We all know the power of data – Google has been flaunting it for the past 20 years. But typically when we think about data, we associate it with some sort of technological or scientific innovation. Rarely do we escape the trap of functional fixedness, even in such an inherently inventive field. But what about using data to revolutionize the way that industries have functioned for centuries? What about in oil & gas? Real estate? Automobiles? Where lies the power of data, and how can we use it to our benefit?
First, it needs to be clear that there’s a difference between COLLECTING data and USING data. Anyone can collect data, but data without purpose is just dead weight. There are two ways to solve this issue from the beginning. If you’re a company who has already collected data, look at what you have and draw conclusions. But before you’re sold on your hypothesis, test it. Remember that correlation doesn’t prove causation. The better option, if you haven’t already collected data, is relatively self-explanatory – determine what your end goal is (bigger email list, more foreign investment, expansion of target consumers, etc.), and come up with 5 determinant data points to start with. Then collect all of the data surrounding those points, and draw conclusions. But even then, don’t forget to test your hypothesis afterwards.
Unfortunately, some of the functionality of data depends on the time that your company was conceived. Let’s say there are two companies, Company X and Company Y. Both are REITs. Company X was founded in 2013 and has 15 employees, while Company Y was founded in 1985 and has 50. Both have their own competitive advantages, but one is absolute. Company X, due to the time it was conceived, has the ability to utilize 21st century technology while it scales. Meaning that while half of Company Y’s transaction reports are offline, all of Company X’s are online and in an organized database. So instead of having to hire 20 people to analyze their data, they can hire 1 computer scientist to run automated programs all day.
That is the power of data in century-old industries. It’s the ability to scale lean without having to hire excess employees; to tailor your operations with a goal in mind; and to solely collect what is absolutely essential to your growth, and do it in a structurally competent manner. Think what you will about its effect on macroeconomics, but from a micro level, it’s irrefutably more efficient.
The beautiful thing about data is that it’s a boundless storyteller. Anyone, with the right information, can study forecasts, see trends, and conclude what’s going right or wrong in an individual company or an entire industry. And there’s no limit to what that can do for your business. No accurate prediction is out of the blue; all great business decisions are educated guesses that are formed on the footing of comprehensive data.