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McKinsey's data whiz mines the social media motherlode

What does a traffic jam on Toronto's Gardiner Expressway have in common with's seemingly magical product referral engines? They're both the province of Big Data, the explosion of information that businesses are racing to capitalize on. Simon Houpt asked Tim McGuire, the head of McKinsey & Company's Consumer Marketing Analytics Centre, why we've all turned into data geeks.

Do you have a small definition of Big Data? Let me give it a try. It's the use of massive sets of data—typically transaction data, motivation data, environmental data, social data—to make better business decisions.

We're talking about data that couldn't have been captured before, right? Absolutely. Social media interactions are probably the best example: There was no way for a company to get any insight in the past on what an individual customer was saying to his or her friends about their experience with a company they'd dealt with. And now, through social media mining techniques, you can go out and look for the positive buzz and the negative buzz. If you've got the right capability to mine that information, it truly is a gold mine.

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Is that why everyone seems to be talking about Big Data now? We've hit three tipping points all at once. The first is data availability: The sheer amount of data [being collected]gives companies far more insight and information than they've ever had in the past. The second piece is the ability to actually do something with that data: A massive pile of data without the right analytics is just a massive pile of data. It needs to be turned into real insights about consumer behaviour to change the way a company makes decisions.

And the third? It's the competitive pressure. In particular, you see this through the emergence of the pure play—what I'd call analytically-built companies. Amazon would be a perfect example. They're built around an analytic engine, and they use that analytic engine to drive their business in every way.

Yeah, they always seem to know what I want, though I'm not much of a shopper. How about you? Oh, I'm a fanatic shopper. My wife refuses to go grocery shopping with me because I spend too much time looking for new products, looking for new ideas, trying samples. If I had my choice, I'd retire and become a personal shopper.

Should non-fanatic shoppers care about Big Data? There's a wonderful opportunity for companies to make people's lives better. The traffic reports of the world will soon no longer be delivered by someone flying in a helicopter. GPS signals in cellphones provide a far more reliable source of information. Imagine I sent you an alert on your cellphone that say"Gardiner blocked, use this route instead"—that would be a wonderful service. We need to look for opportunities where consumers can get benefits out of sharing information.

What about privacy concerns? Companies clearly need to be very, very careful and appropriate about managing all the privacy issues, handling data appropriately, ensuring there are no breaches. We should be both self-regulating and government regulated to make sure things don't cross the line.

So you believe there's a role for government? Absolutely. This is frankly too important, for all of us, to mess it up. Because if we screw it up, consumers are going to take away the right for companies to use that data. Then we all lose. Companies lose, governments lose, and consumers lose.

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About the Author
Senior Media Writer

Simon Houpt is the Globe and Mail's senior media writer, charged with covering the industry's transformation. He began his career with The Globe in 1999 as the paper's New York arts correspondent, covering the cultural life of that city through Canadian eyes. More

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