GOVERNMENT

DATA FOR
BUSINESS
INNOVATION
IN THE 21ST CENTURY
With all the recent attention to big data and
advanced analytics, it is easy to forget that
businesses have been using data to create new
insights and innovation for centuries.

17 th Coined in 1865 by Richard Millar Devens

in his Encyclopedia of Commercial and

Century Business Anecdotes, the term “business

intelligence” was first used to describe
how a 17th century banker, Henry
Furnese, achieved an advantage over his
competitors by collecting and analyzing
internal and public information relevant
to his business activities. By organizing
this information in a structured manner,
Furnese was able to maintain a “complete
and perfect train of business intelligence.”

Fast forward to the 21st century

where the legacy of business intelligence
is now strengthened by government data.
Within the past decade, governments
have started to publish massive troves
of freely accessible data and businesses

21 st
operating all over the world are finding that
analyzing government data together with their
own data sources can transform their strategies
and operations. Century

2
 A few examples:

CVS Health developed an online tool called myhealthfinder that

uses government health data to provide consumers with personalized
recommendations for preventive healthcare services, based on age
and gender. By collaborating with the U.S. Department of Health
and Human Services (HHS), CVS Health leverages government data
to connect consumers with a range of useful services, including
vaccinations and screening tests, which are available at CVS
Minuteclinic and CVS Pharmacy locations.

Starbucks collaborated with Esri, a geospatial technology

company, to develop a business intelligence system called Atlas.
This data-driven platform uses government demographic data,
government weather data, and proprietary sales data to develop highly
STARBUCKS TRUE LOGOS. GENERATED BY CHI NGUYEN (CHISAGITTA)
sophisticated consumer marketing strategies. For example, Starbucks
uses demographic data on the number of local smartphone users
to determine where mobile app discounts will be most impactful.
Starbucks uses weather data to synchronize Frappuccino promotions
with rising temperatures.

Best Buy developed an innovative market segmentation strategy

using government data that was key to growing the consumer
electronics brand. Using a combination of government demographic
data and proprietary sales data, the strategy uses advanced analytics
to define and group consumers by personas, with names like Barry,
Jill, Buzz, and Ray. Each persona represents a different consumer
segment with specific buying habits. For example, Buzz is the ‘young
technology enthusiast’ while Jill is the ‘suburban mom’. Best Buy
used these data-driven profiles to restructure its in-store and online
experience, which together helped to reinvent the brand to meet the
needs of 21st century consumers.

3
GOVERNMENT In July 2017, the Center for Open Data Enterprise
and the U.S. Executive Office of the President Office
DATA ENABLING of Management and Budget (OMB) co-hosted a
ECONOMIC Roundtable on Open Data for Economic Growth,
which brought together nearly 80 participants from
GROWTH the U.S. federal government, business, nonprofits,
ACROSS ALL and academia. The Roundtable confirmed that many
businesses depend on government data to guide
SECTORS business investments, develop new products and
services, and foster innovation, and produced new
case studies showing how they are putting this data
to work. One compelling case study came from the
Kellogg Company’s Vice President and Global Lead of
Data Acquisition and Governance, Rick Davis.

How the Kellogg The Kellogg Company, an American multinational

food manufacturing business, known for its famous
Company
breakfast cereals and snack brands, is a leader in its
Innovates with use of government data to improve operations and
Government Data spur product innovation.

Many businesses follow a problem-centric approach

to government data use, combining proprietary
data with publicly available data to address existing
organizational challenges. Other businesses like
the Kellogg Company also use a discovery-centric
approach, which allows their data analytics team
to identify new correlations and trends by fostering
intellectual curiosity. Together, these data-driven
approaches help the Kellogg Company generate
increased revenue, reduce costs, and better meet
customer needs.
4
According to Davis, there are four key steps of the process that Kellogg uses, and
that any company can use, when applying government data for business decisions:

1 FORMULATE THE QUESTION AND HYPOTHESIS

For example, data scientists at the Kellogg Company used government data
to explore the impacts of cold weather conditions on consumer spending
behavior. The process begins by formulating a business question and a
hypothesis that can be tested by data analysis. The question could be: “Is the
harsh winter affecting our consumer sales?” The corresponding hypothesis
could be: “Lasting cold temperatures are reducing the number of shopping
trips and reducing cereal consumption.”

2 IDENTIFY RELEVANT DATASETS

The next step is to identify relevant data to test the hypothesis. Businesses
can look to both government data and proprietary data. For the hypothesis
on winter sales, for example, the Kellogg Company combined its own retailer
point-of-sale data (by zip code, by day, and by three-year history), and
government weather data (by zip code).

3 CONDUCT ANALYTICS TO DEVELOP INSIGHTS

Once data sources have been identified, the company can analyze them
to test different hypotheses. In this case, data analysis was used to identify
sales patterns and develop models to show how they correlated with
weather patterns. The Kellogg Company discovered that sales drop when
temperatures are below 20 degrees Fahrenheit for three consecutive days -
but that they may not drop on Fridays, when the effect of payday outweighs
the effect of weather.

4 APPLY FINDINGS TO BUSINESS STRATEGY

Finally, the company can apply the findings to enhance its business
strategy, optimize customer experience, and support product innovation.
Businesses can also use this process to improve operational efficiency and
effectiveness. In this example, the Kellogg Company changed their digital
coupon distribution schedule to drive consumers to make purchases on
Fridays, since the data analysis demonstrated that the day was relatively
“weatherproof.”

5
LOOKING As we look ahead, emerging technologies will enable
businesses to further transform the power and utility
TOWARDS of government-released open data, driving demand
to make even more data freely accessible and more
THE FUTURE easily used.

The potential value and use to the public can be

further advanced when federal agencies commit to
better internal analysis of high value datasets. With
enhanced use of open data and advanced analytics
using sophisticated quantitative methods such as
statistics, descriptive and predictive data mining,
machine learning, simulation and optimization,
government can produce insights that spark
development of new products and services. The
private sector, nonprofits, academic institutions, and
other sectors can benefit from government-generated
insights that are relevant to the complex questions
and problems they are seeking to solve for today’s
consumers and other customers.

When it comes to the private sector, machine learning

is already having an impact for businesses operating
all over the world. Walmart, for example, is piloting a
program that uses emerging technologies to improve
customer experience inside their retail stores,
detecting unhappy customers with facial recognition
technology. The company is also using a combination
of government data and machine learning to optimize
delivery routes.

In the 21st century, businesses across all sectors will

continue to seek new ways to leverage the petabytes
of data being collected and released by governments.
The increasing availability of government data coupled
with emerging technologies will help companies
reinvent their existing business models and can
potentially transform the ways in which companies
generate revenue and interact with consumers around
the world.

6
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