4/5/2021 Five insights about harnessing data and AI from leaders at the frontier | McKinsey

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McKinsey Analytics

McKinsey Global Institute

Five insights about harnessing data and AI

from leaders at the frontier
March 25, 2021 | Article

By Mohammed Aaser, Jonathan Woetzel , and Kevin Russell

Four CEOs describe what goes into turning a world of data into a
data-driven world.

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W
hat was once unknowable can now be quickly discovered with a few queries.

Decision makers no longer have to rely on gut instinct; today they have more
extensive and precise evidence at their ngertips.

New sources of data , fed into systems powered by machine learning and AI , are at the

heart of this transformation. The information owing through the physical world and the
global economy is staggering in scope. It comes from thousands of sources: sensors ,
satellite imagery, web tra c, digital apps, videos, and credit card transactions, just to
name a few. These types of data can transform decision making. In the past, a

packaged food company, for example, might have relied on surveys and focus groups to

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develop new products. Now it can turn to sources like social media, transaction data,
search data, and foot tra c—all of which might reveal that Americans have developed a

taste for Korean barbecue, and that’s where the company should concentrate.

The potential is being borne out every day—not only in the business world but also in
the realm of public health and safety, where government agencies and epidemiologists

have relied on data to determine what drives the spread of COVID 19  and how to
reopen economies safely.

But the sheer abundance of information and a lack of familiarity with next-generation

analytics tools can be overwhelming for most organizations. That’s why the McKinsey
Global Institute invited CEOs from CrowdAI, SafeGraph, Measurable AI, and Orbital
Insight—four start-ups that are expanding the boundaries of data and AI innovation—to

discuss what kinds of new insights are possible and how the landscape is changing.
Their wide-ranging discussion yielded ve important takeaways.

Takeaway 1:

New forms of data are giving

organizations unprecedented speed and
transparency

When a CEO wants an answer to a complex question, a team might be able to get it in a
couple of months—but that may not be good enough in a world where competition is

accelerating. One of the biggest advantages of an automated, data-driven AI system is

the ability to answer strategic questions quickly. “We want to take that down to an hour
or so when it’s about something going on in the physical world,” says Orbital Insight
founder James Crawford.

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Data and AI are not only nding answers faster but creating transparency around issues
that have always been murky. Consider a multinational’s desire to ensure sustainability
in its supply chain . An input like palm oil is produced on millions of farms in developing
nations, and it goes through thousands of re neries and mills before it reaches one of

that multinational’s factories. That’s a di cult supply chain to trace. But Orbital Insight
has been able to use geolocation data and satellite imagery to track the physical supply
chain—not based on paperwork that may not be accurate but based on real-time
snapshots of where trucks are driving and where deforestation is occurring.

Data and AI are not only finding answers faster but creating transparency around

issues that have always been murky.

Unstructured data, especially in the form of images and video, remain challenging for
organizations to utilize due to the complexity of building and maintaining cutting-edge
algorithms. CrowdAI is unlocking the ability to extract insights from images and video.
Users begin by labeling objects or pixels in raw imagery—perhaps the most time-
consuming step in creating a computer vision model. “Our platform speeds up the

labeling process by incorporating user-generated labels to automate further labeling,

constantly iterating on that human feedback,” says CrowdAI founder and CEO Devaki
Raj. In this way, re ghters can use apps on their phones to track the behavior of
wild res in real time, and vaccine manufacturers can use computer vision on their
production lines to spot tiny defects in vials that human eyes might miss.

Another start-up, Measurable AI, has found a way to take some of the guesswork out of
corporate nancial performance. CEO Heatherm Huang explained that his company
uses natural language processing and machine learning to aggregate email receipts on

its own mail app, with user permission, for statistical modeling. This kind of analysis can
predict reported earnings better than traditional stock analysts can. When Zoom

adoption spiked in 2020, for example, Measurable AI’s algorithm was able to estimate
quarterly earnings within 1 percent of reported earnings, compared to an industry

consensus that was o by more than 10 percent.

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Takeaway 2:

Specialist firms are refining and

connecting data

Since the universe of data is so broad, service providers are carving out specialized
niches in which they re ne a variety of complex and even messy raw sources, feeding

the data into machine learning– or AI-powered tools for analysis.

Consider SafeGraph, a start-up focused exclusively on geospatial data . It specializes in

gathering, cleaning, and updating data on points of interest, building footprints, and

foot tra c to make it quickly usable by apps and analytics teams. Further, to get around
the issue of the many quirky permutations in the way addresses are assigned around

the globe, the company has introduced Placekey, a free and open universal identi er

that gives every physical location a standard ID. This enables everyone to use a
recognizable string when they interact—a step that will ease the merging of data sets.

In the rst six months after its rollout in October, more than 1,000 organizations began
using and contributing to the initiative.

“We’re just an ingredient in any one solution,” says SafeGraph CEO Auren Ho man. “It’s

like selling high-quality butter to pastry chefs. The end consumer of the croissant may
not even know that there’s butter in the pastry. And they certainly don’t know it’s

SafeGraph butter. But the chef knows how important the ingredient is.”

Another example is Orbital Insight’s compilation of data from satellites, mobile devices,
connected cars, aerial imagery, and tracking of ships at sea. All of this information feeds

into an integrated platform, giving users the ability to pull out whatever is in satellite
imagery and even count objects of interest automatically and connect it with other data

on the platform. “We can deliver counts so you don’t have to look at every corn eld in

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Iowa or every road in China to gure out what the agricultural harvest is going to look

like or whether people are back on the road after COVID,” says founder James
Crawford.

Takeaway 3:

Most non-tech companies are lagging,

but new tools can get them in the race

Adapting to an era of more data-driven or even automated decision making is not

always a simple proposition for people or organizations. The companies that have been

fastest out of the gate  already have data science chops. But according to Devaki Raj,
CEO of CrowdAI, most non-tech Fortune 500 companies are stuck in pilot purgatory

when it comes to sophisticated uses of systems such as computer vision and AI. “It
starts with a lack of understanding of where all of their data is.”

Now a growing range of available tools and platforms can help them catch up. The

number of companies working with data today is sharply higher than it was even ve
years ago. Back then, it took a world-class engineer to extract value from that

information, and non-tech companies had di culty attracting the few at the cutting

edge of data science. But new platforms and analytics tools are leveling the playing
eld—as is the vast array of data that is free, open, or available at relatively low cost.

Now, according to SafeGraph’s Ho man, “People are going to be able to dive into data
and analyze it in a way that just a few years ago only the most advanced engineer could

do.”

For example, CrowdAI’s platform to build custom computer vision models for non-data
scientists makes it possible for organizations at all technological maturities to bene t

from advances in AI. “The critical test for our product team has always been the ease of

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use by someone who works on a factory oor, who looks at the imagery day in and day

out but has likely never heard of Python,” notes Raj.

Takeaway 4:

It takes domain experts to extract the

real value from data

Data science teams can build models with miraculous capabilities, but it’s unlikely that

they can solve highly speci c business problems on their own. Data engineers and
scientists may not understand the subtleties of what to look for—and that’s why it’s

critical to pair them with domain experts  who do. “To be e ective, automation needs to
be informed by those closest to the problem,” says CrowdAI’s Devaki Raj.

On-the-ground business knowledge is especially important when it comes to

interpreting data from other countries. “As a transactional data provider for emerging
markets, we cover places like Southeast Asia, Brazil, and Greater China,” says
Measurable AI’s Heatherm Huang. “You need to adopt di erent languages and

compliance standards in di erent regions. You need to know that people in China don’t
use email that much, for instance, or credit card adoption in Indonesia is still pretty low
at this moment.” Even if the data provider accounts for those nuances, the end

consumer of that information has to go deeper into the local business logic of di erent
cultures to avoid coming away with mistaken conclusions.

Takeaway 5:

Companies need to build in privacy

safeguards and AI ethics from the start

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The utility of data versus the right to personal privacy  is one of the biggest balancing
acts facing society. There is enormous value in using personal data such as health

indicators or geolocation tracking for understanding trends. But people have a

legitimate desire to not be tracked. Companies that work with data typically promise
that it is anonymized and aggregated, but not all of them have the same standards and

cybersecurity protections.

“The mantra for us is institutional transparency and individual privacy,” says Orbital
Insight’s James Crawford. “We created a privacy statement on our website and put it

into the terms of use of our platform. And we actually put monitoring into the platform
so that we can stop users from tracking individuals.”

Heatherm Huang of Measurable AI approaches the issue by asking consumers to opt in

—and giving them an explicit incentive to do so. “If the alternative data economy is to
be sustainable, it has to value the people who contribute the data.” His company’s
Measurable Data Token rewards users in cryptocurrency for sharing their data points.
It’s built on blockchain, which also helps to verify but anonymize transactions.

SafeGraph’s Auren Ho man is optimistic that technology itself can address this issue,
noting recent advances in areas such as di erential privacy, homomorphic encryption,
and synthetic data. These technologies could conceivably enable the ability to connect

individual-level data, analyze it, and then use it in a way that doesn’t give away any
individual-level information. “It’s going to yield an incredible amount of innovation. Over
the next few years, we’ll be able to have our cake and eat it, too.”

ABOUT THE AUTHOR(S)

Mohammed Aaser is McKinsey’s chief data o cer. Jonathan Woetzel is a

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