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It's nearly impossible to do mankind any good without proper data

PremiumApril 17, 2022 | 06:53 pm PT
Do Trung Thong Data scientist
Starbucks is ubiquitous: you would be hard pressed to find anyone who has not heard of the name, even if they do not drink a drop of coffee.

It has not always been smooth sailing for Starbucks, however: the 2007-2009 Great Recession left the company in tatters with shops being closed and employees being let go in droves. When former CEO Howard Schultz came back to take the reins at the coffeehouse, he appointed Starbucks's first chief technology officer and spearheaded a whole new business philosophy. A data science division was set up to analyze the huge influx of information which came from Starbucks customers, which could amount to 100 million transactions per week.

Thanks to the distilled insights, Starbucks could match customers with their preferred, or likely to be preferred, drinks based on factors such as their habits and likings, the weather, the time of the day, or a holiday around the corner, no matter which store they choose to visit. An East Coast co-ed would get suggestions near Halloween that are totally different from what a Silicon Valley businessman would get in the summer. In fact, the total number of beverage combinations at Starbucks comes close to ... 87,000. That is a whole lot of caffeine. A heat wave in Memphis, Tennessee prompted Starbucks to introduce frozen slushy goodness to customers just in time to cool off. Thanks to data, Starbucks also knows that 43 percent of tea drinkers reject sugar and 25 percent of coffee drinkers say no to milk, which helped them develop two additional K-cup lines. Another surprising fact: Starbucks found out that many of their customers favor their stores solely due to their clean, functional bathroom, which raised the importance of this infrastructure metric for Starbucks managers.

This customer-centric philosophy was what brought success back to Starbucks only two years after Howard Schultz regained control of the coffeehouse. Now, Starbucks is firmly positioned as the world's top chain with 30,000 stores and a rising revenue every year, reaching almost 30 billion dollars in 2021. Even in 2020 when traffic plummeted due to the pandemic, great experience still induced customers to spend even more on each order. What is unique about Starbucks is how it reconciles two seemingly contradictory phenomena: (1), from the customers' perspective, Starbucks is as familiar and accommodating as a neighborhood mom-and-pop coffee shop. (2), Starbucks is simultaneously an F&B brand and a huge, full-fledged tech company. Customer-centric philosophy is one thing, what helps bring about (1) is (2), or more accurately, how Starbucks handles customer data. Neither cold nor impersonal, it is technology that brings Starbucks closer to customers. This is one of the best examples of Big Data in action.

As someone who has been in the Big Data trenches for nearly a decade, I have realized that the toughest challenge in data collection comes from the protests of the masses. The main reason, as I can see, is that people think data collection only benefits the "big guys" while they suffer the indignity of privacy invasion, not unlike sheep who were fleeced and then carved up. It is true: many times companies have crossed boundaries. A legendary case that was cited in "The power of habit" by Charles Duhigg: Target knew a teenage customer was pregnant thanks to her shopping history of no-scent lotion and prenatal supplements and sent her vouchers for baby stuff, which sent her father, who did not even know she had a boyfriend, into a tailspin. Recently, a well-known hotpot chain from China also got in trouble for collecting data on customers' dining habits as well as their appearances. And Facebook has famously been a target for anti-protection groups for years.

Of course, things are never as clear cut as they seem, but I am certain of two facts: first, at the moment, you cannot escape data collection whether you want to or not, unless you never go out, never buy or sell things online, never use a credit card, and never go online. It would take nearly 100 percent off-the-grids living to avoid having your data recorded. Secondly, Big Data when correctly applied would benefit the people as much as the companies. In reality, it is nearly impossible to do mankind any good without proper data. Forest protection, oil spill prevention, earthquake prediction, calculation of electricity consumption, tracking the effects of Covid-19, anti-terrorism efforts, movie production for online platforms, etc., all call for data. If the data is not accurate, not up-to-date, or not sufficient, decisions being made are likely wrong, wasteful, and even catastrophic. Therefore I believe that we should not ask whether to use Big Data, but how. My answer is very simple: put people first, always. That is what I often tell our clients as well: if you consider the well-being, happiness, joy, and health of your customers your priority, you are on the right track!

Using people's data to benefit them is no longer a novel idea for many verticals from the private to the public ones. Purdue University uses data to predict which students are more likely to drop out and facilitate intervention, bringing the dropout rate down by 21 percent. Ysbyty Gwynedd Hospital uses data collection and machine learning to monitor multiple patients at the same time without nurses, reducing cardiac arrest by 86 percent. FDA uses Big Data to quickly identify toxic food-borne diseases and keep contaminated foods out of circulation. New-gen farmers upload pictures of crops to help each other spot harmful weeds and insects. Not even 24 hours after the Boston Marathon Bombing in 2013, FBI accumulated 10 tetrabytes of data from various sources including 480 thousand images from CCTV, to locate and apprehend the perpetrators.

There are many more examples in the developed world. In Vietnam, Big Data is also becoming increasingly popular. I have noticed a positive trend: many businesses, both big and small, long established and new, are focusing more and more on sustainable growth and customer experience. Instead of looking for unorthodox strategies, they now concentrate on listening to their customers. It is a big shift of mindset and business philosophy. Of course, it requires Big Data.

Guardian, the global beauty and personal care retailer, is a great example. During our talks, the CEO of Guardian Vietnam, Le Huynh Phuong Thuc, always stresses the utmost importance of customers. To her, customer experience invariably comes first. It needs to get better and better. So Big Data became her solution of choice. When we analyzed the data from some Guardian stores in Vietnam, we realized that many customers loved to linger at the Makeup section but left without buying. On the other hand, the Skincare section, long considered a strategic category, did not attract as many customers as expected. Further investigation revealed that while many were interested in makeup, they lacked either the skills or the confidence to apply them. And while Skincare products are great in and of themselves, the layout did them a disservice: the lighting too dim, the aisles too close together, the location not optimal. Thanks to those insights, Guardian assigned more beauty consultants and put more product testers in the Makeup section, and updated the layout of the Skincare section. Afterwards, customers at those stores reported having a much greater time shopping there.

Of course, the end does not always justify the means. Even if it is for the sake of customers, data collection needs laws and rules to protect not only the customers but the companies as well. Guardian Vietnam, for example, always encrypts customer data and unfailingly complies with global standards of data protection. Regulations such as GDPR, which have long been considered the gold standard on data protection and privacy, are great precedents for Vietnamese businesses and lawmakers alike while taking part in Industry 4.0. Big Data vendors in Vietnam especially need to pay attention if playing in the big leagues is their goal.

In any case, a powerful resource like Big Data needed to be treated with caution and responsibility. But it is my strong belief that as the world becomes flatter and the technology expertise of local companies inches ever closer to that of our overseas friends, Big Data will play a bigger role in the welfare of Vietnamese people. I am willing to wager that the progress of our nation depends largely on how well we utilize this gold mine in the next 10 years.

*Do Trung Thong is a serial tech entrepreneur and data scientist. He is founder and chairman of AI & Computer Vision technology firm Palexy. The opinions expressed are his own.

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