But over the last ew years, the volume o data has exploded. In 15 o the US economy’s 17 sectors, companies with more than 1,000employees store, on average, over 235 terabytes o data—more datathan is contained in the US Library o Congress. Reams o datastill low rom inancial transactions and customer interactions butalso cascade in at unparalleled rates rom new devices and multiplepoints along the value chain. Just think about what could be hap-pening at your own company right now: sensors embedded in processmachinery may be collecting operations data, while marketers scansocial media or use location data rom smartphones to understand teens’ buying quirks. Data exchanges may be networking your supply chain partners, and employees could be swapping best practices oncorporate wikis. All o this new inormation is laden with implications or leaders andtheir enterprises.
Emerging academic research suggests that com-panies that use data and business analytics to guide decision makingare more productive and experience higher returns on equity thancompetitors that don’t.
That’s consistent with research we’ve conductedshowing that “networked organizations” can gain an edge by openinginormation conduits internally and by engaging customers and sup-pliers strategically through Web-based exchanges o inormation.
Over time, we believe big data may well become a new type o corporateasset that will cut across business units and unction much as apowerul brand does, representing a key basis or competition. I that’sright, companies need to start thinking in earnest about whetherthey are organized to exploit big data’s potential and to manage thethreats it can pose. Success will demand not only new skills but alsonew perspectives on how the era o big data could evolve—the wideningcircle o management practices it may aect and the oundation itrepresents or new, potentially disruptive business models.
For more, see the McKinsey Global Institute report
Big data: The next frontier for innovation, competition, and productivity
, available ree o charge online atmckinsey.com/mgi.
See Erik Brynjolsson, Lorin M. Hitt, and Heekyung Hellen Kim, “Strength in numbers: Howdoes data-driven decisionmaking aect frm perormance?” Social ScienceResearch Network (SSRN), April 2011. In this study, the authors ound that eective useo data and analytics correlated with a 5 to 6 percent improvement in productivity,as well as higher proftability and market value. For more, see the orthcoming e-book by Brynjolsson and coauthor Andrew McAee,
Race Against the Machine: How thedigital revolution accelerates innovation, drives productivity, and irreversibly transformsemployment and the economy
(Digital Frontier Press, October 2011).
See Jacques Bughin and Michael Chui, “The rise o the networked enterprise: Web 2.0fnds its payday,” mckinseyquarterly.com, December 2010.