Speaking at an event organized by the nonprofit Council on Foreign Relations, Rometty predicted that data will be the basis of competitive advantage going forward, calling it the “the next natural resource.” She believes it will change how decisions are made, how value is created and how value is delivered. Here’s a look at what the future may hold.
Data Analytics Will Revolutionize Decision-Making
“Many more decisions will be based on predictive elements versus gut instincts,” Rometty said. Even in the most scientifically oriented fields, she noted that decisions are still being made based on anchoring biases. In other words, leaders and managers interpret information through the lens of their subjective perspective and set of experiences.
However, with the incoming “tsunami of information,” Rometty believes that those companies that are able to use data to their advantage will make better, more objective calls. As an example, she cited IBM’s use of software analytics in its CRUSH (Criminal Reduction Utilizing Statistical History) initiative with the Memphis Police Department. Finding a correlation between rapes and outdoor pay phones, they decided to move the phones indoors, which ultimately contributed to a 30% reduction in crime.
Still, Rometty said that just because the technology exists and will become increasingly accurate, the shift will require new ways of thinking. “At the end of the day, it’s about mindset and culture,” she said.
The Social Network Will Drive Value
“The social network will be the new production line in a company,” Rometty predicted. The primary benefit of new social platforms, she said, is that today’s knowledge workers have access to each other. In the near future, she believes “your value will not be what you know, but what you share.”
This social sharing shift will change the way businesses hire, who they hire and how they compensate workers, said Rometty. Employees will be rated by bosses, colleagues and even customers on the value of the information they create, she said, which could impact compensation. A one-star rating would result in a one-star compensation range, just as a five-star rating would ensure five-star compensation. Like data analytics, more and varied input on each employee’s performance may create more objective pay models.
Consumer Segments Will Cede To The Individual
Technology shifts will also change the way businesses deliver value. “What you will see with rapid data and social sharing is the death of the average and the era of you,” Rometty said. Rather than meeting the needs of different consumer segments—geographic, age or income segmentation, for example—businesses will be able to truly serve the individual. “If you have a call center, it’s no longer about a script,” she said. “It’s about a dialogue.”
What Rometty calls “the third wave of technology” may contribute to this individualized approach. In the first era of computing, computers counted. In the second, they could be programmed to perform instructions. In the next era, computers will learn by themselves, she said. “That’s the wave that starts now.”
IBM’s prized innovation, supercomputer Watson, is one such example. The Jeopardy winner can download and analyze hundreds of thousands of data sets, interpret language, and make decisions based on the research it’s reviewed. Watson is already being piloted as a medical adviser to doctors—suggesting diagnoses, providing confidence levels and explaining the evidence that backs them up—and working with call centers. Rometty said because supercomputers are better able to stay current on and more quickly recall data, they may help create more efficient and individualized service.
“The greatest contribution of this shift,” Rometty concluded, “is that it will force every entity to become an authentic organization.”
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