BCG Henderson Institute

The practice of data alchemy, which uses continually refreshed, broadly gathered data to find correlations and draw actionable conclusions, has been evolving for several years. But it was only with the pressures of COVID-19, during the “flatten” phase of the pandemic, that this approach became widespread in business. Companies found themselves coping all at once with volatility in workplace dynamics (with the rise of remote working and the cutbacks in budgets and staff), customer engagement, political circumstances, public and private investment, travel and tourism, international supply chains, and health care.

One powerful example of the value of data alchemy is itself related to COVID-19—and to the Canadian health care risk assessment firm BlueDot, which foresaw the pandemic before just about anyone else. Founded in 2013 to alert governments and businesses to potential infectious-disease outbreaks, BlueDot continually gathered the most recent data from a wide variety of sources: news media in 67 languages, reports on animal and plant diseases, blog entries, airline-ticketing statistics, and social media. It processed all this data through machine-learning algorithms that picked up correlations and patterns that would otherwise be impossible to see.

When BlueDot’s algorithms indicated unusual patterns of activity in Wuhan, China, the system automatically brought them to the attention of the company’s epidemiologists. On December 31, 2019—a week before the World Health Organization’s first official report—the company published a warning about the COVID-19 virus and its potential impact. Throughout the year, the company continued to correctly predict the spread of the pandemic around the world, projecting its rapid growth in locations like India and Brazil, months before the actual cases and deaths began to climb.

The ability to build a business on this kind of prescience was seen as unusual in the past, attributed to human genius. Now, companies in a wide variety of industries can deploy a similar ability to see unusual correlations and act on them immediately. The practice of data alchemy is grounded in a new appreciation for what analytics can do, how to use it effectively, and—most importantly—how to embed it in day-to-day decision making.

Sources & Notes