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Data science and
big data are making an undeniable impact
on businesses, changing day-to-day operations,
financial analytics, and especially interactions
with customers. It's clear that
businesses can gain enormous value from the insights data
science can provide. But sometimes it's hard
to see exactly how. So let's look at some examples. In this era of big data, almost everyone generates
masses of data every day, often without being aware of it. This digital trace reveals the patterns of our online lives. If you have ever searched for or bought a product on
a site like Amazon, you'll notice that
it starts making recommendations related
to your search. This type of system known as a recommendation engine is a common application
of data science. Companies like Amazon, Netflix, and Spotify use
algorithms to make specific recommendations
derived from customer preferences and
historical behavior. Personal assistants like Siri on Apple devices
use data science to devise answers to
the infinite number of questions end users may ask. Google watches your
every move in the world, you're online shopping habits, and your social media. Then it analyzes that data to create recommendations
for restaurants, bars, shops, and other
attractions based on the data collected from your device and your
current location. Wearable devices like
Fitbits, Apple watches, and Android watches add information about
your activity levels, sleep patterns, and heart rate
to the data you generate. Now that we know how
consumers generate data, let's take a look at how data science is
impacting business. In 2011, McKinsey &
Company said that data science was going to become the key basis of competition. Supporting new waves of productivity, growth,
and innovation. In 2013, UPS announced that it was using data
from customers, drivers, and vehicles, in a new
route guidance system aimed to save time,
money, and fuel. Initiatives like this support the statement that data science will fundamentally change the way businesses compete and operate. How does a firm gain a
competitive advantage? Let's take Netflix as an example. Netflix collects and analyzes massive amounts of data
from millions of users, including which shows
people are watching at what time a day
when people pause, rewind, and
fast-forward, and which shows directors and
actors they search for. Netflix can be confident that a show will be a hit
before filming even begins by analyzing
users preference for certain directors
and acting talent, and discovering which
combinations people enjoy. Add this to the success of earlier versions of a
show and you have a hit. For example, Netflix knew many of its users had streamed to
the work of David Fincher. They also knew that
films featuring Robin Wright had
always done well, and that the British version of House of Cards was
very successful. Netflix knew that significant
numbers of people who liked Fincher
also liked Wright. All this information
combined to suggest that buying the series would be a good investment
for the company. They were right.
It was a huge hit. Thanks to data science, Netflix knows what people
want before they do.