AsianScientist (Feb. 26, 2018) – The writing is on the wall: innovate or become obsolete. As technological change—exemplified by artificial intelligence, big data and automation—sweeps through every nook and cranny of the economy, companies in all sectors are rushing to adapt their business models to this new digital normal.
But despite its power and promise, technology alone does not make a successful company, says Professor Li Yan of the Department of Information Systems, Decision Sciences and Statistics at ESSEC Business School, Asia-Pacific. To harness the full potential of tools such as machine learning algorithms, statistics and data analytics, managers must wield them wisely, drawing on their own business acumen and experience in the process.
“Of course technology is very important, but from talking to many companies, we know that it’s not just technology that makes the difference,” says Professor Li, who studies innovation adoption and is particularly interested in how companies can successfully navigate the process of digital transformation. “It’s also very important that the management team is forward-thinking, and that they have a future-oriented vision.”
The data deluge
Take for example customer data, which is highly valued for its usefulness in informing business strategies such as targeted marketing, pricing and the design of e-commerce websites. Gathering data has become the norm even if companies don’t yet have a plan for what to do with it, says Professor Li.
“The cost of not collecting the data and missing out on a future opportunity to use it for something very important is much higher than the cost of collecting and storing it,” she says.
One school of thought, Professor Li explains, is that big data allows companies to leverage correlations in the data without worrying about causality. For instance, if a mobile app company finds that users will usually abandon an app after not logging in for a week, it can devise intervention strategies to prevent the churning even if it does not really understand why users are neglecting the app in the first place.
“Based on this argument, some people believe that industry doesn’t need business expertise any more—companies could be driven by mathematicians, statisticians or computer scientists,” says Professor Li.
Going with your gut
But while data may be king in the digital age, it can only get entrepreneurs so far, thinks Professor Li. In a study that is currently under review, she and her collaborators conducted in-depth interviews with the management of some 15 companies in China—including e-commerce giant Alibaba—and found that gut instinct or intuition remains an important factor in companies’ successful application of big data in their business decisions.
Formally known as ‘heuristics’, this kind of cognitive shortcut and intuitive thinking often involves simple, efficient rules of thumb that can help company leaders make decisions when faced with complex situations, or with data that directly contradicts their own industry experience.
The importance of good business heuristics becomes clear if you consider that different people will decide on different courses of action even if they are given exactly the same data, says Professor Li. When she tells her students the classic marketing chestnut of how a major retail chain in the US discovered that men who buy diapers also tend to buy beer at the same time, she gets a multitude of ideas. Some students suggest placing diapers next to beer in stores, while others advocate separating them as far as possible so that customers will buy other products on impulse while making their way from diapers to beer, Professor Li relates.
“This means that your background, intuition and experience in a business area will lead you to totally different decisions even based on the same data,” she says. “That is why we think heuristics and intuition are still very important even today, when people tend to believe that correlations and associations derived from data will tell the story.”
In addition, data analytics, when applied without a clear direction, can also turn up spurious correlations that have no real-world meaning, says Professor Li. Top managers, therefore, must know when to trust the data and when to trust their own gut instincts—something that comes with years of experience, she adds.
The best of both worlds
Marrying data analytics skills with business knowhow is indeed a key aspect of ESSEC’s Master of Science in Data Sciences and Business Analytics programme, for which Professor Li is academic co-director.
The programme is offered together with renowned French engineering institute CentraleSupélec, where students will gain a solid technical foundation in areas such as machine learning, natural language processing and computer programming.
“CentraleSupélec can complement what a business school cannot offer… having a strong engineering partner gives us an advantage against our competitors,” says Professor Li.
In addition to taking classes at the ESSEC France and CentraleSupélec campuses in Paris, students also spend time at the ESSEC Asia-Pacific campus in Singapore. There, they will focus on digital transformation strategies, as well as have the opportunity to work with ESSEC’s industry partners on projects involving real company data.
Based on previous cohorts, career prospects for graduates are excellent, says Professor Li, noting that the ability to apply insights from data to business is in high demand in today’s climate of digital transformation.
“Digital transformation is something we cannot avoid. When my students ask me what they should do if their company doesn’t want to be transformed, my answer is always they don’t have a choice,” says Professor Li. “It’s not whether you want to be transformed or not—like it or not, you will be, because technological forces will come to transform you.”
About ESSEC’s MSc in Data Science & Business Analytics
Awarded by Europe’s top-ranked business (ESSEC) and engineering (CentraleSupélec) schools, this Master’s program is Asia’s first-of-its-kind program that combines the best of business management and computer science expertise. This 15-month, tri-campus program in France and Singapore offers internship opportunities, an international study trip and a choice of three tracks: Data Science, Business Analytics & Digital Transformation Strategy. Come experience the program through Prof Li Yan’s master class on digital transformation to learn how the next digital wave will impact our lives and businesses.
Asian Scientist Magazine is a media partner of ESSEC Asia-Pacific.
———
Copyright: ESSEC Asia-Pacific.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.
