Speaking of impact, you're probably familiar with Netflix, the streaming company. The competitive advantage of Netflix is not or not only making videos available online, it is improving the whole experience of discovering those videos in the first place. Actually, Netflix collects enormous amounts of data and analyzes customer watching habits to generate personalized recommendations and offerings. And they go even further, they analyse what people like to watch and why, and use this data as a basis to produce their own series. Netflix might be an extreme example. This whole business model is built on Big Data as a competitive advantage. But Big Data can also bring incremental improvements to existing business across different areas of application. Let me give you some examples of how Big Data is used in different industries. The most common use of Big Data is probably personalization of offering. Companies like Amazon are obvious examples. But Brick and Mortar companies also use Big Data to get to know their customers and offer customized solutions. You think you got those discount vouchers from your supermarkets by chance? Think again. Fraud Reduction is another example of how Big Data can be used to create value. Credit card companies like Visa analyse billions of transactions to identify unusual patterns, and therefore reduce fraud in real time. According to Visa, that saves them $2 billion each year. Big Data can also be used for Predictive Maintenance. What does that mean? It means that a company can use the data it collects about operations to predict performance issues before they even happen. This is extremely valuable especially in asset intensive industries. An oil and gas client for example, had hundreds of wells across three continents connected to an analytics platform, which integrates data from those facilities and generates insight. This generated savings of more than $200,000 annually. And these are just selected examples. Big Data has many more application areas across all industries, all functions. We estimate that leaders in Big Data generate an average of 12% more revenue than those who do not maximize their use of analytics. Now, how do those leaders better manage to unlock value from Big Data? We will have a closer look at this in Module 4, but I want to start here by discussing with you an overlooked challenge. Here's an interesting story from 2012. You might have heard about it. It was a big scandal all over the news. The New York Times printed their article, How Companies Learn Your Secrets. The journalist narrates the story of a man who went to his local grocery store complaining that his daughter, teenage daughter, was strangely receiving coupons for baby products. The store manager of course apologized, not sure why headquarters comes up with those recommendations. The store manager, a diligent man, called to apologize again few days later, only to learn that the daughter is actually expectant. And there are more examples like this in which companies have done fantastic analytics work but ended up losing something much more valuable, customers' trust. And if you want your customer data to be your competitive advantage, trust is the one thing you don't want to lose. In fact, a BCG study found that customers' reaction to data misuse can cause them to reduce their spending with a company by about one-third. This cannot be mitigated by even longer or more complex legal documents that you get your customers to sign. It can protect you in court, maybe, but not from a PR standpoints. If you are interested to hear more about this, check my conversation with John Rose, BCG senior partner and writer of multiple perspectives in the topic. So, let me summarize the most important takeaways from this lesson. The amount of stored data is increasing exponentially with a strong shift from analog to digital. Big Data can be defined as an enormous amount of unstructured, fast moving data. It can be traced, connected, and analyzed to generate business value and even to transform whole business models. Big Data is not only a technology question, it is about earning and maintaining customers' trust. This will be the source of a long lasting competitive advantage.
