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Randy Bean is an industry thought leader and author, and CEO of NewVantage Partners, a strategic advisory and management consulting firm that he founded in 2001.
David Kiron is the executive editor of MIT Sloan Management Review.
Boston | New York | San Francisco | Austin | Charlotte
MIT Sloan Management Review Webinar
How Big Data and AI are Driving Business Innovation in 2018
June 27, 2018
www.newvantage.com
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How Big Data and AI are Driving Business Innovation
Randy Bean Introduction | Background
Founder | CEO | NewVantage Partners LLC
Monthly Big Data columnist: Wall Street Journal (2014-2015)
Monthly columnist: Forbes (2016-Present)
Frequent contributor: MIT Sloan Management Review | Harvard Business Review
Executive Thought-Leadership Roundtables | Boston | New York | San Francisco
Focus -> Big Data/AI Innovation | C-Executive Survey
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How Big Data and AI are Driving Business Innovation
NewVantage Partners first conducted a survey on the state of Big Data within
Fortune 1000 companies in 2012.
The survey has been unique in providing a top-down perspectives on c-
executives priorities.
2018 Theme: “How Big Data and AI are Driving
Business Innovation”
Nearly 60 Fortune 1000 size firms participated, representing a bellwether
selection of blue-chip firms.
Participants included American Express, Capital One, Ford Motors, Goldman
Sachs, Met Life, Morgan Stanley, and Verizon, among others.
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How Big Data and AI are Driving Business Innovation
Survey participants comprised executives representing data-intensive industries.
An overwhelming majority of executive participants (93.1%) identified themselves as C-level executive decision-makers.
Industry Participation
Financial Services | Insurance 77.2%
Pharmaceuticals | Medical 8.8%
Other Industries 14.0%
Respondent Role
Chief Data Officer 55.6%
Chief Analytics Officer | Chief Data Scientist 15.3%
Chief Information Officer 13.9%
CEO | President 5.6%
Chief Marketing Officer 2.8%
Other 6.9%
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How Big Data and AI are Driving Business Innovation
Financial Services | Insurance
Aetna Fannie Mae Putnam Investments
AIG Farmers Insurance Regions Bank
Ally Financial Fidelity Investments Standard & Poors
American Express First Republic Bank State Street
Bank of America Freddie Mac Sun Life Financial
Bank of China Goldman Sachs Swiss Re Group
Bank of Montreal The Hartford TD Bank
Bloomberg JP Morgan TIAA
Capital One Lincoln Financial Travelers
Charles Schwab M&T Bank UBS
Cigna Met Life USAA
CitiGroup MFS Investments VISA
Citizens Bank Moody's Wells Fargo
Crawford Morgan Stanley Zions Bank
Credit Suisse Nasdaq
2018 Participating Firms
Pharma | Medical Additional Industries Astellas Estee Lauder Linked In
GlaxoSmithKline Ford Motors Motorola
H3 Biomedicine Global Energy Verizon
OptumLabs IBM
Partners Health Care Li & Fung
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How Big Data and AI are Driving Business Innovation
Why Big Data and AI are Closely Linked 1. AI needs Big Data to build its intelligence – particularly machine learning
2. Big Data provides the data needed to train AI learning algorithms
3. AI doesn’t deduce conclusions – it learns through trial and error, which requires
massive amounts to data to teach the AI
4. It’s safe to say there is no AI without Big Data.
Source: Big Data vs. Artificial Intelligence. Datamation. May 30, 2018.
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How Big Data and AI are Driving Business Innovation
Key Themes and Findings 1. Fear of disruption is fueling investment in Big Data and AI
2. Big Data is directly empowering AI investment and initiatives
3. Firms are reporting measurable results from Big Data and AI investments
4. Chief Data Officers are emerging champions of Big Data and AI
5. Business adoption of Big Data and AI initiatives remains a challenge.
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How Big Data and AI are Driving Business Innovation
Theme 1: Fear of disruption is fueling investment in Big Data and AI
A majority (79.4%) of executives say that they fear disruption and potential displacement from data-driven competitors with highly agile data cultures -- up sharply from 2017.
Fear of disruption/displacement 2018 2017
Yes 79.4% 46.6%
No 20.6% 53.4%
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How Big Data and AI are Driving Business Innovation
Companies are increasing their investments in Big Data and AI/Machine Learning initiatives in response to threats of disruption and displacement.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
ArtificialIntelligence/Machine
Learning
Cloud Computing Blockchain
2018
2017
Nearly 3/4 of executives (71.8%) believe investments in AI/Machine Learning will have a transformational and disruptive impact on their business – up from 44.3% in 2017.
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How Big Data and AI are Driving Business Innovation
Firms (93%) have significantly increased their investment in AI/Machine Learning initiatives.
Executives see biggest threats from data-driven competitors, with highly agile data cultures.
This includes the Tech Giants – Amazon, Google, Apple, and Facebook.
Executives also fear competitors within their own industry.
A majority (54.4%) of executives report that an inability to be nimble and compete on data is
the biggest competitive threat that they face today.
Disruptive technology with greatest impact 2018 2017 Investing
Artificial Intelligence/Machine Learning 71.8% 44.3% 93.0%
Cloud Computing 12.7% 8.2% 83.1%
Blockchain 7.0% 4.9% 54.9%
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How Big Data and AI are Driving Business Innovation
Theme 2: Big Data is directly empowering AI investment and initiatives
Investing in Big Data or AI initiatives
Yes 97.2%
No 2.8%
An overwhelming 97% of executives report that their companies are actively investing in building or launching Big Data and AI initiatives.
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How Big Data and AI are Driving Business Innovation
There is a growing consensus that AI and Big Data initiatives go hand-in-hand.
Executives (76.5%) indicate that the proliferation and greater availability of data is directly empowering AI and cognitive initiatives.
Proliferation of data empowering AI/cognitive learning
Yes 76.5%
No 23.5%
AI initiatives directly benefit from access to richer, more granular, more complete, more extensive data -- in vastly greater volumes, varieties, and data sources.
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How Big Data and AI are Driving Business Innovation
Investment in Big Data and AI initiatives is growing, but most Big Data and AI investment remains small and experimental, focusing on innovation around the edge.
Financial services firms have traditionally been among the largest investors in data and analytics, and are now at the forefront of investment in Big Data and AI initiatives.
Firms need no longer rely on subsets of data, and are combining Big Data, AI, machine learning
algorithms, and computing power to competitive advantage.
Total investment in Big Data and AI
Greater than $500M 12.7%
$50M -- $500M 27.0%
Under $50M 60.3%
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How Big Data and AI are Driving Business Innovation
Theme 3: Firms are reporting measurable results from Big Data and AI investments
Yes 73%
No 27%
Measurable Results from Big Data and AI Investments
Measurable results from Big Data and AI investments
Yes 73.2%
No 26.8%
Nearly 3/4 of the executives surveyed (73.2%) report their organizations are achieving
measurable results from their Big Data and AI investments -- up from 48.4% in 2017.
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How Big Data and AI are Driving Business Innovation
Executives (84.1%) are actively investing in Big Data and AI initiatives to enable better decisions using advanced analytics.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Top Objective of Big Data and AI Investments
#1 Goal
Started
Success
Rate
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How Big Data and AI are Driving Business Innovation
Success rates are highest in enabling better decisions (69%), decreasing expenses (60.9%), and accelerating speed to market (54.1%).
Innovation initiatives are underway at nearly half (46.4%) of firms.
Monetization initiatives have been launched at a growing set (31.9%) of firms.
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How Big Data and AI are Driving Business Innovation
Theme 4: Chief Data Officers are emerging champions of Big Data and AI
A majority of firms (63.4%) report having named a Chief Data Officer – up from 12% in 2012.
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How Big Data and AI are Driving Business Innovation
Organizations are struggling to define the Chief Data Officer role.
34.0% 32.1%
15.1%
11.3%
7.5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Externalchange agent
| outsider
Companyveteran|insider
Line executivewho has beenaccountablefor results
Data scientist| analytics
background
Techexecutive |technologybackground
Background for a Successful Chief Data Officer
Background for a successful Chief Data Officer
External change agent | outsider 34.0%
Company veteran| insider 32.1%
Data scientist | analytics background 15.1%
Line executive who has been accountable for results 11.3%
Tech executive | technology background 7.5%
The Chief Data Officer may be the toughest position in industry today.
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How Big Data and AI are Driving Business Innovation
Primary responsibility for data strategy and results
Chief Data Officer 39.4%
No Single Point of Accountability 23.9%
Chief Information Officer 15.5%
Other C-Executive 12.7%
Chief Analytics Officer | Chief Data Scientist 8.5%
Few Chief Data Officers (13%) have revenue responsibility.
Responsibility for Big Data and AI initiatives remains scattered.
A significant number of executives (23.9%) point to no single point of accountability.
Yes 13%
No 87%
Chief Data Officer with Revenue Responsibility
Managing Big Data and AI initiatives remains a challenge for most firms.
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How Big Data and AI are Driving Business Innovation
Long term role of the Chief Data Officer
Sits on the executive committee 50.0%
Reports to the executive committee 37.1%
CDO role is interim role to be phased out | unnecessary 12.9%
The future role of the Chief Data Officer remains uncertain.
Half of firms (50%) do not see the Chief Data Officer as a top role within their firm.
A minority of executives (12.9%) believe the Chief Data Officer role is unnecessary.
Firms are now combining the Chief Data and Chief Analytics roles into an even newer “Chief Data and Analytics Officer” role.
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How Big Data and AI are Driving Business Innovation
Theme 5: Business adoption of Big Data and AI initiatives remains a challenge.
Business adoption of data initiatives remain a challenge
Yes 64.7%
No 35.3%
Cultural issues represent the greatest obstacle to Big Data and AI adoption.
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How Big Data and AI are Driving Business Innovation
Few executives (19.1%) believe that technology obstacles are the biggest problem.
Creating a data-driven culture 2018 Success 2017 Success
Yes | In Process 98.6% 32.4% 85.5% 37.1%
No | Not a Priority 1.4% 14.5%
Firms are striving to create data-driven cultures, but with limited success.
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How Big Data and AI are Driving Business Innovation
10 Take Aways
1. Be Patient – think of Big Data and AI adoption as a journey, not a sprint 2. Develop a long-term plan – it’s difficult to get to a destination without a roadmap 3. Prioritize initiatives based on measurable business value – know what’s important 4. Undertake a succession of steps to establish credibility and build momentum 5. Focus on “quick wins” that will demonstrate immediate business value 6. Innovate “around the edges” – create avant-garde teams that become tomorrows
mainstream organization 7. Establish Centers of Excellence, Big Data/AI Labs, and Analytic Sandboxes 8. Migrate initiatives from test environments to production in a systematic fashion 9. Celebrate successes – results speak louder than words 10. Don’t underestimate the cultural obstacles – focus on people and process.
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How Big Data and AI are Driving Business Innovation
Those companies that prove themselves to be adept at developing and executing
initiatives using Big Data and AI capabilities will likely be the companies best
positioned to deflect threats of agile, data-driven competitors in the decade ahead.
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How Big Data and AI are Driving Business Innovation
“How Big Data and AI are Driving Business Innovation” – MIT Sloan Review “How Big Data Is Empowering AI and Machine Learning at Scale” – MIT Sloan Review “Companies Brace for Decade of Disruption From AI” – MIT Sloan Review “Variety, Not Volume, Is Driving Big Data Initiatives ” – MIT Sloan Review “Organizational Alignment is Key to Big Data Success” – MIT Sloan Review
“The Chief Data Officer Dilemma” -- Forbes “Setting The Table For Data Science And AI At Bank Of Montreal” – Forbes “How Verizon is Building a Big Data and AI Culture” -- Forbes “Revolutionizing Radiology with Deep Learning at Partners Healthcare -- Forbes “How AI and Machine Learning Are Helping Drive the GE Digital Transformation -- Forbes “Why Cultural Change is Necessary for Big Data Adoption” -- Forbes
“Big Companies Are Embracing Analytics, But Most Still Don’t Have a Data-Driven Culture” – Harvard Business Review “How Machine Learning Is Helping Morgan Stanley Better Understand Client Needs” – Harvard Business Review
“Big Data Innovation: Fail Faster, Execute Smarter” – The Wall Street Journal “Making The Case for the Long-Tail of Big Data” – The Wall Street Journal
Additional Reading
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