The Big Data Boom... is the Beginning

Extracted 21NOV2011 from

Today businesses can measure their activities and customer relationships with unprecedented precision. As a result, they are awash with data. This is particularly evident in the digital economy, where clickstream data give precisely targeted and real-time insights into consumer behavior...

Science has been dominated by the experimental approach for nearly 400 years. Running controlled experiments is the gold standard for sorting out cause and effect. But experimentation has been difficult for businesses throughout history because of cost, speed and convenience. It is only recently that businesses have learned to run real-time experiments on their customers. The key enabler was the Web.

Consider two "born-digital" companies, Amazon and Google. A central part of Amazon's research strategy is a program of "A-B" experiments where it develops two versions of its website and offers them to matched samples of customers. Using this method, Amazon might test a new recommendation engine for books, a new service feature, a different check-out process, or simply a different layout or design. Amazon sometimes gets sufficient data within just a few hours to see a statistically significant difference. [differences that are generalizable given...]

This ability to rapidly test ideas fundamentally changes the company's mindset and approach to innovation. Rather than agonize for months over a choice, or model hypothetical scenarios, the company simply asks the customers and get an answer in real time...

While passive data gathering can be useful, measurement is far more valuable when coupled with conscious, active experimentation and sharing of insights. Likewise, the value of undertaking the experiments themselves is proportionately greater if the organization can capitalize on those experiments in more locations and at greater scale. In combination, these practices constitute a new kind of "R&D" that draws on the strengths of digitization to speed innovation. [the questions of location and scale are deep questions about change, invariance, and what constitutes a replication... see comment below]