Big data is a popular buzz word these days. Companies are told they should harness the vast amount of data produced globally and it will lead to greater profitability and productivity. By using big data, they can reap benefits like producing better products and customization options. That’s all well and good, but it’s contingent on managers understanding how to use and analyze the data. How many can really do that across all industries?
A McKinsey Quarterly report in 2015 found that very few legacy companies have achieved “big impact” through big data. In the study, participants were asked what degree of revenue or cost improvement they had seen through use of big data. The answer was less than 1 percent for the majority of the respondents.
A big problem with big data is that, although everyone talks about it, most people don’t really know what to do to ensure that investing in it is a win-win proposition. To shed light on this issue, MIT Sloan is bringing its deep expertise to a May 26 conference in Bogotá, Colombia called, “Big Data: Shaping the Future of Latin America.” The presenters include faculty from across the MIT campus as well as the Department of National Planning in Colombia. With examples from their own research, they will share new and innovative ways to use big data to achieve specific goals.
For instance, MIT Sloan Prof. Roberto Rigoban, the faculty chair of the conference, will discuss how big data can be used for economic measurement, highlighting the work of the MIT Billion Prices Project (BPP). The BPP uses prices collected from hundreds of online retailers around the world on a daily basis to conduct economic research. That information can be used to predict inflation as well as measure countries’ relative sustainability, construct daily price indexes in multiple countries, and avoid measurement biases that distort evidence of price stickiness and international relative prices. The ability to predict inflation is of particular interest in Colombia where a pending question is if – and how much – the central bank will increase the interest rate to account for inflation expectations.
Participants interested in tackling urban mobility challenges will want to take note of MIT Engineering Prof. Marta González’s talk. She will show how a novel individual mobility modeling framework, TimeGeo, infers travel demand profiles and estimates travel times across five different cities. According to her framework, the percentage of time lost in congestion is a function of the proportion of vehicular travel demand to road infrastructure capacity, and is closely tied to spatial density and choices of drivers. Her talk will include a discussion about the feasibility of smart routing applications. Her modeling framework could be of tremendous help in Bogotá, where car traffic has doubled in the last 10 years. According to Colombia Reports, cars have increased from half a million in 2002 to 1.25 million in 2012, with average commuting time clocked at 72 minutes in 2012.
On the social physics side, MIT Sloan Prof. Alex (Sandy) Pentland, who is director of MIT’s Human Dynamics Laboratory and the MIT Media Lab Entrepreneurship Program and co-leads the World Economic Forum Big Data and Personal Data initiatives, will address how it’s sometimes more helpful to look at the relationships between people than to analyze people as individuals. With research examples, he will show how data from those relationships can be used to improve company productivity, increase marketing return, and improve the effectiveness of government policies. He also will discuss the privacy and security ramifications of big data analysis and how to handle big data ethically.
Looking at finance issues, MIT Sloan Prof. Andrew Lo will examine how recent technological advances in computing, data storage and handling, and trading have revolutionized the financial industry, increasing liquidity, lowering costs, and creating many new opportunities. At the same time, he says that those innovations have launched a growing technological “arms race,” which produces winners and losers. Examples include high frequency traders vs. slow moving investors, quantitative algorithms vs. fundamental analysts, and robo-advisors vs. human advisors. In his talk, Prof. Lo will describe how big data is transforming investing from a business decision into a computational problem, and the pros and cons of this new environment.
For participants interested in learning how to partner with universities to use big data, Elizabeth Bruce, executive director of the MIT Institute for Data, Systems, and Society will discuss what it takes for those relationships to be successful. She also will discuss how big data allows us to discover new patterns, and how these patterns can be applied to make better predictions and better decisions across all fields from healthcare to smart cities to energy.
Other speakers at the conference include David Capodilupo, executive director of the MIT Sloan Office of International Programs, and Simón Gaviria, general director of the Colombia Department of National Planning.
Latin America is currently experiencing a perfect storm with volatility in the global economy and low prices of natural resources like gas and copper. Some local currencies have been devalued more than one-third and many countries are facing high unemployment rates. This is the time to come together and discuss cutting-edge ideas and learn how big data can make a real difference for businesses and governments.