Innovation driven by Big Data and Digitalisation

Digitalisation and Big Data are becoming more and more interesting. In fact, the confluence of several technological and socioeconomic trends, the growing use of the Internet for social and working purposes and the decline in the cost of data collection, processing and storage are generating large volumes of information (the so-called “Big Data”) which could lead to the creation of new industries, new processes and new products, if properly analysed.

What we’re talking about when we talk about innovation
The Organisation for Economic Co-operation and Development (OECD) recently published a report called “Data-Driven Innovation – Big Data for Growth and Well-Being”. The report examines the key role of data and its analysis in the creation of a significant competitive advantage and knowledge-based capital, which could drive innovation and the sustainable growth of both economies and societies.

That’s why we talk about Data-Driven Innovation (DDI), i.e. an innovation which will result in a significant global shift towards new socioeconomic models, where habits and decisions will be guided by data and their interpretation.

In business, the DDI could bring added value through the optimisation of processes in global manufacturing and services and better customer relationships.

The five industries in which Big Data are more disruptive
The OECD has identified five industries in which the increasing use of data could stimulate innovation and production growth, playing a key strategic role:

  1. Advertisement
  2. Health care
  3. Utilities
  4. Logistics and transport
  5. Public administration

DDI has some direct implications, such as:

  • The refinement of Research & Development (data-driven R&D);
  • The development of new products (goods and/or services) using data both as products (data products) and as major components thereof (data-intensive products);
  • The optimisation of production and delivery processes (data-driven processes);
  • Marketing innovation, offering targeted advertisments and personalised recommendations (data-driven marketing);
  • The development of new organisational and managerial approaches (data-driven organisation).

There are several proofs of the DDI potential and, as the report says, the global market connected to Big Data for technologies and services amounts already for as many as 17 billion dollars, with an annual growth rate of 40% from 2010 on.

Another key factor that witnesses the competitive advantage given by DDI is the marked raising in productivity (5%-10%) detected in the companies which have adopted DDI against those who have not.

The future is data
The benefits of DDI aim to improve the industrial fabric of the society, but also the social and environmental one. The DDI can answer more effectively to global challenges, such as climate change and natural disasters, ageing and global population health care, education, scarcity of primary and energetic resources.

In order to benefit of the disruptive nature of DDI in the shortest time, the OECD underlines the fundamental importance of governments’ coordination and commitment in the transition to a data-based economy: in particular, governments should grant a constant stimulus via investments in infrastructures, with a particular focus on mobile technologies, cloud computing and Internet of Things.

Numbers on new subscribers of mobile broadband technologies have a major impact: they are largely over the 1 billion threshold only in OECD area, while at the same time a decline in fixed telephony can be noticed.

Another sector where to act is the public one: a greater access to technological knowledge can provide a higher operational efficiency in state structures. Concerning this topic, it must be underlined that the penetration of DDI means is still low.

This is particularly true concerning cloud computing, which has been implemented only in 22% of the companies with more than 10 employees, as well as systems softwares (31%) and electronic order handling systems (21%) (OECD 2014 data).

Data driven investments, competitive advantages and privacy
Continuous investments in education, focus on couses concerning technology, maths and engineering and constant training over time acquire a key role, allowing the creation of an effective competitive advantage in the globalised labour world.

Of course, it is still fundamental to identify the right balance between social benefits and the posible contraindications. In this respect, the OECD encourages keeping the Internet an open platform accessible to anybody, promoting interoperability and the exchange of information among the various countries all over the world. In addition, OECD suggests the implementation of monitoring policies and legislative standards to protect in an unequivocal way the use of personal data and to detect the possible violations of the privacy, building in this way a common and careful risk management strategy.

The cooperation among the various regulatory authorities of the different world economies (especially concerning competition, privacy and customer protection) will be decisive for data-driven progress.

 

In the end, it is clear how much Big Data and Digitalisation are part of our lives and jobs: the way companies will deal with them will make the difference on their capability to compete in the future.