On Analytics And Entrepreneurs
I do a lot of research and writing on analytics, and like seemingly everyone these days I am looking into the world of “big data.” Yesterday I had an interview with DJ Patil, one of the original “data scientists” (he coined the title!) at LinkedIn and a major guru in the big data world. He’s an applied math Ph.D. who once worked on chaos theory in weather prediction, but now helps startups think about how to use their data—particularly those funded by the VC firm Greylock Partners, where he is “Data Scientist in Residence.”
That role (the first at a VC firm, he thinks) probably has something to do with Reid Hoffman, who is a Partner at Greylock, and Executive Chairman at LinkedIn. Hoffman persuaded Patil to come to LinkedIn, and while there Patil’s group developed a lot of cool features for the site, including “People You May Know.” I always find the lists it creates somewhat uncanny—it remembers my friends and colleagues better than I do.
All this reminded me of the chapter I wrote with Julian Lange in the Babson-authored book The New Entrepreneurial Leader. Called “Prediction Logic: Analytics for Entrepreneurial Thinking,” the chapter focuses on the need for entrepreneurs to know and use analytics in their businesses. We didn’t have LinkedIn as an example at the time we wrote the chapter, but it has become one of the most prominent firms that are: a) very entrepreneurial; b) very successful; and c) very analytical. Hoffman and Patil have declared that “Web 3.0” will be all about data and analytics based on it.
Many entrepreneurs have traditionally made decisions by the seat of their pants rather than by data. They have gone by the famous Alan Kay statement, “The best way to predict the future is to invent it,” or the famous Steve Jobs line, “It’s not the consumer’s job to know what they want.” I suppose if you are a technical genius, like Alan Kay, or a marketing genius, like Steve Jobs, you may be able to get away with ignoring the rise of data and predictive analytics.
However, if you are thinking about starting or renewing or improving a business right now that has anything to do with the Internet—and what business doesn’t these days?—you had better become at least somewhat analytically-oriented. The world is becoming more data-oriented by the minute. Already every customer click on the web creates a stream of data that needs to be analyzed if you want to know what the customer was thinking, and why you did or didn’t make the sale. Even products bought offline often need to be shipped, and before long every package is going to send out lots of data on where it is, what conditions it’s been in, and when you might expect it to arrive. Devices like your thermostat, your microwave oven, and your television are going to start telling the world what they are up to.
In the very near future, every business and every entrepreneur is going to be swimming in data. The most successful businesses will be those that know what to do with it. I hope you know how to swim!
Thomas H. Davenport, President’s Distinguished Professor of Information Technology & Management, Babson College