Distributors increasingly have an enormous amount of information at their fingertips. While this Big Data represents a range of opportunities, it can also create headaches. Kicking off a new podcast series, Profit Levers, Jonathan Byrnes, founding partner of Profit Aisle and senior lecturer at MIT, outlines three areas where issues can arise.
1. Automating routine activities. When RFID became popular a few years ago (using a small tag to label and identify items), managers gained the capability to know the identification and location of every item in their company. Byrnes notes this concept is now resurfacing as the Internet of Things (IoT).
The biggest danger with RFID information applies now to utilizing Big Data, in that large-scale operations that simply automate routine activities — what Byrnes describes as “paving the cow paths” — can only further entrench existing practices, rather than promote meaningful change.
2. Managing at the wrong level. Using a military drone analogy, Byrnes notes that military leaders are commanding at an increasing distance. This centralized command, while perhaps a more effective management structure, has also led to “an explosion of micromanagement,” he says, where the line between timely supervision and micromanagement is blurred.
As in the military, this type of top-level management presents a problem in business, because a leader is ignoring critical, high-level strategy and organizational effectiveness in the process, Byrnes says. The result is a failure to plan for the future and to develop the next generation of leadership. It also inhibits lower-level employees from developing their skills, he adds.
3. Driving without a roadmap. One of the biggest false assumptions of Big Data, Byrnes says, is that if a company’s managers optimize everything, the company will automatically be great. But, he says, much like if dirt roads had suddenly become paved as soon as the automobile was invented, such enormous opportunity can lead to either decision paralysis or people deciding to go in all different directions rather than follow a cohesive plan.
It creates a two-fold problem, Byrnes says, in that a company cannot do everything because it does not have unlimited time and resources, and that effective initiatives must be coordinated and focused on appropriate long-term strategic goals. “If the availability of Big Data encourages a massive flock of independent tactical initiatives, it will do more harm than good,” Byrnes says in the podcast.
The ultimate danger of Big Data, Byrnes says, is to dissipate effort by focusing on a large number of small, incremental projects, rather than game-changing, high-payoff initiatives.
Listen to the podcast to hear Byrnes describe more about how to navigate the hazards and benefits of Big Data.
Jonathan Byrnes is a senior lecturer at MIT, where he has taught for 30 years, and founding partner of Profit Isle, a profit acceleration solutions company. Reach him at [email protected].