CONVENIENCE IS KING IN TODAY’S RETAIL WORLD

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Consumers lead busy lives and their time is becoming more limited and fragmented every day. So when it comes to shopping, they may not always be 100 percent focused or fully engaged in the task at hand. So in order to keep up with them, retailers are increasingly finding that they need to innovate in ways that make it easier and more convenient for their customers to get what they need and not miss a beat in the process.

Innovation can take many forms. While breakthroughs like cellular networking and seedless watermelons are tangible examples of innovation, there’s no denying the impact that advancements like multi-platform store formats and online shopping have had on the retail landscape. In fact, according ot the Continuous Innovation: The Key To Retail Success report, convenience may just be the most creative and energetic example of retail innovation.

STANDING OUT WITH CHANNEL AND FORMAT

Channel and format are the stand-out examples of innovation in the retail space. U.K.-based Tesco PLC is one major retailer that has adapted its physical store offerings to meet customer demand for convenience. Notably, Tesco operates four different formats to ensure that its customers have quick and easy access to its offerings regardless of whether they live in dense metro areas or the outskirts of town. Even Walmart, whose superstore concept made it the largest retailer in the world, is testing two smaller formats—even though it continues to expand its traditional supermarket format in the U.S.

As a format in-and-of-itself, brick-and-mortar continues to maintain a strong footing with consumers, particularly as retailers diversify their available store configurations for specific customer needs, online is changing how shoppers interact with stores. This in turn has prompted stores to change in response. For example, many companies with notable physical footprints have capitalized on the influence that online retailing offers by touting “click & collect” options, whereby customers shop online and pick up their items at a nearby store. This innovation is quite powerful, as it improves convenience dramatically for shoppers who find it inconvenient to wait at home during broad delivery windows.

European retailers such as Carrefour and Auchan are particularly advanced in the click & collect arena. France-based Auchan, for example, offers a drive-through service with spacious collection points, allowing shoppers to collect pre-ordered baskets without leaving their cars. Visible from the road, the service is ultra-convenient and serves as a powerful advertisement. But these trends aren’t just popping up in Europe. In the U.S., drug retailer Walgreens offers shoppers a variety of in-store and curbside pick-up options.

VIRTUAL SHOPS DELIVER REAL CONVENIENCE

Some innovations forge entirely new roads. The virtual supermarket, designed by Tesco and launched in South Korean subway stations in 2011, is one such example.

For Koreans, shopping is a much-dreaded task, so Tesco decided to offer them the convenience of browsing through displays of the same merchandise offered in its stores. To make purchases, consumers simply scan QR (quick response) codes of the items they wish to purchase and then click the send button on a smartphone app. Tesco then delivers the merchandise to the consumers shortly after they get home. The results speak for themselves: online sales increased by 130 percent and site registrations grew by 76 percent in just a few months.

By taking a dramatically unique step outside the box, Tesco, which later teamed up with Samsung to later open a more robust version of the virtual store concept in Seoul, debuted an experience that has since been mimicked by several other retail companies. Eighteen months later, Peapod (U.S.), Cold-Storage (Singapore), Woolworths (Australia) and Yihoudian (China) had created virtual platforms of their own.

Are there more convenience roads to explore? Of course. Recent offerings essentially make it easier for consumers to purchase and receive. Today’s tools, however, offer companies and brands insight into when consumers will need to replenish. The ability to make these types of predictions will likely put retailers with loyalty data in an advantageous position. Notably, we’ve already seen how Amazon walks people through the process of choosing goods, quantities and a delivery schedule on a “save, set and forget” basis. So brick-and-mortar” players will need to respond to stay competitive.

In today’s digital world, the one thing traditional retailers have that online operators don’t—physical stores—needs to be an asset rather than a liability. And those assets need to include entertaining, exciting, and emotionally engaging experiences.

BACKSEAT DRIVING IS WELCOME ON THE ROAD TO FINANCIAL GOALS

 

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Managing money can be difficult no matter where we live, and in many cases, it feels like we spend our cash before we earn it. In fact, Nielsen reports that globally, we save or invest just 10 percent of our monthly income on average. Is that enough? How prepared are we for an unexpected household emergency, health issue or job loss? What about long-term financial security and saving for our children’s future?

To help understand consumer sentiment around these questions, Nielsen conducted a global study that polled more than 30,000 Internet respondents in 60 countries about current and future financial goals and the strategies we use to prepare for them. The findings revealed that the glass was half full for nearly seven out of 10 global respondents (69%), as they believed they would achieve all of their financial goals for the future. Yet, of those, only 28 percent felt that their current financial planning would get them there. The remaining majority of confident respondents (41%) were less self-assured, conceding that they would need to closely monitor and adjust investments from time to time to best meet their financial expectations. On the other hand, nearly one-third of global respondents (31%) said they have no confidence they will meet their financial goals with either current or modified asset allocations.

Overall, financial confidence was highest in Asia-Pacific, where more than two-thirds (78%) of respondents said their planning was sound and on track for the future (32% were satisfied with their current plan and 46% plan to make adjustments). Financial planning was also in good standing among two-thirds of respondents in Middle East/Africa (67%), North America (66%) and Latin America (62%), as about one-fourth in each region said they are satisfied with their existing strategies.

BRIGHTER DAYS AHEAD FOR INVESTORS

“There’s always tomorrow” captures the attitude of global respondents, who by and large plan to invest to meet financial goals in the future, rather than actively save now. Across 14 saving goals reviewed, respondents’ intentions to save in the future were stronger than active intentions for all but one financial goal—saving for health-related issues, whereby global active savers outnumbered future savers by just 1 percentage point (42% active savers vs. 41% future savers).

Overall, plans to save in the future were strongest among respondents in the Asia-Pacific, Latin America and Middle East/Africa regions, especially with respect to intentions to fund their children’s futures, higher education, first- and second-time property purchases, personal luxuries, financial legacy and new businesses.

“The greater number of respondents planning to save in the future versus saving now suggests an opportunity to better educate consumers on saving and investment strategies that will help them meet their financial goals,” said Oliver Rust, senior vice president, Global Financial Services, Nielsen. “It also shines a light on the growing wealth accumulation among consumers in the more developing regions of the world and their aspirations for upward mobility with a more secure financial future.”

Other findings include:

  • Insight into global saving strategies for short-term, long-term and life-event goals.
  • Time table for now vs. later saving intentions.
  • Quick-reference scorecards by saving goals.

For more detail and insight, download Nielsen’s Global Saving/Investing report.

The Top 7 Technology Trends That Will Dominate 2014

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Strap yourself in, it’s going to be a wild ride. In considering the changes we’ve seen in technology over the past year, I’m bracing myself for unprecedented growth when it comes to anytime, anywhere, on-demand information and entertainment.

Based on the trends we’ve seen so far in 2013, I predict 2014 will see many fledgling technologies mature and grow beyond what we could have imagined just a few years ago.

1. Consumers will come to expect Smart TV capabilities

With Smart TV shipments expected to reach 123 million in 2014 – up from about 84 million in 2012 – we are poised to see explosive growth in this industry.

In the midst of this growth, we will continue to see fierce competition between major players like Samsung, Panasonic, and LG. Prices will need to continue to drop, as more consumers crave, and even expect, the ability to use Netflix, Hulu, Amazon Instant Video and their web browser via their TV.

Of course, the development we’re all waiting for in 2014 is the release of Apple’s much anticipated iTV. It appears the iTV is now in the early development stage, and that Apple may be in the process of making a deal with Time Warner to facilitate programming on Apple devices.

The device is rumoured to include iCloud sync, the ability to control your iPhone, and ultra HD LCD panels. Keep an eye out for this release as early as summer 2014.

2. Smart watches will become ‘smarter’

Rather than having to pull out your smartphone or tablet for frequent email, text and social media updates, you’ll glance at your watch.

2014 is the year to keep an eye out for the Google watch. Rumor has it the device will integrate with Google Now, which aims to seamlessly provide relevant information when and where you want it (and before you’d asked for it).

We’ll see smart watches become even smarter, learning what news and updates are important to us, when we want to receive them, and responding more accurately to voice controls.

3. Google Glass will still be in “wait and see” mode

While Google Glass hasn’t yet been released to the general public, we’ve heard enough about it to know it’s still very early days for this technology. With an estimated 60,000 units expected to sell in 2013, and a predicted several million in 2014, it’s still a long way from becoming a common household technology.

These augmented reality glasses allow you to access information like email and texts, take hands-free pictures and videos, effortlessly translate your voice, and even receive overlaid walking, cycling or driving directions, right within your field of vision.

It’s predicted that both Google Glass 2.0, and its companion, the Glass App Store, should be released to the general public sometime in 2014.

Be on the lookout for competition in this market, particularly from major players like Samsung. I predict we’ll see much of this competition aimed at niche markets like sports and healthcare.

4. Other applications and uses for Apple’s TouchID will emerge

The release of the iPhone 5S has, for the first time, made on-the-go fingerprint security a reality. The potential for Touch ID technology to really take off is, I believe, an inevitable reality. Touch ID, which uses a high-resolution camera to scan your fingerprint, allows convenient ultra-security for your iPhone.

Currently, the technology is limited; the only real uses are unlocking your iPhone, and making purchases in the App store. I predict that we’ll see this technology incorporated into other Apple products soon. I think we’ll even see TouchId integrated into MacBook products later this year or next.

5. Xbox One and PS4 will blur the lines between entertainment and video gaming

The new gaming consoles (Xbox One and PS4) will increasingly integrate social media-like connectivity between players. Players could have followers, work together to achieve in-game goals, and new technology will allow for equally-skilled players to compete.

The PS4, slated to be released November 15th, will track both the controller and the player’s face and movements for more intuitive play.

Apart from great gaming, these systems will allow for a far more integrative entertainment experience. For instance, rather than switching between TV, gaming, music and sports, you’ll be able to do two or even three activities side-by-side, or by easily switching back and forth.

6. 3D Printing will begin to revolutionize production

We’ve seen a huge rise in the popularity of 3D printing this year, coupled with a dramatic fall in pricing. The ability to easily create multi-layered productsthat are actually usable – well, that’s pretty amazing.

I’ll be watching for a movement towards simple products being produced close to home, and to greater customization given the ease of manufacturing. I think it’s inevitable that manufacturing in countries such as China will become less appealing and lucrative for businesses given the high costs of shipping and managing overseas contracts.

I don’t expect these changes to reach their full effect in 2014, however I believe businesses will be starting to consider how this will affect their production plans for 2015 and beyond.

7. The movement towards natural language search will make search more accurate and intuitive

With the emergence of intelligent personal assistantslike Google Now and Apple’s Siri, the goal is to have information intuitively delivered to you, often before you even ask for it. The shift seems to be away from having to actively request data, and instead to have it passively delivered to your device.

Natural language search will continue to overtake keyword-based search, as seen by Google’s move towards longer, more natural searches in its recent release of Hummingbird, Google’s largest algorithm update thus far.

Why oil prices plunged today and could keep falling

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Oil prices plummeted today after reports of a two-week halt to protests that have blocked Libyan crude exports, and an economic slowdown in China. The plunge reflects the primary role of local politics and economics—in China, Libya, Nigeria, Iran and elsewhere beyond—in determining oil prices. It also rekindles the longstanding debate over whether we’re in an age of oil abundance or scarcity.

The debate goes like this: Last year was supposed to initiate a long slide in oil prices lasting through the end of the decade and beyond, according to many forecasters, driven largely by a surge in US oil production to 7.7 million barrels a day as of October. But an outbreak of local and geopolitical trouble (such as the increased theft of Nigerian oil, pictured above) shut off about 3.5 million barrels of global supply, led traders to keep global prices above $100 a barrel–and provided ammunition for opposing forecasters who believe in oil scarcity.

Until today, that is, when protesters at Libya’s Al-Sharara field said they will lift a two-month-old blockade of 350,000 barrels a day of production after promises of agreater say in government decisions. In addition, a widely watched HSBC index showed that Chinese manufacturing barely grew in December, its slowest rate in three months. And the new year began with the perception of a “U.S. better supplied with oil than at any time in history,” Phil Flynn, an analyst with the Price Futures Group, wrote on his blog.

As a result, international benchmark Brent crude plummeted by 2.7%, to $107.78 a barrel. The US-traded benchmark was down 3% to $95.44 a barrel, its lowest price in months.

The price decline boosts those who argue that oil abundance will bring on a decade-long period of relatively low oil prices. Among the leaders of this group is Citi’s Edward Morse, who forecasts (pdf) oil prices averaging $80 a barrel through 2020 and beyond

But an equally fervent if less vocal group of analysts say that while appearances have changed, the global oil market has not; supplies remain tight and oil prices are on the way up, they say. In a note to clients today, Oswald Clint’s research group at Sanford Bernstein forecasts almost double Morse’s oil price estimate—$158 a barrel in 2020

Bernstein’s arguments, among others, are that the US surge will be less than many expect, that global demand will surpass supply growth, and that OPEC nations can’t subsist at sub-$100-a-barrel and will cut production to hold that as a price bottom.

Citi forecasts $98-per-barrel Brent in 2014, down from an average of $108.71 last year; Bernstein says prices will average $110. They are the extremes: A Bloomberg survey of last year’s most-accurate oil forecasters produced a prediction of $105 a barrel in 2014.

As today’s price plunge shows, the answer will be much less mysterious than these forecasts make it seem. As with 2013, it will boil down to local and global politics: If the US and Iran harden their November deal with a nuclear settlement that lifts sanctions, that alone should send prices down—not because new Iranian oil supplies will flow immediately onto the market (it will take time), but because of the chances for a period of lower tensions. If you get that and a political agreement among tribes and clans in Libya, resulting in a full resumption of its 1.6 million barrels of supply, Ed Morse will deserve a handshake.

Is Google+ is future? At least Google believe it is !

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It’s common currency in internet punditry circles that Google won the battle to dominate search while Facebook won the battle for social, and that Google+ is just a failed competitor to Facebook. But Google hasn’t given up

It has been clear for a while now that, to make up for the fact that not very many people actively use Google+ as a social network, Google is turning it into a platformon which the rest of Google’s web services are evolving—something that has the effect of making people use Google+ by default. Results from Google+ already clutter search results. YouTube’s commenting system has been replaced by Google+. Chat and Talk, once stand-alone services, were combined into Hangouts and incorporated into Google+.

In a revealing interview with the Indian business newspaper Mint, Steve Grove, a Google+ exec who inks deals with content providers and influential figures, makes it clear that this is just the beginning. Grove tells Mint that “the reason for that is that Google+ is kind of like the next version of Google.”

Why? According to Grove:

There’s a lot of great value here, because Search also shows results from Google+ and this is going to bring more people into Google+; people are going to see that there’s a lot of value in logging into our services, before doing a search.

We’ve written before about how Facebook’s strategy for getting users in emerging markets is to convince people new to the internet that Facebook basically is the internet. Google’s strategy looks a bit like the obverse of this: convince people already on the internet that the internet runs on Google+

But when you look at it longer-term, Google’s strategy is actually very similar to Facebook’s. New internet users, such as the hundreds of millions expected to come online in India in the coming years, will find that being on Google’s social network is increasingly a prerequisite for using Google’s other services. Roping those new users into Google+ from the get-go is the company’s best chance for coming from behind and defeating Facebook’s dominance in social media. And that clearly seems to be Google’s goal, given how much effort it’s pouring into the network.“We focused a lot on Google+ here [in India], and it’s already very active, and people are getting on board on their own,” Grove said.

Don’t Worry About the Trade Deficit––It’s Meaningless

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What happens when one country’s imports consistently exceed its exports, creating a deficit in the international balance of trade? There is probably no greater misunderstanding about the real nature of wealth than when a discussion turns to the balance-of-trade question.

Henry Hazlitt, author of Economics in One Lesson explained this phenomenon when he wrote:

… the same people who can be clearheaded and sensible when the subject is one of domestic trade can be incredibly emotional and muddleheaded when it becomes one of foreign trade.”

I recently taught an economics course to a group of learned professionals, and this one topic was the most contentious. Most everyone seemed to have an inordinate fear of China, India, and other foreign nations accumulating more and more of America’s debt.

I asked the group a simple question: If China and India become wealthier, is that a threat to America? The general consensus seemed to be yes, illustrating how zero-sum thinking is endemic to this discussion. Adam Smith eloquently wrote about this in 1776 in his seminal book, The Wealth of Nations:

Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.”

 

USA = Free Trade Zone

One of the reasons the United States of America is such a relatively wealthy country is that it maintains a free trade zone among its 50 states. The Constitution prohibits the states from interfering with trade among their respective citizens; there are no tariffs or import, export, or other restrictions within the 50 states. No individual state worries if it is running a deficit with another.

Economist Russell Roberts posed this challenging question in his delightful academic novel,The Choice: A Fable of Free Trade and Protectionism:

Shouldn’t Florida help out Minnesota by importing just as many oranges from Minnesota as Minnesota imports from Florida? Trade flows should be unequal. … if you pick any one state in the United States and look at its trade position with respect to other states, you’d see a lot of deficits and surpluses.”

 

People Trade, Not Governments

Trade deficits and surpluses are merely accounting conventions with no explanatory relationship to the underlying reality of an economy, which is why accountants and economists have different worldviews. If a free trade zone works internally for the United States, why would it not work internationally among the countries of the world?

It helps to keep in mind that countries do not trade, people do. In any transaction, as Adam Smith pointed out, both parties must gain for it to take place at all––the antithesis to a zero-sum condition.

You buy a Lexus only because you perceive it as being of higher value than the price you are paying. The government, for all practical purposes, has nothing to do with it; nor is it any of its business.

As individuals, we run trade surpluses and deficits all the time. I run a deficit with my local grocery store, importing more from them than I sell to them. You run a large surplus with your employer, who pays you more than you buy in products or services from them in return. So what? The resulting accounting deficits and surpluses simply do not reflect the economic reality behind these billions and billions of individual transactions around the world.

This is what Adam Smith meant when he wrote, “Nothing can be more absurd than this whole doctrine of the balance of trade.”

The gains from trade are what we import, not export. The purpose of production, in the final analysis, is consumption. The more imports we can acquire for fewer exports, the wealthier we are, either as individuals or as a country.

Other countries face the same realities, and we are no more likely to obtain the goods and services we desire by trading pieces of green paper with other nations than we are to send letters to the North Pole and get gifts from Santa Claus.

Being a creditor or debtor nation simply has no correlation with a country’s standard of living. Thomas Sowell exposes this fallacious concept in Basic Economics:

In general, international deficits and surpluses have had virtually no correlation with the performance of most nations’ economies. Germany and France have had international trade surpluses while their unemployment rates were in double digits. Japan’s postwar rise to economic prominence on the world stage included years when it ran deficits, as well as years when it ran surpluses. The United States was the biggest debtor nation in the world during its rise to industrial supremacy, became a creditor as a result of lending money to its European allies during the First World War, and has been both a debtor and a creditor at various times since. Through it all, the American standard of living has remained the highest in the world, unaffected by whether it was a creditor or a debtor nation.”

 

No one revealed the specious reasoning behind balance-of-trade concerns better than the French economist, statesman, and author Frédéric Bastiat (1801–1850), whom the Austrian economist Joseph Schumpeter said was “the most brilliant economic journalist who ever lived.”

Bastiat used entertaining fables and carried the logic of the proponents of protectionism to their logical extreme, with biting wit. One of his most famous essays, “Petition of the Candlemakers,” was a parody letter from the manufacturers of “candles, tapers, lanterns… and generally of everything connected with lighting,” arguing against the unfair competition––since its price was zero––of the sun.

Bastiat understood that exports were merely the price we pay for imports, and having to work harder to pay for those imports did not lead to wealth. Using impeccable logic, Bastiat wondered if exports are good and imports are bad, would the best outcome be for the ships carrying goods between countries to sink at sea, hence creating exports with no imports?

Stop worrying about the accounting fiction known as the trade deficit. It’s meaningless, and leads to harmful effects in public policy that destroy wealth.

Big Data is here to stay !!

 

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The amount of data in our world has been exploding, and analyzing large data sets—so-called big data—will become a key basis of competition, underpinning new waves of productivity growth, innovation, and consumer surplus, according to research by MGI and McKinsey’s Business Technology Office. Leaders in every sector will have to grapple with the implications of big data, not just a few data-oriented managers. The increasing volume and detail of information captured by enterprises, the rise of multimedia, social media, and the Internet of Things will fuel exponential growth in data for the foreseeable future.

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Deep analytical talent: Where are they now?
Deep analytical talent: Where are they now?

Research by MGI and McKinsey’s Business Technology Office examines the state of digital data and documents the significant value that can potentially be unlocked.

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MGI studied big data in five domains—healthcare in the United States, the public sector in Europe, retail in the United States, and manufacturing and personal-location data globally. Big data can generate value in each. For example, a retailer using big data to the full could increase its operating margin by more than 60 percent. Harnessing big data in the public sector has enormous potential, too. If US healthcare were to use big data creatively and effectively to drive efficiency and quality, the sector could create more than $300 billion in value every year. Two-thirds of that would be in the form of reducing US healthcare expenditure by about 8 percent. In the developed economies of Europe, government administrators could save more than €100 billion ($149 billion) in operational efficiency improvements alone by using big data, not including using big data to reduce fraud and errors and boost the collection of tax revenues. And users of services enabled by personal-location data could capture $600 billion in consumer surplus. The research offers seven key insights.

1. Data have swept into every industry and business function and are now an important factor of production, alongside labor and capital. We estimate that, by 2009, nearly all sectors in the US economy had at least an average of 200 terabytes of stored data (twice the size of US retailer Wal-Mart’s data warehouse in 1999) per company with more than 1,000 employees.

2. There are five broad ways in which using big data can create value. First, big data can unlock significant value by making information transparent and usable at much higher frequency. Second, as organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to sick days, and therefore expose variability and boost performance. Leading companies are using data collection and analysis to conduct controlled experiments to make better management decisions; others are using data for basic low-frequency forecasting to high-frequency nowcasting to adjust their business levers just in time. Third, big data allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services. Fourth, sophisticated analytics can substantially improve decision-making. Finally, big data can be used to improve the development of the next generation of products and services. For instance, manufacturers are using data obtained from sensors embedded in products to create innovative after-sales service offerings such as proactive maintenance (preventive measures that take place before a failure occurs or is even noticed).

 

3. The use of big data will become a key basis of competition and growth for individual firms. From the standpoint of competitiveness and the potential capture of value, all companies need to take big data seriously. In most industries, established competitors and new entrants alike will leverage data-driven strategies to innovate, compete, and capture value from deep and up-to-real-time information. Indeed, we found early examples of such use of data in every sector we examined.

4. The use of big data will underpin new waves of productivity growth and consumer surplus. For example, we estimate that a retailer using big data to the full has the potential to increase its operating margin by more than 60 percent. Big data offers considerable benefits to consumers as well as to companies and organizations. For instance, services enabled by personal-location data can allow consumers to capture $600 billion in economic surplus.

5. While the use of big data will matter across sectors, some sectors are set for greater gains. We compared the historical productivity of sectors in the United States with the potential of these sectors to capture value from big data (using an index that combines several quantitative metrics), and found that the opportunities and challenges vary from sector to sector. The computer and electronic products and information sectors, as well as finance and insurance, and government are poised to gain substantially from the use of big data.

6. There will be a shortage of talent necessary for organizations to take advantage of big data. By 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.

7. Several issues will have to be addressed to capture the full potential of big data. Policies related to privacy, security, intellectual property, and even liability will need to be addressed in a big data world. Organizations need not only to put the right talent and technology in place but also structure workflows and incentives to optimize the use of big data. Access to data is critical—companies will increasingly need to integrate information from multiple data sources, often from third parties, and the incentives have to be in place to enable this.