Organizations of all shapes and sizes are investing in data and analytics, but few understand how to glean forward-thinking insights from those findings. Yet, as artificial intelligence becomes integrated into more products and services, those insights will become increasingly vital to business decision-making and growth. Data-driven insights have the potential to help businesses better serve customers, become more efficient, predict behaviors, manage risk and more.
“Innovation starts with the data and being able to look for ways to improve processes and predictive maintenance,” says Hitachi Consulting’s Vice President of Solution Sales, Americas Jim Weldon. Hitachi Ltd. has been honing its methodology for incorporating innovative management practices into its businesses for more than 30 years and has been sharing its expertise with other companies for more than 15 years through its strategic consulting arm in a wide range of industries from aerospace, energy, mining and government to health care, financial, transportation and retail. Here’s what Weldon has to say about the role of data in driving innovation and shaping the future of business.
How can companies leverage data in their decision-making?
There are three things we ask our customers. Can you account for all your data? Can you ascribe a monetary value to each data set in the company? And is the data an asset or liability? Once we can answer those questions, then we can start looking for opportunities for growth whether it’s in a market or a product line and figure out if you need to continue to invest in a product line or create a whole new way to solve the problem. That comes out of understanding data itself. R&D budgets are usually not driven by the data but by market research. Brands continue to innovate in a particular line of product because people gave them attitudinal feedback. They don’t go into the market and empirically analyze what is really going on. It’s an endemic problem across nearly every organization.
What are some ways companies can better analyze data?
We have a methodology called data supply chain analysis that teaches our client companies how to implement a framework that allows them to strategically leverage their data to improve their operating performance. We have systems that create the data, we have a system in the middle that acts as an exchange to make it accessible, and we have the demand side. Once companies understand they have a data supply chain and a common data exchange, we start looking at the current state of it — here are the leaks, here are ways to fix it and here’s how more effective it could be in giving you insight. You don’t just want to see the historical trends; you want to get the insight out of your data. You want to look forward to which machines will break, which inventory you need to have, and what is the demand forecasting based on the trends in the market. That’s difficult to get to if the data isn’t properly organized in the data supply chain.
What trends do you see emerging in this area?
Machine learning is going to exponentially change how we look at things. Look at the artificial intelligence platform Siri and what Amazon does with its predictive recommendations. As those areas continue to improve, AI will fundamentally change how companies compete. They will rely much more on those types of systems to make their investments. There are just too many combinations and permutations to understand the implications of your decisions without the help of an expert system. If you are not looking at those types of platforms to help your company, you’re going to be left in the dust.
Where should companies invest in innovative?
The data will tell them where to invest, whether in the market or channels of distribution or product innovation. There are so many different dimensions of innovation. I don’t think we’ve even begun to figure out all the ways to innovate. If you look at all the core components that make up the business, you can innovate in any of them. When you start looking at it from a data-driven perspective, you’ll know very quickly what can give you an advantage in the market.
How can companies like Hitachi help shape the future of business?
Some of the work we do is for the good of all, and some things we do for the benefit of our company. We’ve put dollars in well in advance of whether or not we’re sure it will be a commercial venture because it’s the right thing to do. That’s the role of companies like Hitachi: to continue to invest even if they don’t see a path to commercialization.
Hitachi Consulting was a sponsor of the second annual YPO Innovation Week.