The Social Data That Business Should Use; Focus on how people relate to each other, says MIT’s Sandy Pentland

The Social Data That Business Should Use

Focus on how people relate to each other, says MIT’s Sandy Pentland

Feb. 10, 2014 4:47 p.m. ET

Social-physics expert Sandy Pentland from MIT’s Human Dynamics Laboratory says that face-to-face social connections are the most effective way of communicating information and getting results. He speaks at The Wall Street Journal’s CIO Network conference in San Diego.

Businesses know more about their customers and employees than ever. Making sense of that data and using it productively is something else entirely.

To find out the best strategies for leveraging social data, Steve Rosenbush, deputy editor of The Wall Street Journal’s CIO Journal, spoke with Sandy Pentland, director of theMassachusetts Institute of Technology’s Human Dynamics Laboratory and MIT Media Lab Entrepreneurship Program. Here are edited excerpts of their conversation.

Beyond Status Updates

MR. ROSENBUSH: For most of us, social data is Twitter, it’s Facebook. What do you mean by it?

MR. PENTLAND: Those sorts of things are people’s public face. On the other hand, for instance, there’s badge data. Every corporation has name badges. Many of these record where people come and go, door swipes and things like that. That’s a different type of social media. Or if I look at cellphone data, I can tell when people get together, what they search for, who they talk to. You can look at connections between people in ways you never could before. The way most people approach this is incorrect, because they’re asking questions about individuals. A better way to approach is asking questions about interactions between people.


MR. ROSENBUSH: How do companies make use of tools and technology to get it right?

MR. PENTLAND: Make sure you have diverse enough interactions with people and diverse enough sources of information. In my lab, we have data from over 1,000 companies that have deployed a well-known social network intended to increase productivity. There are a couple of things we’ve discovered about this sort of deployment and use of social media. One is that it grows along existing social ties, so face-to-face connections, people who work together. The other thing is that people are busy and forgetful. If you get lots of invites from people you don’t particularly know or from the CEO or CIO, it does nothing. People don’t sign up. On the other hand, if the people you work with immediately invite you, almost everybody does.

Privacy and Business

MR. ROSENBUSH: Do you think the average person in a corporation is going to be receptive to carrying around a badge that records their movement?

MR. PENTLAND: We have a spinoff company that does that and we find almost universal adoption, but you have to give people informed consent, tell them what you’re doing. The other thing is you typically only need aggregate data. Here’s the pattern of communication between your group and the other group, period. You can’t see when the guy went to the bathroom or snuck off to take a smoke.

MR. ROSENBUSH: How do you capture data about a market? How do you analyze it?

MR. PENTLAND: The fundamental thing almost everybody does is look at the individual. If you look at them in a social context, that lets you know so much more.

We had a company where we have location data. We ask, “If you’re on this street around noon, which types of restaurants do you go to?” That tells me what you’re interested in, so I can send you a coupon for that type of restaurant at that time. That has five to 16 times the click-through rates of normal location-based advertising.

If I know what your buddies are doing, I know what you’re doing. You need to think about how to get that data. Sometimes it looks like Big Brother, and you have to engage your customer. “Do you want to know what your buddies are doing? Let’s share this in a safe way, and you can be there before your other buddies, and you’ll feel good about it and I’m going to make it super safe.” People will do it.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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