Data science is the study of large amounts of information and the ways in which it can be processed to glean insights or to solve real-world problems. A great example of data science in action can be found at Netflix: Through tracking and analyzing the behavior of 33 million subscribers, it was able to tell that users enjoyed director David Fincher, actor Kevin Spacey and the British drama House of Cards; this information inspired the company’s decision to produce the immensely popular, award-winning American adaptation of the show starring Spacey and kicked off by Fincher. That’s a gross oversimplification of the process, but you get the point: the knowledge mined from data can inform the best business decisions.
Thankfully you don’t need to be a goliath like Netflix to take advantage of the benefits of data science. Below are a few strategies and tools that even small businesses can leverage to get the best of their data:
1) First Things First: Organize Your Data
We have thankfully (hopefully?) emerged from the era of filing cabinets stocked with reams of handwritten business documents. Not only is this a logistical nightmare – Where do you stock 20 years worth of reports? – but it ensures that none of the information contained within those filing cabinets is ever referenced except in the most desperate of circumstances. Unfortunately, the latter can still be true of digitized business records, as having a hard drive stocked with 20 years of individual reports is only one step better than the old school filing cabinet. Before you can even begin to reap the rewards of your data, you need a way to process it, and this requires being able to parse through all of it efficiently – not by opening years of reports individually to grab the necessary information, but by having it all available when and where you need it.
Case in point: Twiddy & Company is a North Carolina realtor that manages 998 homes on the Outer Banks. Rental information for these properties was stored for years in individual spreadsheets, rendering it useless to data science. Turning to the analytics tools offered by SAS, a business software developer, Twiddy was able to distill these spreadsheets and discover pricing trends. Armed with this knowledge, the company was able to raise rental prices to take advantage of high demand seasons and lower them to shore up low demand ones. This dynamic pricing has helped Twiddy increase its inventory of managed homes by 10 percent over the last three years, which is an unquestionable success.
2) No Data? No Problem
Unfortunately (fortunately?) not every business even has filing cabinets to work with. For new businesses who haven’t had the opportunities to collect data or old ones who’ve done an unredeemable job at it, there are still ways to capitalize on data science. The first step would be to start collecting well-structured data immediately (see above). The second could be simply buying the pieces of information you’re missing.
“Data brokers” are in the business of supplying your business with the information it needs. Example: Say you’re starting the Amazon of baby supplies; Experian, the information company best known for credit reporting, sells lists of expectant parents and families with newborns, which may be particularly useful to your fledgling business. Other data brokers, such as Acxiom, DataLogix and Factual, offer everything from general information on online consumers to detailed segments, like the market for a new Japanese vehicle. Realizing what you don’t know is the first step to learning it; visiting a data broker may be the second.
3) When in Doubt, Turn to the Data Science Experts
Let’s be honest: Even if they have all necessary data at their fingertips and it’s structured just perfectly, not every small business owner is going to know what to do with it. Data science is a complex interdisciplinary field connecting aspects of statistics, computer science and predictive analytics – subjects the average business owner is not necessarily versed in. But that doesn’t mean you can’t find a data scientist to help you.
One avenue to stroll down in your search for a data scientist is Kaggle, an online platform for data prediction competitions. To illustrate how Kaggle works, let’s take a look at the case of Jetpac, an iPad app: Jetpac wanted to find its users’ best images but did not want to task its own team of engineers with the job. Instead it turned to Kaggle to sponsor a contest to do just that. In three weeks, competitors had solutions breaking 85 percent accuracy in finding the best photos. Voila!
If outsourcing the data science needs of your own business just doesn’t feel right, you might want to consider becoming a data scientist yourself. Generally speaking, this involves obtaining a master’s degree in either computer science, operations research or the newly minted academic field of data science itself. A Master’s in Data Science degree program offers coursework in quantitative analytics, predictive modeling, machine learning, business intelligence, statistical methods and project management. It can help ensure that your business is not only successful, but as successful as it can possibly be.