Data Analytics. The decade of the consultant?

A recent survey on Techrepublic[i] showed that businesses were using data analytics to increase revenue, better understand customers and assess markets. So… basically, it is relevant to every business on the planet. I wonder then what this means for traditional service providers of high-powered analytics?

Is this the beginning of the end for management consulting firms?

More and more businesses are gaining access to data analytics services that allows them to slice, dice and interpret data in increasingly intuitive ways. For instance, 70% of Techrepublic’s members will be using big data analytics by the end of the year! A management consulting analyst would previously spend one week, and several thousands in fees, creating a spreadsheet dissecting market shares of various players and segments. Now a company employee can access this data at the click of a few buttons.

Of course, the data still needs to be tailored to individual business needs, but perhaps the likes of IBM’s consulting arm are more suited to this growth market than traditional consulting firms? Perhaps McKinsey will be forced back to its roots; pure strategy consulting instead of implementation and operational improvement projects?

It’s a nice story, and many would cheer the demise of the high-priced consulting industry, but this narrative misses several important points.

First, talent cannot keep up with the data. The McKinsey Global Institute recently estimated that the United States is already short up to 200,000 workers with “deep analytical expertise” and 1.5 million “data-literate managers”.[ii] It will take years to retrain existing managers, and decades to adjust the education system to compensate for the increased analytical knowledge necessary in graduates. (I realize the irony of sourcing McKinsey to defend McKinsey…)

Second, the automation of some types of data analysis is offset by the proliferation of thousands of new data points and sources. This means that the type of analysis conducted by a typical consultant will simply change, to incorporate the automated data as inputs, and then synthesize and analyze new sources. Said another way, it is the business of management consultants to generate insights by cross-referencing data points and analyzing at the margin. When has that been easier than today?

If anything, the Data Analytics revolution is great news for traditional management consulting firms. The more data, the more complex the analysis, the more analyses that are possible, and the more difficult it is to synthesize conclusions. Oh, and guess who attracts the top analytical talent? Nice one, McKinsey.

Data Analytics are here to stay. So are management consultants.

For those of you disappointed in this conclusion, take solace in another trend: the amount of knowledge transfer from the top-tier consulting industry to corporates has been enormous over the past few decades; mainly because the proportion of ex-consultants in the workforce is multiples higher than twenty years ago. Gantt charts and profit pool analyses are now the norm. If this trend continues, and growth in Data Analytics slows (as it inevitably will), then there just might be a day when… well, probably not.


[i] Bill Detwiler, Techrepublic, 29 Nov 2012, ‘Beyond hype: 70 percent will use data analytics by 2013’, http://www.techrepublic.com/blog/big-data-analytics/beyond-hype-70-percent-will-use-data-analytics-by-2013/284

[ii] Steve Lohr, The Age of Big Data, New York Times, http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?pagewanted=all&_r=0


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Who would imagine a world where a HBS course mandates each student to write a blog post as an assignment 20 years ago? Welcome to such a strange world where a person like me without any writing talent writes a blog post under the name of Harvard

Business School…

The emergence of the Internet obviously lowered the hurdle of self-expression to the general public for ordinary people and dramatically increased the impact of it. The world was also surprised to see how much of us inherently own (and had hidden) a strong desire to express ourselves beyond day-to-day fashion or bar conversations with friends. Blogging is probably the first generation of online self-expression, mostly through writing. And innovations in technology, entrepreneurship and a huge amount of investors behind them have enabled completely different ways of online self-expression, including YouTube, Twitter, Facebook and so on. The trend here seems pretty simple; online self-expression is becoming more and more intuitive and centered around your taste itself, rather than how you skillfully write about it. Following this trend, one of the ultimate forms of the intuitive online self-expression today is probably Pinterest.

According to Wikipedia, Pinterest is “a pinboard-style social photo sharing website that allows users to create and manage theme-based image collections such as events, interests, hobbies, and more. Users can browse other pinboards for inspiration, ‘re-pin’ images to their own collections or ‘like’ photos” and has gathered about 12 million unique users (as of the beginning of 2012) since its launch in March 2010, making itself the fastest website to break through 10 million unique users. Having read some articles and heard from my tech-savvy friends, I came to believe Pinterest has successfully hit 2 unique insights of people’s desire for online self-expression:

1. “I want to express myself through a collection of visuals I love.”

Self-expression through visuals is definitely one of the key aspects to understand Pinterest because writing nice sentences that you want to represent yourself is definitely not a piece of cake for all of us. But what’s equally important about Pinterest is that you can use an organized collection of visuals to express yourself, rather than random pieces of your private life e.g. your Facebook timeline that doesn’t necessarily represent your taste.

2. “I want to reconfirm the fact that my taste of visuals is so cool…!”

People love to recognize that their own taste is actually pretty nice, but it’s not always too easy to do so because things around you, that are supposed to represent you, easily get messy e.g. your room, your desk, your iPhone’s photo albums and etc. But filling Pinterest’s pin board with nice visuals and organizing them are easy for some of the people, which makes Pinterest a perfect tool for them not only to express themselves but also to find (and reconfirm) that their taste is amazing.

As mentioned above, Pinterest’s value proposition has certainly been addressing unmet needs for some of us. But not for all of us. As Pinterest becomes bigger, I started to realize there are more and more people like myself who understands the beauty of it but simply can’t use it well. Their (and my own) frustration is that they simply forgot how to express themselves intuitively through visuals after years and years of training that taught them to express themselves through “conclusion first supported by 3 reasons” kind of communication style (we call them “left-brained” people in Japan). If a Pinterest account becomes another must-have, just like twitter, Facebook or Linkedin, and becomes like a business card, that would totally be a nightmare because the collection of visuals I pick will never represent who I am in the way I want.

Then, the question is with what can I express myself the best? The simplest answer to me is my bookshelf, or other words, information I’ve consumed. You could even tell who I am very well if you look at the online articles I’ve read for the past 1 year. So, what if there is a website where you could pin any information you consumed online in a nicely organized way and use it as a self-expression tool, pretty much like Pinterest for “left-brained” people. I’d love to create an account and share it with my friends just like others enjoy Pinterest. Or, I could manage my online information consumption (e.g. what are the categories I spent most time on last week? Finance? Tech Business? Should I spend more time on Politics? How about my friends?) just like people manage monthly running mileage with Nike +.

I think it is a little different from the way you express yourself through random pieces of your life on Twitter or Facebook or clipping information for yourself on Evernote (because the objective is to share and manage the amount/ category/ variety of information you consume, not to keep all the details of important information you found and don’t want to forget). What do you think of this idea? I’d love to hear your thoughts.


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Big Data in the Online Economy

Everyone is talking about “Big Data” and the amount of interest in this area from investors and even the government is currently huge. Online/internet companies like Google, Amazon, Facebook have be

en the lead adoptors of this technology and are also in the forefront of innovations in this space. It would not be too far-fetched to claim that “Big Data” is one of the engines driving the online economy .

What benefits does this massive data processing capability provide?

For companies, one of the primary benefit is improved operational efficiencies in targetting the right customer base – whether it is Google and Facebook using your browsing/searching history and online activity to sell targeted ads, Amazon providing better recommendations for product purchases, or Target using your purchase history to send you coupons. In the semi-online world, “big data” is enabling new discoveries in the health sciences field and other scientific endeavors, helping intelligence agencies with better analyses, driving more operational efficiencies in supply chain management, Khan Academy is using it to better evaluate students, insurance companies are using massive data sets to predict risk better and quicker, hubway is using it to provide improve locations and capacity to best serve cyclists, sports teams (money ball!) are using it to evaluate players, and even presidential election are using it to win elections! There is also a push towards using big data for more data oriented decision within organizations with the hope that it will result in better business outcomes.

For customers, these advances in big data processing have made the online browsing experience more customized. Imagine LinkedIn without its “Jobs You may be interested In” feature or Amazon, YouTube, New York Times etc. without its recommendation engine. New frontiers are also being explored. A startup travel company in the Boston area is exploring the idea of using individual browsing and search histories and online social activity to provide you with travel destination recommendations which you most likely to enjoy. Big data analytics combined with “crowd sourced” intelligence is another approach leading to some very interesting products. A blog post earlier in this semester dealt with

The Downsides of Big Data
There is also a potential downside to this advance – the social and legal implications of governments and organizations posessing so much information about individuals is not completely clear yet. There is literally a “data grab” going on and there have been some obvious cases of invasion of privacy. A retail chain knowing when women are pregnant before their families do, or a group of students working on a class project being able to predict a person’s sexual preferences based on the person’s facebook activity are just two instances of this. If enterprises – with their primary objective of profit making – know so much about you, how will they use this information? In the best case scenario, people will get information really relevant to them. In the worst case scenario, it could lead to some kind of “online discrimination” based on your online activity or even something insidious as information control – companies or governments deciding what information people see and when. Whichever way it plays out, it is definitely going to be an interesting ride in the near future.

References and Articles:

http://gigaom.com/cloud/obama-administration-to-push-big-data-agenda/
http://www.mass.gov/governor/pressoffice/pressreleases/2012/2012530-governor-announces-big-data-initiative.html
http://www.heritagehealthprize.com/c/hhp
http://hubwaydatachallenge.org/
http://www.vjolt.net/vol6/issue2/v6i2-a11-Weiss.html
http://www.mckinseyquarterly.com/Competing_through_data_Three_experts_offer_their_game_plans_2868
http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?pagewanted=all&_r=0
http://online.wsj.com/article/SB10001424127887323353204578126671124151266.html


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Recently, I came across a new trend – social commerce – where more and more businesses are providing discounts and other incentives to its customers in exchange for publicizing their purchases online. Social Commerce is the intersection of social media activity and eCommerce where sharing leads to real dollars. I learned of this phenomenon for the first time through an online shopping website Gilt.com. When I logged in on to the website using my iPad, Gilt offered me a discount to download their app and asked me for permission to make my purchases visible to my friends on facebook (Gilt promised some exceptions, however, gifts and intimates purchased would be excluded). At first, I thought: “What a genius marketing idea!” but then I started to doubt whether this idea was feasible and would get any customer buy-in. On the one hand, people I am friends with probably fit within my age and socio-economic group, thus purchases I make might be items my friends would be interested in buying. Ecommerce businesses by making my purchases public would be getting access to exactly the customers they want. Furthermore, the fact that I actually made the purchase as opposed to just liked the item (Pinterest allows users to simply share items they find appealing) might be a more powerful signal to my friends and might have a meaningful influence in driving transactions for any given ecommerce business. However, at the same time users might not be as excited about making their purchases (sometimes irrational, i.e. items of designer clothing that cost way more than they should) public. I, for one, thinking about that downside refused to become a member of this service despite the whooping 20% discount Gilt offered me). I imagine, there are many users like myself out there who would be worried about giving away the right to make their purchases public to online commerce website.

Social media democratized marketing for small businesses: successful promotion and distribution of products is no longer reserved for larger companies who can afford expensive media expenses such as TV ads, commercials during sporting events, etc. Companies like Facebook and Twitter have leveled the playing field – allowing participants to share events, products, and companies they are excited about with their friends by simply clicking the “like” button. Mass adoption of these platforms made it incredibly cheap for companies to reach a large subset of the population that might have a high likelihood of enjoying and purchasing their product.

EVENTBRITE CASE[1]:

Eventbrite is one of the companies that is very excited about social commerce and uses it extensively. The company allows users to share the event before they’ve purchased a ticket by featuring the Facebook “Like” button. On their order confirmation pages (after the ticket has been purchased), they placed a “Publish to Facebook” tool. They track event-sharing behavior carefully and have made few key discoveries from the data they collected between October 2010 and March 2011:

  • 40% of sharing through Facebook occurred on the event page (via the “Like” button) vs. 60% of sharing which occurred on the order confirmation page. This suggests that the motivation to share is higher once the purchase is made and the guest is confirmed to attend the event.
  • The company’s BSR (browsing share rate) is 1% — only 1% of people who are simply exploring the idea of going to the event share with their friends before purchasing a ticket to the actual event. Eventbrite’s TSR (transcation share rate), on the other hand, is 10%, which means 10 times more people share an event from the order confirmation page.
  • They’ve also found that post-purchase share on facebook drives 20% more sales than a pre-purchase share.

The Eventbrite case shows that social commerce is a very powerful tool that could be used to drive sales for a business. However, are all businesses created equal when it comes to social commerce? Or are some businesses meant to succeed in integrating their tool into their marketing strategy while others are doomed to fail?

I believe it is the latter. Although people feel more and more comfortable sharing many aspects of their lives online – e.g. music they listen to (Spotify), events they go to (Eventbrite), places they’ve attended (FourSquare) – products they buy might not be one of them. Firstly, because frequently purchases we make online (although frequently discounted) might be overpriced – an average price for a shirt on Gilt is around $100, which is significantly higher than the price of an average shirt an average American buys (partly due to the fact that items sold on Gilt are designer). Secondly, frequency of their purchases might be something people are ashamed of. If someone shops online every week feels embarrassed by their shopaholism, they might be uncomfortable by these public posts and thus, it could potentially hurt Gilt by discouraging to customers to make frequent purchases. Thirdly, many of us have facebook friends that we do not know much about, so perhaps I am not comfortable with those individuals finding out more about my spending patterns. For the reasons above, I can see how Gilt could fail at implementing a successful social commerce initiative. I believe to succeed, they should beta test it and incorporate a solution similar to that of Eventbrite, i.e. let customers choose which purchases they want to make public and which they prefer to keep private (as opposed to making every purchase public by default). This approach would allow Gilt to analyze their preliminary data and ensure that their customers are happy with this sharing and then consider making it a default feature.


[1] http://blog.eventbrite.com/social-commerce-2/

 


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Fresh out of the Thanksgiving holiday shopping spree, a few interesting reports came out digging into the Black Friday-Cyber Monday ecommerce shopping performance. cialis sale

rts/black-friday-2012.html” target=”_blank”>According to IBM, mobile engagement continued to soar, making up 24% of the traffic and 16% of the sales. Fab.com, a design-focused ecommerce startup, has been seeing very interesting mobile stats on sales and the dominance of the iOS platform – revenue from its mobile apps reached 25% of total sales just 30 weeks post-app launch (95% of which came from iPhone & iPad), and mobile apps generated over 1/3 of its Black Friday-Cyber Monday sales. This phenomena is not hard to undersand – people are simply spending more time with their phones than with their computers.

The continued rise of smartphone led to an appreciation for a “mobile first web second” strategy – in order to deliver the “right” mobile experience, you have to start building your product with the mobile UX/UI in mind (vs. building a website and then repurpose the web experience to mobile). As a result, countless startups focused all their resources and energy to build a killer iOS app (why iOS first? because it continues to dominate Android on engagement and monetization) only to realize there are some serious flaws in this approach.

Some of the issues around building a “mobile first/mobile only” product can be attributed to the unique properties of a mobile device (e.g. smaller screen translates into a constant battle between usability and monetization, small/ineffective ad units, etc.), but a few of the key problems can be traced back to how Apple runs its App Store.

Problems:

  • Discovery/Distribution – One of the key differences between the web and mobile is that there is no SEO/SEM in the App Store, a key tool for organic traffic and paid marketing for driving visitors to your websites. Yes, you can “kind of” buy pay-per-installs through ad networks such asTapjoy and Flurry, but Apple continues to crack down the whole pay-per-install model with its latest App Store rule change. The sheer volume of apps in App Store plus its notoriously random “Featured Apps” system makes it extremely hard for an app to gain any organic visibility. In short, no one has cracked the app distribution nut and Apple is not helping.
  • App Approval Process & Cumulative Reviews – In a web environment you can iterate much more cheaply and faster than you can do so on mobile. For one, it costs much less to build a “minimum viable website” to test key hypotheses than to develop a fully-functional native app. Apple’s app approval process has improved over the years in terms of speed and transparency, but it is still a barrier for fast iteration and testing (wait time running up to to three weeks). Furthermore, the fact that all Ratings & Reviews of an app is carried over across versions means that the first version “can’t suck.” The only way to avoid “getting on the app store stage before you’re ready” (to avoid bad reviews) nd test your app with users is through Apple’s Ad Hoc distribution (but you’re limited to 100 beta testers) or third-party hacks such as TestFlight.
  • Apple’s 30% Cut – Apple charges 30% revenue share on gross revenue generated through apps (in-app purchase AND ad revenue). 30% off the top is great profit for Apple in the short-term, but if no one can build a real mobile business in the iOS ecosystem given the high customer acquisition costs (see “Discovery/Distribution” above) and the hefty 30% payment to Apple (and we haven’t taken into account credit card payment processing, taxes, etc.), Apple might have a problem in the long run.

So what can you (and Apple do) beyond reconsidering the above policies?

  • (You) Build Web Presence to Drive Mobile Download – Instead of “mobile first web second,” maybe the alternative strategy is “mobile product web marketing” – leveraging traditional SEO/SEM and the web’s larger screen to do more effective, targeted marketing and a simpler on-boarding process. You do the “selling/convincing” on your homepage, walk the user through a sign-up process to create an account, then bring the user to the App Store to download the app. An example: I found out about Lift through an article and arrived at its homepage, which did exactly the above. I would’ve never thought of looking for the Lift app in the App Store otherwise. Instagram also leveraged its web presence (via shared Instagram photo landing pages) to drive awareness and downloads.
  • (Apple) Native “Share An App” Function and Referral API – The major benefit of Apple’s “closed” App Store ecosystem is that the user experience is much more unified across all apps. Contrary to the web environment, there’s no easy way to create a mobile viral loop among iOS devices to facilitate sharing an app with friends. One thing Apple should consider is to build in a native “Share An App” function that sits within each iOS app, so a user can easily spread the word with contacts who have iOS devices. To push this thought further, Apple could develop a referral credit API (e.g. invite a friend and get $10 credit when the friend installs/purchases) to further help facilitate native viral loops within the iOS environment.

Apple’s iOS ecosystem is currently enjoying the mindshare of developers, and developers need a thriving ecosystem that can help them build a business. It’s a fine balance to strike between maintaining the integrity of the user experience and optimizing on monetization, but Apple should start spending more time to help developers make a plausible business case by investing in “mobile first on iOS.”


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