing and service delivery, and security and law enforcement insight. The overarching expectation is that big data will be beneficial.

Data is already captured in vast quantities and more is coming everyday as more objects join the Internet of Things and become senders and receivers of information. It is estimated the number of mobile phone users worldwide will surpass five billion in the next two years. In New Zealand alone research shows 70% of people have access to a smartphone for personal use. But what value can be extracted from these vast data sets, by whom (or what as we consider growing computational power and machine learning) and for purpose?

According to McKinsey and Company there are some key challenges faced by organisations trying to build data and analytics into their business processes.

The first challenge is incorporating data and analytics into a core strategic vision. The next step is developing the right business processes and building capabilities, including both data infrastructure and talent. It is not enough simply to layer powerful technology systems on top of existing business operations. All these aspects of transformation need to come together to realise the full potential of data and analytics.

Fortune magazine considers how too much data can be detrimental to organisations without insight.

Capturing more data will not automatically generate more value for a company. The more we collect data, the more we convince ourselves that we will be able to glean good insights from it. This modern take on the sunk cost fallacy is corporate quicksand. Data is only good when it results in accurate and relevant insights.

Importantly from a board perspective, any insights gleaned from big data need to be aligned with overall business strategy.

For boards, the advice is to clarify your vision. EY suggests asking:

• What do you want to achieve with data?
• What is relevant?
• What will drive value?
• Big data can mean big risks. What are the opportunities and value and how does the value link to the strategic plan?

Aside from the challenges of implementing big data analytics into a business, there are some fundamental questions to consider around privacy and trust. These questions are not so simply addressed, but business leaders and heads of government organisations alike are recognising the necessity to at explore these issues in more depth.

Context is king

It is hard to fathom how much data can be collected about a single person every day. IBM estimates around 90% of the data in the world today has been created in the last two years alone. But that data is fairly meaningless without context. Speaking on the Ted Radio Hour, Susan Etlinger discussed how the need for context becomes even more apparent when you consider that analysis of data is undertaken by machines not humans.

Etlinger argues that “we have the potential to make bad decisions more quickly and with far greater impact. It’s not as simple as saying if we have more data it will be better. We need to start thinking about the scenarios as we build these systems.”

Etlinger uses the example of data that shows when death by drowning increases, so does the amount of ice cream consumed. While humans understand the concept of seasons, will the machine analysing that data have this context?

“Correlation doesn’t equal causation,” Etlinger says. “If you don’t have the context you miss the meaning. If the machine does not know that seasons exist and the link is summer, the wrong conclusions can be made.”

As amusing as it might seem that a machine, unaware of the seasons, could potentially link drowning with ice cream consumption or vice versa, the real-world implications of data without context matter. The unintended consequences could be harmful to both consumers and companies when we think about using data insights more and more to shape business and society.

At board level there needs to be an understanding of the complexities of dealing with big data and how it can both assist and hinder decision making. It is not simply a case of collecting more information and pulling it out to glean business insights.

Trust, privacy and social licence

Caution is being urged in many corners by those concerned about privacy. In New Zealand, visiting United Nations Special Rapporteur on Privacy Professor Joseph Cannataci stated the government's privacy laws and regulations were "inadequate in 2016", and noted his concerns around data being used for security purposes at the expense of the privacy of individuals.

In January last year a report released by the United States Federal Trade Commission considered both benefits and risks of big data. Benefits included the ability to provide specialised healthcare to underserved communities. On the other hand risks included the exposure of sensitive information and the ability for unscrupulous companies to use big data to target vulnerable prospects (for example accessing lists of “suffering seniors” who are identified as having Alzheimer’s or similar conditions).

Members of the public are concerned about how and why data that is collected about them, businesses and social and government organisations, will be used. Polling conducted for the Office of the Privacy Commissioner found New Zealanders are happier with the idea of government agencies sharing data over to commercial organisations.

Concerns such as these are part of the reason discussion about data is so important Etlinger noted:

“This is what makes this conversation so important. What we need to do is think about the ways technology can serve us but also be mindful and have a set of principles that govern the way we will and won’t use data.”

Kenneth Cukier, also speaking on the Ted Radio Hour, isolated privacy as a key issue. He notes that we can’t opt out of data collection – it is happening already. The questions for directors and other leaders within society are how it is going to be used and protected.

“If we are going to accept big data and all the benefits that we can use it for, we need limitations so that we can preserve out fundamental freedoms... The benefits are so incredible and we must address the downsides so that we can take advantage of these, otherwise we would be a stupid society.”

An article from Silicon Valley Data Science said that conversations boards should have with their management teams will consider trust and privacy, including what will happen should a data breach occur. Not everyone who accesses big data will do so with honest intentions, or even have the right to that data in the first place.

These conversations will be ongoing as the data becomes more and more embedded in our lives. Without doubt big data represents some great opportunities for business and society. McKinsey and Company’s 2016 report ‘The age of analytics: Competing in a data-driven world’, suggests that the range of applications big data can be applied to and the opportunities these present will continue to expand. Those that use big data well may find themselves in a position to disrupt the status quo:

Given rapid technological advances, the question for companies now is how to integrate new capabilities into their operations and strategies—and position themselves in a world where analytics can upend entire industries.

What's happening in New Zealand?

Dame Diane Robertson, Chair, Data Futures Partnership talks about the work being done to strengthen New Zealands data ecosystem:

The Data Futures Partnership has been tasked by Government to strengthen New Zealand’s data ecosystem and drive more effective trusted data use. We report to ministers but are an independent body working across the public and private sectors.

An important part of our work is engaging with New Zealanders to understand how they feel about the ways in which their data is used and shared. We are using what we learn to develop guidelines designed to help organisations and companies build and maintain the trust of those whose data they wish to use. The guidelines will help data users develop social licence for their data activity.

The concept of social licence is important. When people trust that their data will be used as they have agreed, and accept that enough value will be created, they are likely to be more comfortable with its use. This acceptance is the social licence and is dynamic. It can change over time, or indeed be suddenly lost. It is dependent on the extent of trust the subjects hold in the data user, and their acceptance of the particular data uses. We are still reviewing the results of our public engagement work but it is clear that New Zealanders are far more comfortable about sharing their data when they understand why it is needed and what benefit it will bring to them or their community. Given trust in data use is so important, company boards have a particularly important role to play in relation to data governance and how client information is collected, used and shared.

A further element of our work is focused on identifying barriers which get in the way of data being used and shared effectively. The Partnership works with projects, such as our 18 catalysts, which are using data to tackle real world problems and extracts the learnings to share them more widely. Common barriers encountered include problems with data quality, issues with sharing data across organisations, and an absence of data standards or definitions which makes data collaboration difficult.

Over the coming months we want to continue engaging with organisations across New Zealand to learn from their experiences and ensure the guidelines we develop help them to grasp the opportunities presented by data use.

Dame Diane Robertson, Chair, Data Futures Partnership

Published in Boardroom Apr May 2017 issue