Digital Platforms and Big Data Creation

Big Data and Analytics, Digital Strategy

Digital Platforms and Big Data Creation

11 Apr , 2015  

Digital platforms are all around us. We used many each day. These platforms serve our needs but also create realms of Big Data – about or lives, media, shopping, health, and interest. LinkedIn is a great example of a powerful and successful digital platform. Parties interface digitally. Data is openly shared, transmitted, created, and then reused by the platform owner to create data products and useful insights to users, advertisers, and other interested parties. Netflix, Uber, Airbnb, and social networks are all digital platforms. They do not sell physical goods, transport them, nor do they even hold material physical assets. The value of these firms is in the way they enable commerce, advertisement, or communication – all digitally. Digital platforms are powerful because data is implicitly created.

There is a new trend in digital platforms – the move to aggregated digital platforms. The scale achieved by bigger networks brings more users, but also much more data. In fact, combining digital platforms allows a fusing of data that creates new opportunities.

Aggregation of Digital Platforms Will Become More Common

Mint.com has aggregated data from multiple digital platforms, such as banking and financial service sites. Kayak.com has done the same type of aggregation across travel sites. LinkedIn is doing the same as it ventures into education with the acquisition of lynda.com In each, the digital platforms developed by others are mined to create a more convenient and value-added data product to end users. Not surprisingly, each operates a marketplace strategy for monetization. Expect the same in many other markets, especially where multiple digital platforms are competing and end-users might have the inconvenience of visiting many sites. Behind the scenes of these digital platform aggregators are algorithms that automatically source data from many sites to one place.[1] Health care, with its myriad of information sites and service offerings would be ripe for aggregation. Social media and the plethora of different social media flavors suggest an aggregation that would provide users convenience too. The danger in the aggregation of digital platforms is that like Kayak.com and Mint.com, the user no longer goes to the underlying websites, but prefers (because of convenience) to visit the aggregator. This means that important customer data and online behavioral data are now captured by the aggregator. Many places now accept Facebook logins, bringing new data to Facebook. Other digital platforms that do the same enjoy the same advantages in growing a larger reach in their digital platform. Such important customer information can be missed if the digital platform does not report it back to the suppliers. It also means that the aggregator has essentially taken control of measuring the customer and in ultimately providing the interface to the customer.

Digital Platforms Will Reduce Market Inefficiencies through New Data

The rise of firms like Uber and Airbnb are just recent successes of digital platforms. Angie’s List, which provides reviews on service providers and SitterCity, which connects babysitters with stressed-out parents, are some examples of how supply and demand are being met through digital platforms. Interestingly, in these cases, the supply comes from individuals. Once available in a digital manner, suppliers are, in many ways, democratized. Small and big can be accessed with the same tap of an app on a phone. It changes who can be a service provider and changes what is needed to market—mostly presence and reviews on a digital platform. Imagine the many services that we consume that are in some capacity limited by lack of access. Professional cooking services, professional financial services, custom made art, and even personal assistants are all possible with TaskRabbit, which brings people with tasks and errands together with local people willing to do those tasks. It is yet another example of how inefficient markets, like labor markets, can be transformed by digital platforms with data about suppliers and buyers. The convenience enabled by digital platforms is very attractive for users. Find a worker, driver, or babysitter with a mobile app. Expect that to also change how firms and people source talent and approach the overall service market.

The result is the mega-digital platforms will grow not just because of the user base, but because of the scale in the data and value it offers. That will attract more users and create more data. In many data realms, the race to first biggest is critical. Build more and more data, while you can. It will lead to more opportunities on your digital platform.

[1] Matthew Panzarino, “Priceline.com Acquiring Travel Company KAYAK for $1.8B in a Deal That Includes $500M in Cash,” thenextweb.com, November 8, 2012.

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By  -      
Russell Walker helps companies develop strategies to manage Risk and harness value through Analytics and Big Data. As Clinical Professor at the Kellogg School of Management of Northwestern University, Russell Walker has developed and taught leading executive programs on Big Data and Analytics, Strategic Data-Driven Marketing, Enterprise Risk, Operational Risk, and Global Leadership. He founded and teaches the popular Analytical Consulting Lab and Risk Lab, experiential classes, which bring Kellogg MBAs together with real-world projects in Analytics and risk evaluation. His is the author of the book From Big Data to Big Profits: Success with Data and Analytics (Oxford University Press, 2015) which examines data monetization strategies and the development of data-centric business models in the new digital economy. He is also the author of the award-winning text Winning with Risk Management (World Scientific Publishing, 2013), which examines the principles and practice of risk management as a competitive advantage. Dr. Walker consults with firms on the topics of Big Data and Analytics, Risk Management, and International Business Strategy. Russell Walker can be reached at: russell-walker@kellogg.northwestern.edu @RussWalker1492 russellwalkerphd.com



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