D.C. Council Member Yvette Alexander (D-Ward 7) joins Kojo and Tom Sherwood to chat about her upcoming fight for re-election.
It’s a mountain of raw data, growing bigger every time a credit card is swiped or a photo uploaded to the web. Last year, more than 13 exabytes of data– that’s 13 quintillion bytes (a 13, followed by 18 zeros) — was saved on servers, computers, and mobile devices around the world. We explore how innovative organizations are beginning to harness the power of “Big Data” and whether the IT sector can help drive a broader economic recovery in the United States.
- James Manyika Director, McKinsey Global Institute; Senior Partner, McKinsey & Company
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. Later in the broadcast, the effect of men's nurturing side on our naturing side. But first, it's an ocean of information that grows drip by drip every time you swipe a credit card, visit a doctor's office or upload a picture to the web. Welcome to the world of big data.
MR. KOJO NNAMDILast year, consumers in businesses stored 13 exabytes of information worldwide on personal computers, servers and mobile devices, that's 13 followed by 18 zeros, more than 52 thousand times the data stored in the Library of Congress, a number so big it's almost impossible to get our heads around it. But somewhere deep inside that vast ocean of data, innovative companies are discovering all sorts of insights about their customers and about the way they do business.
MR. KOJO NNAMDIYou may have seen early signs of things to come. It explains why the cooking catalogue or the credit card offer that shows up in your mailbox might be different than the offers your neighbor or your co-worker gets. But in the not-so-distant future, big data could change the way we interact with businesses and government in profound ways.
MR. KOJO NNAMDIJoining us to discuss this is James Manyika. He is director of the McKinsey Global Institute, the business and economics think tank of the global consultancy McKinsey & Company. He's a lead author of a report called, "Big Data: The Next Frontier for Innovation, Competition and Productivity."
MR. KOJO NNAMDIHe's also a senior partner in the high tech sector at McKinsey & Company. Earlier this year, he was named to the New Innovation Advisory Board at the Department of Commerce, a new body tasked with studying U.S. economic competitiveness and innovation and making recommendations for increasing job creation. James Manyika joins us from studios in San Francisco, thank you so much for joining us.
MR. JAMES MANYIKAWell, thank you for having me, Kojo.
NNAMDIJames, we live in strange economic times. The economy is the midst of the worst downturn since the Great Depression. Unemployment is stubbornly locked in at just over 9 percent. But the picture is more complicated when you break it down by sector. Over the last five years, technology has increased productivity in many sectors and the information technology sector itself is booming.
NNAMDIIn your most recent report for the McKinsey Global Institute, you describe an emerging field of innovation as companies try to mine huge amounts of data. How would you characterize this emerging field?
MANYIKAWell, in many ways, Kojo, this is a trend that's been coming for quite some time and has actually now reached a pretty significant inflection point in the last several years and this is the explosion of data that we talk about. By the way, I'd like to come back later on to the jobs question because that's an important one.
MANYIKAWith regards to the question of big data, this is really the result of several forces at work over a period of time. I mean, we've had Moore's Law, which has driven down the cost of computing and storage, the ability, which has made it incredibly easy for us to store and capture lots and lots of data. At the same time, we've also had the network effect of connectivity, cell phones, the internet, which make it very easy for data that is captured to be communicated, to you know, from various devices, your cell phone, your smart phone, your PC, your computer, your tablet.
MANYIKASo this combination of low-cost computing and a high, high connectivity has created essentially the data explosion that we now have.
NNAMDIYou wear a number of hats when it comes to these questions of technology and innovation, as an academic, as a consultant, as a member, as I mentioned earlier, of a special advisory board to the Secretary of Commerce on innovation. Before we get too deep into the world of big data and following up on your desire to talk about jobs, I'd like you to put on that last hat. Give us a sense of how this field of information technology fits into the broader health and well-being of the economy, in general, and on job creation, in particular?
MANYIKAWell, I think it fits in, in terms of the tremendous amount of innovation and the possibility of creating new kinds of jobs and new jobs for the future that this portends. But I want to come back and may set some important context on this jobs question for a moment because I think it's easy for us to imagine that the jobs issue is something that's just happened because of this recession.
MANYIKAThe U.S. job creation engine was already in trouble even before this recession. We were not creating jobs in this last decade at anywhere compared to the rate of job creation that we've had in previous decades. So we already had a jobs engine that was already in trouble and in many ways, was actually masked by some of the bubble sectors that we had.
MANYIKAThe reason why this matters to come back to the big data question is that one of the things that's failed us is our education system, the ability of the U.S. to create the right mix of skills and capabilities that are matched to the jobs of the future. You made the point that the high tech industry is booming. It is and, in fact, if you talk to many of the companies in the high tech sector many of them are actually hiring. Many of them will say that they can't find the right mix of skills and capabilities that they would like.
MANYIKAAnd so you've got this mismatch between the sectors that are growing and have job opportunities and the skills and capabilities that are being created by the U.S. economy. This is an important issue that we're going to have to solve for if we're going to solve and address the jobs challenge.
NNAMDIPresident Obama has said that we have to outcompete and out-innovate other countries. In your view, can the high tech sector lead our economy out of the doldrums?
MANYIKAAh, it has. It can and it has in the past. If you think about it, the computer industry in the '90s essentially was fundamental to the economic boom that we had. Not that the industry itself created all the jobs, but the products and services from this industry basically spurred innovation in many, many other sectors whether it's retail or financial services or wholesale and these are very large sectors of the economy.
MANYIKAI actually think that the innovation and technology can do the same yet again because there's so much innovation coming out of companies and technology that can spur development in many, many other sectors. These can range from information technology big data as we're going to talk about, but also many of the innovations coming out of the clean tech sectors that have the potential to transform much larger sectors like the energy sector, for example. So I think innovation is, in fact, a critical component for how the U.S. continues to grow and prosper.
NNAMDII'd like to put the same question to our listening audience. In your view, can the high tech sector lead our economy out of the great recession? Will high tech companies create enough jobs to make a dent in unemployment? You can call us at 800-433-8850. Send us a tweet at kojoshow, e-mail to email@example.com Can the high tech sector lead our economy out of the great recession? Call 800-433-8850 Our guest is James Manyika, director of the McKinsey Global Institute. He's a lead author of a report called "Big Data: The Next Frontier for Innovation, Competition and Productivity."
MANYIKAJames, in the global information economy, data is the raw material. With every picture we post on Facebook, every e-mail we send, every book we buy, every gadget we buy, we leave a kind of data trail. When we start trying to quantify that the numbers start to get so big, it's almost impossible to wrap our head around it. As lead author, can you help us to wrap our heads around these numbers?
MANYIKAWell, the numbers are truly mind-boggling. I mean, you mentioned that we stored 13 exabytes of data in 2010 alone. Just to keep this in context, an exabyte is roughly 4,000 times the information at the Library of Congress and that's just one exabyte. So we're talking about a tremendous amount of data. At the same time, not all this data is stored. So I'll give you an example.
MANYIKAIf you take a sector like healthcare, healthcare already discards something like 90 percent of the data that it actually captures with all the research and analysis and video feeds and data feeds that are captured in healthcare. But I think it's important to realize that a lot of this data is now creating the opportunity for companies and users to actually benefit in some very new and interesting ways. I mean so, for example, one of the things that is starting to happen is as companies start to analyze and mine a lot of this data, they can make tailored offers to consumers, to users, offers that take into account your behavior, offers that take into account your preferences, the context of what you're doing in ways that are pretty powerful.
MANYIKAWe've all started to experience this whether we go online and we're trying to look for products and services, we're made offers that seem somewhat tailored to what we happen to be doing at the time or that happen to be linked to something we're interested in two minutes ago or two hours ago or two days ago. So I think there are actually tremendous benefits for users. The good thing in all of this, by the way, in all the research and analysis that we've done, is that a lot of the value actually ends up as consumer surplus for the consumers, which is a good thing.
NNAMDIYeah, we might notice that the credit card offers we're getting from Capital One are different from the ones our friends or family members are getting. We're talking about companies that are already sitting on a massive amount of data and they're only now just starting to try to mine that for insights about their customers. But what is driving this explosion in data?
MANYIKAWell, the explosion in data comes from the fact, as I said, it's easy to create it. It's easy to capture it with all these devices that we have that basically create and capture and communicate data so easily. I mean, it's quite striking that one of the things that we're now entering is you might call it the internet of things where the number of devices and sensors that have internet connectivity and are able to sense and create and capture data is just enormous. This is what's creating the data explosion.
MANYIKAI think the real interesting question is not so much the explosion itself, but rather what we do with it and how we use it to benefit ourselves as consumers, as businesses, as innovators. That, to me, is the interesting question and we're starting to see some very innovative companies and some very innovative uses being made of this data.
NNAMDII'm glad you mentioned the internet of things because before preparing for this broadcast, I didn't -- I was not familiar with the phrase, but we've all become accustomed to the idea of smart phones, but we should probably prepare for the era of smart cars and smart refrigerators, shouldn't we?
MANYIKAOh, we should. I mean, if you think about it, with what technology can do in terms of miniaturization of basically the computing and communication capabilities, just about anything now can become an IP or internet endpoint so think about sensors in your car. Think about sensors in your watch, in your devices. Think about refrigerators. Think about industrial equipment. Think about your running shoes.
MANYIKAAll these devices now are essentially capable of capturing enormous amounts of data and being able to communicate it to other devices. So, in fact, a big part of the data explosion is actually going to come from just the sheer explosion of these things that have internet capabilities and also have the ability to compute and sense and capture more information.
MANYIKAThat, to me, is...
NNAMDIGo ahead, please finish.
MANYIKAThat, to me, is going to be quite interesting. I mean, think about what will happen. Take your car insurance, for example, the, you know a lot of the ways in which our car insurance premiums are calculated assume particular things about how we drive and where we are in our behavior and on the basis of that the insurance company determines what the risk profile is going to be.
MANYIKAIn the world of the internet of things where the car itself has sensors and devices, it's actually quite possible and there are already examples of this in the real world. It's quite possible to basically instrument where you're driving, what time you're driving, Kojo, what you're doing, where you happen to be, what neighborhood you're in, how fast you're driving, whether it's you or your daughter or your son driving, in a way that then allows an insurance company to tailor their premium to exactly what you happen to be doing at that particular time and to who happens to be driving your car. That's extraordinary.
NNAMDIShh, James, I hear my car insurance premiums going up already. Allow me to go to the telephone and start with Illia (sp?) in Washington, D.C. Illia, you're on the air. Go ahead, please.
ILLIAHi Kojo, thanks so much for having my -- taking my call. I fully agree with your subject matter expert. And I just wanted to say that, as a sculptor and a graphic designer myself, the content is what really is at the heart of what we're putting out there. And it's really exciting to see these new developments coming through, with devices and connectivity, in order to share what we make easily and be able to get a audience feedback and understand our audience more fully.
ILLIAAnd I think that's the core at kind of the economic boost here and the advantage to jobs and job creation, is the actual distribution, the ability to more closely connect and really understand our audience in terms of content (word?) .
NNAMDIIllia, I'm glad, as a -- I'm glad you called in because as an artist, I'd like to know, what specific gadgets are you particularly impressed with? What developments?
ILLIAI'm really into how Facebook is working with people and how you can connect. I think Google plus is also doing something great with the ability to share images quickly and as a sculptor and a graphic designer, I see a really big advantage of that. The kind of things that vimeo.com do with video hosting and the ability to look at -- get hits and kind of how people watch the video, kind of how people experience a visual work -- visual content is really profound.
ILLIAAnd it can get me to change and modify and sort of create a message that's clear and better suited to reach a wider audience.
NNAMDIJames Manyika, what does Illia's...
NNAMDI...comment say to you?
MANYIKAWell, actually, I couldn't agree more with Illia. And, in fact, he made a very important point that's worth amplifying, which is the ability to get feedback, that's not possible with what big data and the internet make possible. One of the things that's interesting is that, if you think about what used to happen -- what still happens in many companies, how companies market their products and services or even artists market their music or their creations, is that they try and put something out there or either do focus groups or try and do market research.
MANYIKAWell, in a big data world, one of the things that's happening now is this rapid feedback cycle and the ability to do experimentation and get immediate feedback as to whether users or people who like art and music or sculptor in the Illia, are appreciating the art form. And you can get that almost immediately and decide how you choose to respond to that. So this idea of rapid feedback and the ability to experiment and explore ideas, pretty rapidly, is pretty profound.
NNAMDIIllia, thank you very much for your call. We're going to take a short break. When we come back, we will continue our conversation with James Manyika about big data and the future of the information economy. If you've already called, stay on the line, we will get to your call. If not, the number is 800-433-8850. You can go to our website, kojoshow.org, ask a question or comment there. What do you think governments should be doing to encourage certain industries and sectors, 800-433-8850? You can send us a tweet @kojoshow. I'm Kojo Nnamdi.
NNAMDIWelcome back, we're talking with James Manyika, director of McKinsey Global Institute, the business and economics think tank at the global consultancy McKinsey & Company. He's a lead author of a report called "Big Data: The Next Frontier For Innovation Competition and Productivity." Earlier this year, he was named to a new innovation advisory board at the department of commerce, which is tasked with studying U.S. economic competitiveness and innovation and making recommendations for increasing job creation.
NNAMDIHe joins us from studios in San Francisco. I'm going to get directly back to the phones to Nick in Falls Church, Va. Nick, you're on the air. Go ahead, please.
NICKHi, Kojo, how are you doing?
NICKYes, you had previously asked if the technology industry in the United States can lead us out of the economic doldrums. And I have to say, fortunately, I don't think that's going to be the case this time around because I'm a 15-year veteran of the IT industry and in the Washington Metro area, here. And all I see from myself and my friends, our experiences, is that all of the biggest technology companies, the CISCO's the Microsoft's the Hewlett Packard's and the IBM's, they're doing everything they can to destroy as many United States jobs as they can.
NICKThey fire as many U.S. workers as it's feasible for them to do. And they replace them as soon as they possible can with workers in India or Brazil or China or the Philippines workers that work for, you know, sometimes pennies on the dollar in countries where the labor laws are much more lax then they are in the United States.
NNAMDIOkay, allow me to have...
NNAMDI...Manyika respond. James Manyika, how is this not a race to the bottom?
MANYIKAWell, I don’t think it's a race to the bottom, but let me address Nick's question directly. I think that when you think about the impact of the tech industry on the U.S. economy, you have to think about it, at least, in two ways. There's the industry itself, in terms of the jobs it's creating as an industry in itself, and then there's also the effect that the industry has on the rest of the economy.
MANYIKAI think in terms of the industry itself, technology happens to be in that part of the economy that is globally traded and very competitive. So, yes, there've been, you know, massive shifts in where work gets done, how much off shoring happens in that sector. So these are very competitive globally traded sectors. And so, yes, while some companies have created jobs in the tech industry, some have not. And some have moved jobs either to their partners or elsewhere in the global economy.
MANYIKABut I think it's also important to think about the second effect of the technology industry on the economy. That is the impact of the products that come out of this industry and the way in which they transform the economy. If you had looked at the '90s, for example, yes, the technology industry itself grew, but the bigger effect that the tech industry had in the economy was in the use and adoption of its products by retailers, by banks, by the health care industry.
MANYIKAThat's what drove the massive amount of growth and impact that we saw. I mean, you're probably familiar with the solo paradox. The reason why the solo paradox was resolved was we saw the impact of the tech industry on the rest of the economy. And that's what I have incredible confidence that innovation and technology will, in fact, improve the wider economy.
NNAMDISo you're not looking simply at the tech industry, but it's impact on the wider economy. Nick, thank you very much for your call. Onto Shawn in Frederick, Md. Shawn, your turn.
SHAWNHi, Kojo. I'm calling because, you know, I'm sure there are other people out there that have different security concerns whether it be something sort of silly like if your refrigerator is internet connected, someone could hack it and, I don't know, shoot ice cubes all over your kitchen. But, you know, more serious like people hacking at the power grid and just, you know, what happens with all this very personal information that goes out?
SHAWNI mean, I don't think I want my health insurance company to know exactly how many ounces of water I drink in a day or my car insurance company to know, you know, how fast I drive and where I go...
SHAWN...all the time.
NNAMDI...I'm glad you brought that up because James Manyika, the Big Data report does not delve too much into privacy concerns except to note that there are valid questions being raised about how protected our data is. But the term Data Mining in the view of some has a distinctly negative ring to many consumers that implies that companies are snooping into our private lives and that, I guess, is a part of Shawn's concern.
MANYIKAI think the concerns are very valid and Shawn, you know, I am concerned too. I think Big Data, as with most of these massive technology enabled innovations, have both a positive and some maybe negative things that need to be addressed. I think, clearly, on the positive side are the enormous economic benefits we can talk about that. I think on the concerned side, you'd have to be concerned about cyber risk and cyber security.
MANYIKAThe situation you described, if your refrigerator is shooting ice cubes at you or worse and you'd also have to worry about some of the concerns about personal privacy and how we regulate that. I think the thing that the industry and others who look at it, us trying to realize, is that, in fact, a lot of the institutions and frame works that we've used to think about privacy are increasingly outdated and I think there needs to be a fundamental look as to how we're going to deal with privacy and security, both privacy and security in this new Big Data world.
MANYIKAThe thing that is interesting, though, however, is that if you take a sector like health care, for example, where it's one of the sectors that has enormous amounts of data involved in it and if you look at the questions of privacy and security, they're certainly a very legitimate when it comes to patient data and patient information. But there all so vast parts of that industry where the privacy concerns are actually not quite founded. And these have to do with, for example, looking at the pair information, how pairs perform.
MANYIKAI mean, I certainly -- I find it quite interesting that there's very little data transparency, for example, as to how much -- what the management fees are on the -- on my health care provision. If, in fact, those things would be opened up to more competition, I might even get better health care. So I think there are clearly a part of anyone of these industries where there are legitimate privacy and security concerns, but at the same time, we should also not forget the massive economic benefits that come with these.
NNAMDIShawn, thank you very much for that call. And James Manyika, that's where I'm going to go to the other side of that coin, company executives and government officials have always used data to guide decision making. But we're talking about a different kind of data augmented decision making using algorithms to see trends that are not immediately obvious. Give us a sense of how this data could change the way business is done.
MANYIKAWell, in many ways, Kojo, I think there's certainly the idea of being able to do micro segmentation in order to provide you with particular offers tailored to you and services tailored to you. The other is also to be able to take and look at actual real trends in the real economy. I mean, I think, one of the things that's quite fascinating now is that many -- much of the information we use in the economy such as employment data or consumer confidence data and all of that, typically comes from what we've done historically which is to do these massive surveys.
MANYIKAWell, increasingly you'll find, that now, with the behavior that's captured digitally, much of that information is now possible with all kinds of trend analysis that can be done in real time. And that, now, also allows companies to be able to use that information. I think one of the things we're going to see a lot of is the idea of companies both using their own private data that they capture as part of doing business with their partners or their customers, as well as publicly available data, as well as data that they might even purchase from others, that might include location data.
MANYIKAOne of the things that I find quite fascinating is that nowadays, the data that can be combined for both consumer benefit and business purposes comes from multiple sources. You could imagine location data that has to do -- and captures on your cell phone based on behavioral data of what you've been looking at, what you happen to be doing. So this idea of being able to mash up data from different sources and come up with interesting insight, I think, is a pretty powerful idea.
NNAMDIGeo-location functions on smart phones could mean that we can even see our communities in new lights. Many of the cost savings you see and environmental benefits from data could come from using these Geo-location functions. They can save time, they can save gas when traveling around a city, for instance.
MANYIKAOh, oh, absolutely. I think the -- you know, information -- I mean, one of the things that's been quite interesting is the economic benefits are quite straight forward in terms of the efficiency gains, the ability to be able to instrument how you're driving and so therefore, what alternative routes can save you fuel, where the nearest location is for this, that or the other. I think the benefits are enormous, but I think, as several of the callers have highlighted, we need to make sure we're taking a balance to view here as to the economic benefits, but also, quite frankly, the security and the privacy risks.
MANYIKAI think it's quite interesting that you're seeing various ways in which companies are trying to deal with this, such as either giving users the opportunity to, you know, opt-in or opt-out, I think that's one mechanism. The idea of offering kind of economic benefits in exchange for you being willing to share your privacy data -- your private data, I think we're going to see a lot of experimentation in this way about this idea of value exchange in return for people being able to -- being willing to have their data be used or shared in some interesting way.
NNAMDIBefore I go...
MANYIKAI think when it becomes quite concerning is when that's done without our explicit tacit agreement or willingness to have it be done.
NNAMDIWe have a caller, Kye (sp?) , in Springfield, Va. that I'd like to go to, but first, to kind of compare and contrast because we were thinking in the end, math majors will reign for companies and governments to successfully harness all this data, they're going to need to hire people with very specific skills and manipulating numbers. Right now, we don't really have enough of those people. Give us a sense of the challenge.
MANYIKAThe -- one of the things that was quite surprising in our research was realizing that part of the big shortcomings or challenges is simply a talent and skills challenge. So if you think about it, you know, the -- it may very well be that statisticians may be the next, you know, most coveted capability in the future. But the sheer number of people who are able to deal statistically, technically and be able to manipulate the data, the need for those people far exceeds what the economy currently has.
MANYIKAThere's a big gap, if you like, in terms of just the skills that are needed for that. We estimate that, over the next few years, just that pure, raw technical skills run close to a couple hundred thousand in terms of this shortfall of the skills that are needed to manipulate the data. In addition to that, you then also have the next layer of that which are the management and other complimentary capabilities of people who are able to deal with a world in which Big Data matters.
MANYIKASo imagine your manager who must be able to interpret what, you know, what does it mean to run an AB test, what does it mean to have a control group, what does it mean to be able to analyze the data as opposed to take a sample and be able to draw managerial insights out of that? So when you then expand the skills gap to other people who don't have to manipulate the data themselves but need to be able to understand it, work with the results of it and change the way they do what they do, you then have an ever bigger gap.
MANYIKASo, I think, you know, this comes back to the point I made at the beginning, Kojo, which is that one of the challenges in our economy, at the moment from a job standpoint, is this mismatch and gap that we've got between the industries and the skills that are going to be needed, going forward and what we currently have and are creating in our economy.
NNAMDIWhich brings me to Kye in Springfield, Va., you're on the air. Go ahead, please.
KYEYeah, so I have definitely noticed the same thing. There's a -- I will get a lot of resumes for one position which maybe 10 percent of them, I will in -- think about at all to bring in. But even the people that I bring in, it's not necessarily the education or the degree that they have as much as just their ability to think and problem solve. And very often I'll get people with lots of experience or very good education that as soon as you started asking questions or start getting them to solve a problem, they're incapable of doing it or they just don't know, they don't have that basic skill.
NNAMDIAnd Kye, I guess you should clarify what you do. You do a lot of hiring in IT, don't you?
KYEYou know what? I work mostly in software development.
NNAMDIOkay. Here's James Manyika.
MANYIKAWell, I think I'll certainly agree with having the observation he just made, Kye, is very similar to what we see which is the skills mismatch is a real issue, I think, in our economy. And it's not just a matter of educational degrees, by the way, just to be very clear. I mean, we see this, too, even at the level of vocational skills, technical skills, many of which don't necessarily require advanced degrees. And one of the things -- one of the comparisons in another piece of work that we've been doing and we've been looking at is to see how other countries have done this.
MANYIKAI mean, I think it's quite striking when you're compare and contrast the U.S. to say Germany. In many ways Germany -- the U.S. had a much deeper recession peak to trough than Germany did, and yet Germany has fared much better from a jobs point of view than the U.S. has, and you look at the skills and capability profiles that they have in the Germany economy, it's actually quite different from the U.S., and I think many of that speaks to even some of the points that I think Kye is making.
NNAMDIKye, thank you so much for your call. James Manyika, we've run out of time, but I know we're gonna have you back on this broadcast again because your entire career arc fascinates us from Zimbabwe through Europe and in the United States. So thank you so much for joining us.
MANYIKAWell, thank you for having me, Kojo, and I'm delighted at the questions that your callers asked. Those are terrific questions, thank you.
NNAMDIJames Manyika is director of the McKinsey Global Institute, the business and economics think tank at the global consultancy, McKinsey & Company. He's a lead author of a report called "Big Data: The Next Frontier for Innovation, Competition, and Productivity," which we'll probably be revisiting in the future. He's also a senior partner in the high-tech sector at McKinsey & Company. Earlier this year he was named to a new innovation advisory board at the Department of Commerce. We're going to take a short break. When we come back, the effect on men's nurturing side on their naturing side. I'm Kojo Nnamdi.
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