Tuesday, May 27, 2014

Analogies from the past

BigData-Startups ponders on the rise of (or heretofore lack thereof) the Chief Data Officer / Chief Analytics Officer

A data and analytics aware culture is in most businesses not present. Why not? Because revenue and profits are still flowing in at the end of the month and there is no sense of urgency or importance. There is basically no fire to do things differently.

 They go on to quote Jeff Jonas of the Wall St. Journal:

The biggest obstacle preventing companies from taking full advantage of their data is likely outdated information-sharing policies.

What's happening? Why would organizations fail to adopt successful strategies  that are--to we data geeks, at least--self-evidently the right thing to do to achieve the organization's objectives?

Erik Brynjolfsson and Andrew McAfee offer a compelling analogy from history. When factories were powered by steam, a single power plant was placed in the center of the factory. That power plant turned an axle. Factories were built up so that as many machines could be as close to that central axle as possible. Machines were placed based on their power needs, irrelevant to the factory's workflow.

When electric power began to replace steam power, factory owners simply replaced the central steam power plant with a central electric power plant. They saved a few pennies on energy costs and then went about their business.

It took years, a new generation of managers and factory owners, and budgets to build new factories to truly reap the rewards of electric power. New factories were built flat, every machine had its own small electric power plant. Machines were laid out according to the workflow of manufacturing a product. Huge efficiencies were gained in manufacturing. Profits went up while the price of manufactured goods went down. Society wins.

How does this apply today? We're still building our factories vertically. Those organizations and managers who have embraced a data-centric culture, it's not always obvious what the optimal data approach is. These things take time to work out, but the change is coming.

1 comment:

  1. Plus, they don't grok data. Or steam. Or electricity.

    ReplyDelete