Big Data, the Internet of Things (IoT), Planning and the Lure of Near-Perfect Knowledge
There are two related trends in information technologies that may have a significant effect on strategic, project and operational planning in the near future. These trends are “Big Data” and the “Internet of Things (IoT).” These initiatives promise near-perfect knowledge and with it near-certainty in planning and decision making. But perhaps a word of caution is advisable.
Big Data
Big data refers to the collection of extremely large data sets that are gathered largely via the participation of millions of people in social media and on-line marketplaces. The data sets are huge and currently require expensive collection, storage and processing capabilities to overcome the challenges of collection, storage, search, sharing, analysis, and visualization. The trend to larger data sets is due to the ability to identify and analyze market activity, buying and sales trends, conduct research of large population samples, track and treat diseases, and reduce crime.
The promise then of big data is near perfect knowledge that enables certainty in decision making, greater efficiency in operations, and mitigation of risk. SAS suggests that with big data it is possible to:
- Determine root causes of failures, issues and defects in near-real time, potentially saving billions of dollars annually.
- Optimize routes for many thousands of package delivery vehicles while they are on the road.
- Analyze millions of SKUs to determine prices that maximize profit and clear inventory.
- Generate retail coupons at the point of sale based on the customer’s current and past purchases.
- Send tailored recommendations to mobile devices while customers are in the right area to take advantage of offers.
- Recalculate entire risk portfolios in minutes.
- Quickly identify customers who matter the most.
- Use clickstream analysis and data mining to detect fraudulent behavior.
The Internet of Things
The Internet of Things (or IoT for short) refers to the trend to connect virtually every object we touch or use to the internet in a way that enables an exchange of data. McKinsey suggests that equipping all objects in the world with minuscule identifying devices or machine-readable identifiers could be transformative of daily life. For instance, business may no longer run out of stock or generate waste products, as involved parties would know which products are required and consumed. One’s ability to interact with objects could be altered remotely based on immediate or present needs, in accordance with existing end-user agreements.
In fact, the predictable pathways of information are changing: the physical world itself is becoming a type of information system. In what’s called the Internet of Things, sensors and actuators embedded in physical objects—from roadways to pacemakers—are linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet. These networks churn out huge volumes of data that flow to computers for analysis. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly. What’s revolutionary in all this is that these physical information systems are now beginning to be deployed, and some of them even work largely without human intervention.
So, if we connect virtually everything to the internet and are continuously and ubiquitously collecting data that we now have the capability to quantitatively analyze it would appear that we are approaching near-perfect knowledge. That would suggest significant impacts on planning:
- Less need for detailed planning since we will be able to make decisions near-real time off near-perfect data; allowing more effort to be spent on concepts and problem solving/problem management.
- Greater ability to see and anticipate changes in environment and market and perform adaptive planning
- Near-perfect situational awareness, especially on status of our own organizations and capabilities.
- Planning that is produced, distributed, acknowledged and implemented in near-real time.
- Planning in packets that automatically update.
- Seamless planning and execution
- Immediate execution feedback enabling plan adjustment
All of this is exciting and many of these potential improvements to planning may come to fruition. But, a word of caution. All of this new knowledge is quantitative, not qualitative. The political, economic/market, and security environments are systems that react as much if not more to subjective decision making as to objective decision making; and past performance is not necessarily a predictor of future performance, particularly with regard to innovation or disruption. Take for example the colossal failure of “New Coke.” Every aspect of market analysis told the Coca Cola Company that New Coke would be a hit, yet consumers refused to buy it. Why? Because they didn’t like the taste, a fact that could not be predicted through past buying habits or even early testing. Moreover, the dislike of New Coke “went viral” in today’s terms and the reaction rapidly spread nationwide and worldwide, so that New Coke quickly disappeared and Classic Coke (the old formula) replaced it. Another example is the Vietnam war. Every measurable data point about the war pointed to an overwhelming US/South Vietnamese victory, except for the entirely subjective will to win of the Viet Cong and North Vietnamese. Clausewitz suggested that the more we know, the more information we have, the more uncertain we become because each new piece of information suggests new questions. We must therefore be careful of our decision making system locking-up as it is presented with more information, much of which often conflicts, than we can absorb, assess and make decisions on.
References
http://www.mckinsey.com/insights/high_tech_telecoms_internet/the_internet_of_things
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