We are just at the onset of the big data era. In future, all businesses are going to try to understand how they can become a platform for the collection and the analysis of data. We’ll be optimizing everything we do in society by taking more information and learning from it. Big data will quantify everything automatically at every moment. Things that we never could even imagine collecting information on before will now be possible. There is a value in that data that is latent. It is a sort of new economic input and a new raw material of business.
One of the most promising is an area of artificial intelligence called machine learning. The computer can make predictions or make decisions that can implicitly learn from a large body of information. The implication for business is huge regarding business strategy. A manager has to make decisions using imperfect information and an algorithm is going do better because it can crunch more data.
Big data can spot trends that we could never spot before. We may learn that there are signals that best predict someone is actually going to repay a loan or get into a car accident that has nothing to do with that actual activity. We have already seen big data change the world. Media companies are getting better at throwing in recommendations that if you’ve read one article, you’d likely to read another article. Banks are getting good at saying that if you buy one commercial product, you’re probably going to buy these other financial products as well.