Product Management

How New York City is Acting Like a Tech Company

NYC’s new OMNY MetroCard shows how the city is creating products that better meet customer needs, just like tech giants like Amazon do.

While it’s easy to get sucked into discussions on “important” topics like COVID or politics, sometimes it’s fun to focus on the little things in life. These little things can be incredibly frustrating. Other times they can lead to wonderfully delightful surprises.

Before COVID,(1)This is less of an issue these days, now that I use a Citi Bike for work. one of my minor frustrations was deciding whether or not to buy an unlimited ride subway card or a pay-per-ride card. I’d used to take the subway 5 days a week and a little on weekends. An unlimited ride monthly was normally the right choice. It paid for itself plus a got juiced up that I could ride the subway for free to explore the city. The unlimited ride ticket helped me feel more connected to the city. But what if I went on vacation? What if I had work travel? I would feel cheated if the pay-per-ride card was cheaper that month.

I wanted someone or something to just choose the best card for me. I wanted a card that acts like a pay-per-ride card when I needed it and an unlimited one when I needed it. This is what the new OMNY MetroCard is doing. It’s a card that works like a pay-per-ride card on weeks when you don’t use it a lot and then unlimited weekly on the weeks when you do. It’s literally a card that transforms itself. That’s not the way that it’s being marketed though.

An OMNY ad for this new pricing scheme.

Here’s how it works. New York City has a new(ish) pay-by-phone system called OMNY (you’ve got to love the wordplay). Instead of getting a MetroCard, all you have to do is take out your phone and swipe it against the turnstile reader. With an iPhone, you don’t even need to unlock your phone.

Recently, OMNY created a new kind of subway card. It’s being marketed as an improvement over the pay-per-ride card. You ride 12 times starting on a Monday and every ride after that is free. But here’s the kicker. 12 rides is the same cost as paying for a weekly pass(2)A single ride is $2.75 and a weekly is $33.. So with every ride that you’re purchasing with OMNY you’re also getting one-twelfth of a weekly pass that expires at the end of the week.

Amazon offers a product with similar transformational properties through Amazon Prime Video. When looking to buy a season of a TV show, I have the option of buying the whole season or individual episodes, with the whole season costing more in total but less per episode. But with Amazon Prime Video, I can purchase a single episode, and then, later on, I can use that purchase price toward the whole season. So I’m purchasing the episode but also part of the season. Eventually, as I buy more episodes, I get the whole season for free once I reach the price of the season. It’s two products in one!(3)Correction: Previously, I’d made a much stronger claim which turns out to be false. I thought that each time you rent the movie you get credit towards buying the movie. The credit you get toward purchasing the movie is the amount you pay for the rental. So when you rent the movie, you aren’t just renting it, but also buying a piece of it too. If this were true, there’s no reason to buy a video anymore.

This is a fundamental shift in the way products are sold. Previously, companies would treat their customers as adversaries. For example, a company might sell a gift card with a provision that said something like, “If you don’t use this gift card in a year, we will start charging you a $2/month maintenance fee.” You’d pull out an unused gift card from a drawer only to find that it didn’t have money on it—with the company pocketing all the value. But a few customer-centric companies bucked this trend. I remember when I saw that Starbucks didn’t have an expiration on its gift cards. It made me feel very warm and fuzzy about the company and greatly encouraged me to buy a gift card. Over time, this loyalty toward customers drove Starbucks to one of the largest gift card businesses in the country.(4)In 2021, Starbucks accounted for 10% of all holiday gift card sales—$3B out of a total $28B

So why are we seeing this change to more consumer-friendly products? First, companies are playing catch up with tech giants like Amazon and Google. Tech companies are putting the customer first instead of profits and everyone else is playing catch-up. To paraphrase Ukranian President Volodymyr Zelensky from his television show Servant of the People,(5)In addition to being the name of his television show, Servant of the People is also the name of Zelinsky’s political party “We are here to serve the people. The people are not here to serve us.”

Technology has also allowed companies to create innovative and fungible products because they are no longer physical objects. In the old days, you had a subway token which was a physical metal object. A weekly or monthly ticket was a paper ticket. It’s very hard to transform a token into a paper ticket. But when both of these are on a phone, it becomes possible.

Getting back to the new OMNY card, it’s a great start but there are a few improvements that I would make:

Let me use tax-free money with OMNY. I get to buy my MetroCard with tax-free money using the TransitChek program but this doesn’t currently work with OMNY.

Make OMNY work as a monthly card rather than a weekly. Monthly cards are far more commonly used by locals. Weekly cards are only used by tourists. So make the OMNY card work for people that live here.

Change it from a “pay-per-use that turns into an unlimited when you use it a lot” to “an unlimited card that turns into a pay-per-use card (and gives you a discount) when you don’t use it.” This one is a little complicated. As we said, this card is a mix of a pay-per-ride card and an unlimited card. The current card starts with the pay-per-ride card and then transforms into an unlimited card for the week once you take more than 12 rides. I think it should be a monthly card that you pay for up front. At the beginning of the calendar month, you’d buy this new card at the price of a monthly. If the number of single rides in that month would be less than a monthly, you’d receive a discount for the difference. You’d only pay for the number of single rides you made. Below are some examples of how it would work (keep in mind that a single ride is $2.75 and a monthly card is $127 or about 46 rides):

Scenario 1 (Works as an unlimited card)

In January I take the subway 2 times a day every day including weekends. That’s $170.50 (31 days x 2 rides x $2.75) rides. But a monthly pass only costs $127 so I’d only pay $127 that month.

Result: 62 rides for $127 (the price of a monthly)

Scenario 2 (Works as a pay-per-use card)

In February, I went on vacation for a week. Also, I didn’t take any rides on the weekend. So 15 days at 2 rides a day is $82.50. I’d paid $127 in the beginning of the month so I’d get $44.50 back. I think this should be sold as a monthly subscription product so this value would be credited to my payment for next month’s card.

Result: 30 rides for $82.50 (the price of a pay-per-ride card)

Starting with a monthly card has a number of advantages:

  1. Customers only pay once a month so they don’t feel the pain of paying each time. This would encourage them to ride more.
  2. Customers always get some sort of a gift at the end of the month. If they don’t ride enough, they get a discount at the end of the month. If they ride more than the cost of a weekly, they see how much they saved by not paying for each additional ride. Both of these “gifts” build loyalty.
  3. It automatically gives people the best option between a monthly and a pay-per-use. Because they’re only paying for what you use, more customers would sign up for this card and not have to worry about how they were being charged.
  4. Customers feel like they already have a monthly so they will ride the subway as if they had a monthly because they would think of every ride as “free.”
  5. It sends the message, “We care about you as a New Yorker. Use the subway as you want to use it and we will give you the best price.” The subway becomes utility that you don’t need to think about.

Even though the current product still has areas for improvement, it’s a good start. The city is aligning the product with customer needs rather than just thinking about making a profit. It’s acting like a tech company! Tech companies understand that customers will always have a desire for improvement and that it’s the company’s job to meet that need. Amazon’s Jeff Bezos sums it up when he says, “Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great.”


1 This is less of an issue these days, now that I use a Citi Bike for work.
2 A single ride is $2.75 and a weekly is $33.
3 Correction: Previously, I’d made a much stronger claim which turns out to be false. I thought that each time you rent the movie you get credit towards buying the movie. The credit you get toward purchasing the movie is the amount you pay for the rental. So when you rent the movie, you aren’t just renting it, but also buying a piece of it too. If this were true, there’s no reason to buy a video anymore.
4 In 2021, Starbucks accounted for 10% of all holiday gift card sales—$3B out of a total $28B
5 In addition to being the name of his television show, Servant of the People is also the name of Zelinsky’s political party
Product Management

Creating Great Social Experiences

Creating products is about building great experiences for customers. In the past, companies would create products to tell a story to customers. But my old boss, Raja Rajamannar, CMO of Mastercard, says, Storytelling is Dead. Jeff Bezos says that at Amazon, “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” However you cut it, customers are now engaged participants rather than passive recipients. It’s the job of companies to engage with customers rather than just treat them as an audience.

Product Management Technology

On Amazon – A Peculiar Company

Disclaimer: I worked as the Head of Banking for Amazon Web Services. This writing does not represent Amazon in any way. Opinions written here are strictly my own.

Amazon has a very strong culture. At other places I’ve worked, culture is an aspiration at the senior level but took a back seat to more pressing concerns like making as much money as possible. Amazon’s culture is embedded in its 14 Leadership Principles that are a common language and framework that form the basis of everything the company does, from interviews to everyday decisions. You can get a good feeling of the Amazon culture by watching videos of Founder and CEO Jeff Bezos. A few good ones are from the Economic Club of Washingtonan interview by his brother Mark,  the Axel Springer Award, and a 60 Minutes Story about Amazon from 1999.

Product Management Technology

The Future of Payments

Disclaimer: I work at Amazon but this writing does not represent Amazon in any way. Opinions written here are strictly my own.

When I was working at Citi Cards, I was under the impression that people were spending a lot of time figuring out what credit cards they should have. Were they going to get points or miles? Weren’t they going to be so excited that they could redeem their points with Amazon? Of course, working in a credit card company I was thinking about this all day and I lost sight of the fact that my customers had far better things to do with their time.

Product Management

Reframing Bad News to Inspire the Team

A leader’s job is to inspire their team. This is easy when things are going well. A good leader can keep morale up even when there’s bad news. But a great leader can find a way to use the bad news itself as inspiration.

I remember two years ago working at a financial services firm in an innovation group. John was the leader of the group. He started out the weekly team meeting by saying, “We got some news over the weekend. We redid our projections for the project launch and instead of the $50 million that Tony projected, we are only going to make $5 million in the first year.”

Product Management

Alexa Blueprints: Personal Alexa Skills in Minutes

I like building Alexa Skills. Skills are Amazon’s name of the apps that run inside Amazon’s Echo and other Alexa products. Building skills is a good way for me to understand how Alexa works and it’s a pretty neat party trick to get Alexa to pretend that she knows me.

Building skills used to be difficult.  You needed to know how to program a voice user interface. Alexa soon came out with templates which made things easier but still required you to know how to program and so some basic system administration.  I persisted in building a simple trivia game and Amazon sent me a T-Shirt for having published one of the first 1000 skills.

My Shirt for Building One of the First Thousand Alexa Skills (Front)

My Shirt for Building One of the First Thousand Alexa Skills (Back)

I remember thinking, “Where can Alexa be useful to me?” At the time, my boys were just starting to learn peoples birthdays. So I started building a skill for family birthdays. This was a great way to drill them on an important topic until they memorized it.

Alexa would ask, “Who’s birthday is on June 20th? One … Daddy … Two … Mommy … ”

And the kids would respond, “Daddy!” (Actually, they probably said “One” because the technology wasn’t very good at picking up names at the time.)

The problem with this skill is that you needed to include all the birthdays into the skill itself. So I could build a birthday family trivia skill but it would have the birthdays for my family. That’s not a particularly useful skill for other people.

My wife Abigail had a good idea for a skill as well. She said, “It would be really convenient to have a skill for the babysitter to know everything about the house — like bedtimes, WiFi passwords and emergency phone numbers.” But we couldn’t do this either because the program needed to have OUR information inside of it.

Amazon solved a lot of this problem last month with Alexa Blueprints. Alexa Blueprints are a simple and convenient way to create a customized skill that’s just for you. Instead of programming to create the skill, you just type into the web forms and Alexa does the rest.

You Create a Blueprint Just by Filling Out a Form

There’s a number of pretty cool thing is that you can build with Alexa Blueprints. I can easily build my birthday trivia game, Abigail’s babysitter skill and even a Game Show complete with buzzers. My sons and I used the Mother’s Day blueprint to build a card for my wife. It took about 10 minutes and Voila — the Mother’s Day card was done!

Sample text for a 10 minute Alexa Mother’s Day Skill

Take a look at this video to see how you can create your own Alexa blueprint.

Update (10/1/18): I’ve also created another couple of skills for the boys. I’ve used the Flashcards Blueprint to create a vocabulary quiz for my son’s fourth grade class. It’s a great way for him to come up with the definitions for us to put in. Also, we use Whose Turn to decide who’s turn it is to do different activities. 

MIL Guide to Technology Product Management

The Mother-in-Law’s Guide to Cloud Computing

This is part of my “Mother-in-Law’s Guide to Technology.” My Mother-in-Law is a very smart woman even if she isn’t a “computer person.” The goal of this post is to take a very big and treacherous sounding idea and bring it down to earth. I tried this before in a post which I’ve now renamed The Mother-In-Law’s Guide to Chaos Engineering.

Dearest Mother-in-Law,

You know when we visit a Target or a Wal-Mart in the suburbs and they have 30 checkout lanes and only 3 are open at any time? I always wondered why that happens. It even sparked someone to write a funny blog post about the phenomenon: Target Store Opens More than Three Checkout Lanes; Shoppers Confused.

Product Management

The Value of Big Data and Why It’s Difficult to Monetize

I recently attended a session on Autonomous Cars at the law firm Herbert Smith Freehills. It was an insightful session where the lawyers gave great presentations on legal issues they advise on, like M&A, regulatory and product liability. However, one non-legal item they talked about was the ability for car manufacturers to “monetize data.” The idea of monetizing data comes up often but it’s a lot harder than it sounds.

A decade ago, I was working for a large credit card company looking at new growth opportunities. We were convinced that we could become the most valuable company in the world. Our reasoning went like this. Google was worth billions of dollars. But Google’s value was based on what web links people clicked. We, as a credit card company, had data on what people actually bought. Because our data was more relevant to advertisers than Google’s data, we should clearly have been worth more than Google.

There was just one problem. While we had this data, so did Bank of America, Capital One, JP Morgan and every other bank. And everyone was looking to monetize their data.

Did I say one problem? It wasn’t just financial services companies looking to out-Google Google. The phone companies were in this game too. They were saying, “Hey, we should be the most valuable companies in the world. Google has data on where people go on the web, but we have data on where people actually are in the real world.” Suffice it to say, there was a lot of data around.

This reminded me of an article written about undersea cable capacity in the days of the telegraph. Andy Kessler shared the following cautionary tale:

After undersea telegraph messages were first sent between Newfoundland and Ireland in 1886, a half-dozen companies sprang up to relay messages between London and Paris and New York. Half the traffic was for stock trading. These companies charged up to $5 per word and could transmit 15 to 17 words per minute. Each thought it could generate revenues of $5 million dollars or more per year. It was easy to raise the $2 million it took to lay undersea cable and investors, who constantly dashed off telegrams themselves, were all too happy to lend money.

Each of these companies assumed that they’d have a monopoly on the market. But when many companies entered the market based on that same assumption, all of the excess capacity created a race to the bottom for telegraph message pricing, forcing many of the companies into bankruptcy.

So what makes Google different? I remember a discussion with stock analysts around that time. I had written a paper on Mobile Payments along with Citi’s Equity Analysts. The topic of data was very hot and various analysts asked me, “Who’s going to win the data game? Who has the best data?” I explained that the real differentiator, and what people will pay for, isn’t the data itself but what you can do with the data.

As the famous Harvard Marketing professor, Theodore Levitt said, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” In the data space, this would be, “People don’t want to buy data, they want to buy results!”

How Google Uses Big Data

The goal of a search engine is to find the most relevant documents. In the early days of search engines, things were relatively easy. You could:

  1. Examine Web Pages: Early search engines like Lycos and Altavista would look at web pages and determine which ones were the most relevant. They would do this by looking at factors like the number of times a word was repeated or whether the search term was in the title of the document.
  2. Curated Directory: Yahoo, on the other hand, had humans hand-curating the web into a giant directory. This was relatively easy when the web only had a few thousand pages.

My Interpretation of the Early Web. With Only a Few Pages, Choosing a Winner Wasn’t That Difficult.  

However, as the web grew, it became more and more difficult to manage search with these methods. Lycos and Altavista were overwhelmed. Not only was it difficult to distinguish between multiple similar pages based on the text in the page but there was also web spam that was trying to fool the search engines into promoting their pages. Yahoo had a problem hiring enough people to keep up with the quickly growing web. Both had doomed strategies.

The State of Web Search When Google Entered the Game. As the Web Started Exploding, Finding the Best Pages Became Increasingly More Difficult.

Google went down a different path. By using an algorithm called PageRank (after Larry Page), formerly called BackRub (oh those Googlers and their funny names), Google was able to make use of data that everyone else was overlooking. The links between pages were just as valuable as the data in the pages themselves. For example, any page can claim to be the authoritative page of IBM. But if 100 people point to as the right answer, it’s easy to lift that one to the top.

Google Changed the Game by Using Links from Other Sites as a Measure of Quality

There are a few things to realize about Google’s use of data:

1.  Google didn’t have the “best” data. Yahoo had a more accurate method for categorizing the web. Having humans look at content gave better results for each individual page. Unfortunately for Yahoo, that method was too slow and expensive to sustain.

2.  The data didn’t cost Google anything. At the time, everyone was concentrating on the web pages themselves — not the linkages between the pages. This kind of information is often called “information exhaust” — information that’s a by-product of what you’re really looking for. It was already out there, free for anyone to use.

3.  It’s the capability that made the difference. While the data was free, it was up to Google to organize the data and make it useful. Going back to the jobs to be done metaphor, Google put this data to work solving a problem for users.

4.  More data is better. While other search engines were getting overwhelmed by the torrent of data from an explosion of web content, Google’s product actually benefited: The more links that can point to a quality web page, the better search results Google produces.

Google has been using this template for various other projects since they were founded. They can leverage data in some very creative and useful ways. Take location data for example. If you have an Android phone or Google Maps on your phone, Google is keeping track of your location data. You can take a look at your data here. The data is useful to me but it’s a bit odd seeing that Google holds a record of everywhere I’ve been.

An Example of Google Tracking Me Through the Day.

So how can Google use your location, along with that of others, to create value? Well, one way is to aggregate this data to show where there’s road traffic. If you have a lot of phones not moving, then you can flag that road as congested. But where else could Google use this data? Google added a feature to Google Maps that let you see how crowded a restaurant was at different times of day based on how many cell phones they found at the restaurant.

A Graph of Popular Times at Bubby’s Restaurant Compiled Through Location Data. Note the Popularity of Sunday Brunch.

It’s important to remember that Google did not have the best data to determine busy times at restaurants. Telephone companies and restaurant sites (e.g., Yelp, OpenTable) likely had better data. For example, OpenTable manages the reservations systems for many restaurants and actually knows how busy they are. But yet again, Google was the best at putting the data to work at solving this problem.

So let’s sum up. People still talk about monetizing data but their data isn’t as valuable as they think it is. There’s a lot of data out there that can solve problems and generate value. The tricky part is extracting the value from the data. Google did this in search and continues to do so in lots of other ways.

Note: Ben Thompson from Stratechery gave a similar talk about how Google works last week to kick off the University of Chicago Antitrust and Competition Conference.

Fun Stuff Product Management

Why I Love My Fitbit Alta HR

The Fitbit Alta HR is one of the few technology products that gives me almost everything I need and very little that I don’t. It’s a tour de force of good design. When I look at what I need on my wrist, it’s not really a smartwatch or even a fitness tracker but something else (maybe a “smart wristband”). Let’s take a look at the 3 features of the Fitbit Alta HR that are most important to me.

3 Features I Love About My Fitbit

  1. EASY Sleep and Exercise Tracking. I need to track how much I sleep and how often I go to the gym. I used to have a Fitbit Flex, which while being a good product, made me manually track my exercise and sleep. For example, to track sleep I was supposed to tap on the band when I went to sleep and when I woke up. This meant that I forgot many days and didn’t have good data on my sleep patterns. The Fitbit Alta HR makes use of its heart rate tracker to guess at when I go to sleep (my heart rate drops by a lot) and when I’m exercising (heart rate goes up). It can even figure out the type of exercise I’m doing (i.e., bicycling, walking, sports).
  2. Vibrating Notifications. For about 20 years, since I got my first flip phone, my friend Seth Gilbert and I talked about how difficult it is to make sure that we got our phone calls. We would put our phones on vibrate in our pocket and occasionally miss calls. Women had it worse because their phones were in their purses. With the Fitbit Alta HR, the wristband connects to my phone and will vibrate when there are calls or text messages. But notifications are limited to ONLY calls and text messages so I’m not bothered or even tempted by anything else (e.g., app notifications).
  3. Tactile Alarm Clock. A wise man once said, “The hardest thing about being married is not having your own alarm clock.” Not really. I like to wake up earlier than my wife so I can relax and let my mind settle. But if I set off an alarm clock, then everyone wakes up. Having a vibrating alarm clock allows me to wake up with a vibration that’s much nicer than the buzzing of the alarm and wakes me up without waking up the rest of the house.

How I Might Improve These Features

As a product person, it’s fun for me to think about how to make these features even better.

  1. Exercise Guidance (building on the feature EASY Sleep and Exercise Tracking). It would be great if my Fitbit could offer me sleep and exercise guidance in addition to tracking. Fitbit’s certainly going in this direction after having bought Fitstar and renaming it Fitbit Coach. Trying to put all of Fitbit Coach into something without a screen is difficult so I don’t think it’ll be done in the near term. However, I can see something simple like the Seven Minute Workout coming relatively soon.
  2. I Need You NOW (building on the feature Vibrating Notifications). In an emergency, you really want to get someone’s attention. For example, parents want to know where their kids are but they’re not checking their phones. One way that I’ve seen parents get their kids attention is to set off the “Find My Phone” alarm on their kids iPhone. The “Find My Phone” alarm is normally used when the phone is missing in a large house so it puts out a piercing screech which cannot be ignored. One way of bringing this to the Fitbit would be priority vibrations. For example, if someone calls multiple times in a row, the vibrations would increase in intensity so that the wearer could not ignore them. If we wanted to bring this to the next level we could add a small shock to the wristband though I’m not sure how well that would sell 🙂
  3. Wake Up and Relax (building on the feature Tactile Alarm Clock). The first thing I do when I wake up in the morning is turn on my meditation. It would be great if my Fitbit would wake me up and then go right into a 5-minute breathing exercise. The Fitbit Charge 2 HR already has a clever meditation routine for a small screen called breathing sessions. I imagine that my experience would go something like this:
    1. The alarm rings
    2.  I wake up and tap it to tell the watch I’m awake
    3. The guided breathing exercise starts. In … Out … In … Out
    4. If I’m not breathing at the guided breathing rate for 30 seconds, the Fitbit assumes I’ve gone back to sleep and tries to wake me up again.

Reasons I Like My Fitbit More Than an Apple Watch

The obvious comparison here is to the Apple Watch. “Why not just get a smartwatch?” you might say. Then you’d only have to have one thing on your wrist. Here are the reasons that my Fitbit is better than an Apple Watch — at least for me.

  • It’s Not a Watch. I really like my watch. It’s beautiful and far nicer than an Apple watch. Wearing both watches looks a bit silly because hey, how many watches does a person need? It’s also a bit annoying because it has the feeling of “Go Apple or Go Home” —monopolizing my wrist. It’s one thing for my technology items in my life to be Apple. I mean I love my iPhone and I love my MacBook Air but I don’t need everything in my life to be Apple.
  • Long Battery Life. Because it’s not trying to do too much, the battery can last a week without charging. This lets me wear it to sleep which gives me half of the features that I want in my wristband (sleep tracking and alarm clock). The Apple watch needs to be charged every night so misses these features.
  • Small, Light and Fashionable. Because it doesn’t have these Apple Watch features (especially as it doesn’t need a full screen) the Fitbit Alta HR can be small, light and fashionable. I can wear it to the sleep, to the gym and even do vigorous exercise I don’t notice it.
  • Limited Notifications and Features. While there’s another feature or two that I’d love to have, I like the fact that I’m not distracted or even tempted by them. I’m sure if I had an Apple Watch I’d be tempted to read the newspaper or check my appointments on my watch — which I really don’t need to do.

Overall the Fitbit Alta HR is an awesome device. It gets me 90% of the things I need and little else. When I started writing this post I thought about how weird it was that I was talking about a fitness tracker that I don’t really use for fitness very much. Then I came across Wearable’s Top Fitness Tackers of 2017 and saw that they rated the Fitbit Alta HR as their top choice. One of the top features for the favorite “fitness tracker” was sleep tracking!

Product Management

Big Data vs. Small Actionable Analytics

“Big Data” is a technology buzzword. The idea is that we have so much data about people and the way they interact with a company, we should be able to generate new and interesting insights from this data that will solve business problems.

But there’s a catch. Big Data is just another form of analytics. In most companies, each additional piece of data provides less value than the previous piece of data. In economics, this is called the diminishing marginal utility. So if the first piece of data (e.g., has this customer bought this product before) may be worth $1, the 50th piece of data (e.g., how old are the customer’s children) may worth less than a penny.

The First Piece of Data Gives a Lot More Value than the 50th Piece of Data 

Unfortunately, many people are unduly optimistic about the value that big data can provide.  They have this idea that they have so much data, if only they could search all this data, there’s bound to be something useful in there. It reminds me of one of Ronald Regan’s favorite jokes:

The joke concerns twin boys of five or six. Worried that the boys had developed extreme personalities – one was a total pessimist, the other a total optimist – their parents took them to a psychiatrist.

First the psychiatrist treated the pessimist. Trying to brighten his outlook, the psychiatrist took him to a room piled to the ceiling with brand-new toys. But instead of yelping with delight, the little boy burst into tears. “What’s the matter?” the psychiatrist asked, baffled. “Don’t you want to play with any of the toys?” “Yes,” the little boy bawled, “but if I did I’d only break them.”

Next the psychiatrist treated the optimist. Trying to dampen his outlook, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist emitted just the yelp of delight the psychiatrist had been hoping to hear from his brother, the pessimist. Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. “What do you think you’re doing?” the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist.

“With all this manure,” the little boy replied, beaming, “there must be a pony in here somewhere!”

If you have enough data, you’ll certainly find relationships between the data. But then you have a new problem − whether or not these findings will help you run your business. You can find lots of statistically relevant correlations that are completely spurious, like this:

So how should you use Big Data? Start with small actionable analytics − analytics that matter. That’s what I did when I joined a new group at a large company. Though the business unit had a chief data officer, our team didn’t have the analytics that we needed. So I implemented a simple plan for understanding the users, making sure we had good data and building iteratively over time.

Understand the Users

The first thing we needed to do was understand who was going to use the system. These users were going to define success for the project. We had two user groups:

  1. Senior Management: This was the easy one to identify. Senior management wanted some basic information to run the business.
  2. Power Users: However, we wanted to have a robust view of the data, not just high level reports. So we needed to look for our power users. And that’s when we found him. Let’s just call him Power User. He was based in London. Each month, Power User asked for a download of all the raw data and ran a 10 year old program in Excel to get the output he needed. The output looked great but the program was very fragile, hard to read and not extensible. But the output of this program gave us a great starting point.

Make Sure We Have Good Data

Analytics, first and foremost, is about the quality of the data. If you don’t have quality data none of your analytics will be right, whether it’s big data or anything else. When I started working on this project there was a report that showed the volume of payments being processed. Every few months there was a massive spike in volume. This wasn’t something hard to see. It was a spike of a quadrillion dollars going through the system. By comparison, all the value of everything in the world is only $241 trillion. This report was a couple of years old and people reviewed it each month but no one mentioned anything. As it turns out, testing data was being included which is what messed up the numbers. Cleaning all of the data and ensuring its quality took a lot of time but was an integral part of the project.

Build Iteratively Over Time

We spent a lot of time with our users understanding what they wanted. We did most of this on the cheap. Instead of building out real applications, we created PowerPoint and Excel mock-ups to understand their needs. We went through many iterations to pin down what they needed. The real test was with Power User.  He was this really smart data geek and had been doing the same thing for 10 years. I remember holding my breath when I asked him for feedback. I was happily surprised with the reply, “Fantastic!!! This is really really good, guys, thank you so much!!!”

Don’t Over Build

Once we’d finished the first phase we’d expected to move our work out of Excel to a “real” business intelligence platform like Microstrategy or Cognos. However, we realized that the user group was so small and the flexibility they needed was so great that there was little value in moving off of Excel.

In Summary

Big Data is just another form of analytics. If you don’t do analytics well, you’re unlikely to find something magical under your pile of Big Data. It’s best to start small and really understand your basic analytics by understanding your users, ensuring your data quality and building iteratively.