Leverage Data to Drive Business Growth

How many times have you heard that data is crucial for business success? Data helps companies make decisions, improve efficiency, personalize and innovate products or services, and identify problems, among many other things. However, not everyone knows how to leverage it effectively.

Miguel Houghton, Data Scientist at Mercedes-Benz AG, explained in this open class how technological innovation has led to a shift in business mindsets towards a focus on the value of data. We’ll also see an example of how a successful company uses data. Let’s get started!

Technological evolution in companies and Big Data

Due to rapid and constant technological evolution, companies have become more productive, efficient, and competitive in recent decades in an increasingly demanding and globalized market. This has allowed them to achieve improvements in production, storage, and information management processes with the help of technologies that have revolutionized the way they operate. Such as Artificial Intelligence, Cloud Computing, the Internet of Things, and robotics. 

New technologies such as 3D printing, Augmented and Virtual Reality, and Quantum Computing are becoming increasingly valuable, and companies face the challenge of incorporating them to achieve success and further transform the way they operate and compete in the market.

However, the emergence of these new technologies has led to the generation of a large volume of data in the business environment, also known as Big Data. This is a very important asset for the strategic planning of any business. To fully understand the scope and dimensions that Big Data can have in informed business decision-making, the 5Vs emerge:

1. Volume: the amount of data being generated, collected, and stored. Big Data is characterized by large volumes of data that exceed the capacity of traditional data processing tools.
2. Speed: This refers to the rate at which data is being generated and needs to be processed. With the number of applications and devices generating data in real time, processing speed is one of the most important characteristics of Big Data.
3. Variety: the diversity of the types of data being generated and collected. This data can be structured, such as tables and numbers, or unstructured, such as videos, images, and text.
4. Accuracy: the reliability and quality of the data being generated and collected. The data must be accurate and reliable so that it can be used for decision-making.
5. Value: This refers to the potential value that data can bring to the business. Big Data can be used to identify patterns, trends, and business opportunities that would otherwise be difficult to detect.

Stages of data transformation

Data is a valuable and strategic asset for any company. To create value, we must use techniques that allow us to interpret the different sources of data. The stages through which data is transformed into value are:

• Data: This can be defined as concrete, decontextualized facts. At this stage, the data that will be used later is collected and stored. Data can be collected from various sources, including the organization’s information systems, sensors, social media, and other external data sources. Once collected, the data is stored in a repository or database.
• Information: various contextualized data with meaning and significance. During this stage, multiple activities are carried out to prepare the data for analysis, such as data cleaning and normalization, elimination of duplicate data, and identification and correction of errors.
• Knowledge: a combination of contextualized data and relevant user experiences. The goal of this stage is to create a deeper understanding of the data and how it can be used to improve the organization’s performance and effectiveness.
• Wisdom: also known as the action or results stage, it consists of making informed decisions based on processed data. This may involve identifying patterns and trends in the data, predicting future events, and creating more effective business models.

An important aspect that should not be forgotten is data collection, but where can we find it? Companies can obtain internal data through business transactions, customer data (customer profiles, purchase history, demographics), production data (quantities produced, cycle times, production efficiency), financial data, or IoT device data (motion or temperature sensors).

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On the other hand, to obtain external data, they can use public databases related to the company’s sector, social media data, websites, and surveys. Some examples would be: weather databases, data consumption data, or population data.

The impact of data on each business’s strategy

A business strategy is a company’s long-term plan for achieving its goals and fulfilling its mission. There are two common paths to generating value by analyzing the data a company manages:

1. Grow the business: creating value through the creation of products, services, and the implementation of innovative proposals.
2. Run the business: creating value through the optimization or improvement of internal company processes.

The analysis of large amounts of data and the use of Artificial Intelligence are revolutionizing decision-making and strategy development in business. Companies that utilize new technologies and focus their strategy around their use can gain a competitive advantage in their sectors, as well as significantly improve business efficiency.

How do companies use data? Success story: Starbucks

Starbucks is known for its ability to collect, analyze, and use data to make effective business decisions and improve the customer experience. Some of the processes in which the company uses data include:

• Knowledge and optimization of the product offering: the company uses data to determine which products are popular and which are not, being able to adjust its offering to meet the needs of customers.
• Experience personalization: It uses data about users’ preferences and purchasing habits to personalize their experience. For example, the Starbucks mobile app shows product recommendations based on the customer’s purchase history.
• Inventory and on-demand product management: Uses data to manage your inventory and minimize food waste, allowing you to predict demand and adjust inventory levels accordingly.
• Supply chain management and supply optimization: The company uses data to manage its supply chain and ensure that products are delivered on time and kept in optimal condition.

As we can see, the company places data at the heart of its strategy to understand the customer, the product, and the location. To achieve this, it answers questions that every business should ask itself: What might be of interest? When might it be of interest? Where might it be of interest? And at what price might it be of interest?

Keys to success

Some of the key aspects to consider for making good use of data in your company are:

• Establish a strong data culture: decision-making should always be based on data.
• Identify different data sources: We must remember that data can be found anywhere.
• Constant innovation: companies that succeed through data analysis are constantly experimenting with new proposals and strategies to improve their business.
• Diversify the business without losing focus.

Ultimately, the main objective will be to create a data-driven strategy, also known as a data-driven mindset. This is a mindset that aims to minimize subjectivity and human error by prioritizing data as the primary factor in decision-making and problem-solving. Thanks to this, companies can develop more effective and efficient solutions, improving the quality and value of the products and services they offer.

Are you interested in the ICT sector? With the Bachelor’s Degree in Computer Engineering from UEMC, you will be able to design, implement, and maintain information systems thanks to learning advanced tools and techniques to navigate a constantly evolving digital environment.

Furthermore, we also offer the Official Master’s Degree in Management and Analysis of Large Volumes of Data: Big Data, so you can learn modern engineering methods, tools, and techniques and gain knowledge in an area with excellent career prospects and continuous development. What are you waiting for?