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CHAPTER 2: IN.FOR.MA.TION - Coggle Diagram
CHAPTER 2: IN.FOR.MA.TION
Human Obsession with Prediction :pencil2:
Assumption
Past behavior reasonably predicts the future
Rely on historical data
Good predictions need:
(a) Sound Data
Data ▶ Information
Data is raw facts - Example: 24, 32 and 28 are data
Information is when they are sorted, condensed and contextualized - Example: temperatures for tomorrow which makes them information.
Insight
or knowledge, is actionable information
Example: Deciding what you will need to wear tomorrow is insight that you can act on
Unreliable data ➡ Untrustworthy insight
IT unit's job: Collecting and managing data
But not all data is worth managing. Not all information it produces is competitively valuable
Non IT manager: must help your IT colleagues figure out what types of information are competitively valuable to your line function and how fast you need it
(b) Sound Models/Reasoning
Business apps transform Data ▶ Information ▶ Business Insight
Software apps transform data into information then into business insight
Insight does not emerge spontaneously from data without efforts to transform it
Turning raw data into actionable insight must begin with questions*
Non IT manager: help identify what business outcomes are competitively important to predict, within time constraints and which model you would use to predict them
You can begin with just 1 business outcome that you believe could differentiate you from your archrivals
Predictions are only as good as the managerial insight in the underlying models
Their underlying models/reasoning is based on functional domain knowledge, which can come only from non IT managers
Arrival of "Big" Data with TWO(2) opportunities :pencil2:
Generating foresight :
Cheap computing horsepower speeding transformation
Challenge: How to use such foresight to deliver more business value
Example: micro-segmentation, dynamic pricing and instantaneous price discrimination
Discovering what causes what
Correlation in statistics ~ Walmart's beer and diapers sales on Friday night
Causation is the Holy Grail of prediction
Can tweak things that cause sales, returns or customer loyalty
Trifecta is opening up opportunities exclusive to born-digital firms
Abound in information intensive activities
Example: finance, operations, supply chain, marketing
"Big" Data is More than Just Volume
The "big" in big data is not simply a magnification of volume but rather one qualitative difference:
ephemeral data streams are supplanting data points
Ephemeral
: the data lasts for a very short time because its volume far exceeds our capacity to store it.
If you do not use it within a brief moment, you lose it
Streams
: the data is continuously flowing as a series of data points
The digitization-infusion-ubiquity trifecta perpetuates these data streams
Firms now have data streams coming from instrumented, interconnected supply chains, mobile devices, IoT, social media
Example: Walmart produces over 200x entire Library of Congress every hour
Boeing 787 jet generates 2500 iPhones worth every hour
Most firms have more data than they know what to do with. They often fail to capitalize on the data that they already have
Big data raises the bar for what constitutes a valuable insight. If your archrivals can extract and act on a valuable insight faster than you can, it is worth far less to rediscover it
Three Lenses for IT Strategy :pencil2:
Meaning : It is about the three lenses (level of zoom) which give sharp insight for formulating IT strategy
IT strategy requires understanding on;
Five Forces Model (How IT is affecting your industry)
the lense is for your telescope - to zoom out to the level of the industry that your company in it
how IT altering the rules of competition for every company in your industry including your archrivals
create strategy to make industry attractive
Value Chain (How IT can alter how your firm creates value vis-a-vis your archrivals)
the lense is for your magnifying glass - to zoom in to compare your firm with your archrivals
how your company and archrivals create value and from value chain you could be able recognize where your company can use IT to imagine how it earns it kids
operational effectiveness and value added: Inbound logistic ➡ Operations ➡ Outbound logistic ➡ Sales ➡ Services
Competitive Litmus Test (Whether a particular IT asset can create a sustainable competitive advantage)
the lense is for your microscope - can use competitively most tests to zoom in on an individual idea sets
you would know whether the IT itself can offer a sustainable competitive advantage over for your archrivals
Three lenses must be use together because they zoom into different aspects of your firm's competitive landscape
IT alters industry attractiveness but also provides antidotes. IT can alter the attractiveness of an entire industry by increasing transparency, blurring industry boundaries, enabling legacy-free business models and squeezing margins
Firms can use IT to erect unconventional competitive barriers using network effects and analytics-driven customization