Data explosion refers to rapid growth of data, mainly due to growing use of the Internet and increasing collection and retention of data. This data explosion is the large amount of data that is being rapidly generated (by sensors, logs, applications, images, videos, documents, etc.) and stored in computer systems (Zhu et al, 2009). This explosion comes from the interest in data as extremely valuable for business to have a competitive advantage, thus the phrase “Data is the new oil” (Davenport, 2020). Data science, data analytics, and data mining are all phrases around ways to use this data. The idea of big data is relevant to this collection and usage of massive amounts of data in a business.
Thomas H. Davenport wrote a book called Competing on Analytics: The New Science of Winning on this concept of data as competitive advantage. According to an article by the same authors, they say “In Competing on Analytics, Thomas Davenport and Jeanne Harris assert that competitive advantage can come from sophisticated exploitation of business intelligence and predictive analytics.” Davenport and Harris point to Netflix, Amazon, Harrahs Entertainment, and Capital One as large users of predictive analytics attached to big data. Insurance companies, as well, collect massive amounts of data to perform actuarial analytics (Davenport & Harris, 2007).
Companies and investors these day assume that it is possible to “gain an unbeatable competitive edge” by collecting massive amounts of data from large pools of customers and throwing machine learning tools at the data. This is one of the reasons for the rapid growth of data in this data explosion. In reality, it can be much harder to analyze and extract useful and valuable information and knowledge from data. Data can also be proprietary and it can depreciate and become irrelevant quickly. Considering these limitations, data can create valuable insights and give businesses powerful forecasting abilities. It can also enable value through suggestions and marketplace positioning such as with Amazon, Alibaba, Apple App Store, and Facebook, which can be a huge competitive advantage (Hagiu & Wright, 2020).
Other brands like McDonalds use sensors and point of sale data to track customer interactions, ordering, and store traffic which they analyze to use for operational decisions. Disney uses “MagicBands” to track movement of customers in theme parks and correlating it with purchase data to create more personalized customer experiences. Walmart uses big data in their Walmart Data Café, their large private cloud, in analytics to manage things like pricing and other insights. Data is used to create competitive advantage in automation, marketing, decision-making, and developing product quality (I.E. University, n.d.).
Davenport, T. H., & Harris, J. G. (2007, September 17). Competing on Analytics.
Davenport, T. (2020, October 5). Getting serious about data and science. Retrieved from https://www.tomdavenport.com/getting-serious-about-data-and-data-science/
Hagiu, A. & Wright, J. (2020, January-February). When Data Creates Competitive Advantage. Harvard Business Review. Retrieved from https://hbr.org/2020/01/when-data-creates-competitive-advantage
I. E. University. (n.d.). Data is the current and future source of competitive advantage – IE Driving Innovation. IE Driving Innovation. Retrieved from https://drivinginnovation.ie.edu/data-is-the-current-and-future-source-of-competitive-advantage
Zhu Y, Zhong N, Xiong Y. (2009). Data Explosion, Data Nature and Dataology. Brain Informatics. 2009;5819:147–58. doi: 10.1007/978-3-642-04954-5_25. PMCID: PMC7121844. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7121844/