CHAPTER 2 Digital Upstarts Vanquished Consumer Giants

Question 1

What percentage of Amazon’s sales are based on personalized recommendations?

Answer 1

As many as half of the sales

This highlights the importance of Amazon’s recommendation algorithms.

Question 2

What is the purchase graph?

Answer 2

A model created by Amazon that connects people’s purchase histories with their browsing, viewing, and listening data

This graph is used to enhance personalized recommendations.

Question 3

What are the three factors incorporated by Amazon’s algorithms for product recommendations?

Answer 3

• Diversity
• Serendipity
• Novelty

These factors help in creating effective personalized recommendations.

Question 4

What is Google’s Shopping Graph?

Answer 4

A dynamic, AI-enhanced model that understands a constantly changing set of products, sellers, brands, reviews, and product information

This model connects users to over thirty-five billion listings.

Question 5

What does the Knowledge Graph do?

Answer 5

Interconnects interrelated information to uncover comprehensive insights and helps users explore related concepts

It improves the search experience beyond simple data retrieval.

Question 6

What are systems of record?

Answer 6

Traditionally used systems that gather data on transactions such as who bought what, how much, when, and at what price

They are often maintained separately by departments.

Question 7

What are systems of engagement?

Answer 7

Platforms that connect with customers through email, websites, mobile apps, and social media

They allow for interaction beyond just transactional data.

Question 8

What is the significance of product-in-use data?

Answer 8

Allows organizations to track how products are used in real time, leading to better analysis and insights

Companies like Amazon and Google use this data to enhance their datagraphs.

Question 9

Define datagraphs.

Answer 9

Constructs that capture the relationships, links, and interrelationships between a company and its customers through product-in-use data

Inspired by social networks and graph theory.

Question 10

What are the three characteristics of a datagraph?

Answer 10

• Scale
• Scope
• Speed

These characteristics determine the value and richness of a datagraph.

Question 11

How can companies increase the value of their datagraphs?

Answer 11

By expanding scale, scope, and speed of data collection

This can be achieved through partnerships and acquisitions.

Question 12

What are data network effects?

Answer 12

When users provide data that enhances the value of a product or service for other users

Examples include interactions on platforms like Google and Spotify.

Question 13

How do data network effects differ from direct network effects?

Answer 13

Data network effects increase value through user engagement, while direct network effects increase value by adding new users

Direct effects are typical in social networking.

Question 14

What is the role of AI and machine learning in datagraphs?

Answer 14

They are used to analyze data, generate actionable insights, and refine algorithms for personalized recommendations

This capability has developed significantly in the last five years.

Question 15

What is the relationship between datagraphs and customer satisfaction?

Answer 15

Datagraphs improve customer engagement, satisfaction, and loyalty through personalized experiences

Companies that leverage datagraphs effectively can outperform their competitors.

Question 16

What is an example of a company that has successfully utilized a datagraph?

Answer 16

LinkedIn, which has developed a professional graph capturing data on around eight hundred million professionals

This graph helps in connecting professionals and enhancing job-related interactions.

Question 17

What is the impact of digitalization on data collection?

Answer 17

It allows for observable and codifiable actions at scale in real time

This capability enhances the effectiveness of datagraphs.

Question 18

What do datagraphs capture?

Answer 18

How individuals live, work, play, learn, listen, socialize, watch, transact, travel, spend, and any other activity associated with a business.

Question 19

How has digitalization impacted the observation of actions?

Answer 19

It has made actions observable and codifiable at scale in real time.

Question 20

Which platforms does Meta’s portfolio of datagraphs include?

Answer 20

Facebook, Messenger, WhatsApp, Instagram, Oculus, Threads.

Question 21

What is the description of Facebook’s datagraph?

Answer 21

Social graph.

Question 22

What allows Meta to run trials and experiments?

Answer 22

Real-time collection of user data on interactions.

Question 23

How does Facebook determine which posts or ads to show a user?

Answer 23

It sorts through a large inventory and narrows it down based on past patterns.

Question 24

What type of graph does Airbnb use?

Answer 24

Travel graph.

Question 25

What does Airbnb track to provide personalized recommendations?

Answer 25

The room each individual rented, the places of interest visited, dining locations, shows watched.

Question 26

What is Google's Knowledge Graph used for?

Answer 26

To organize facts and interrelationships about entities.

Question 27

What does Google's graph-based architecture help with?

Answer 27

Understanding context in search queries.

Question 28

Fill in the blank: Google's Knowledge Graph had indexed more than ______ entities.

Answer 28

500 million.

Question 29

What does Gen AI enable?

Answer 29

Generating new content in unstructured forms.

Question 30

What are the three core ideas captured by the letters in GPT?

Answer 30

Generative, pretrained, transformer.

Question 31

What is a business algorithm?

Answer 31

A proprietary reasoning and inference engine that interlinks various analyses.

Question 32

What types of analyses do business algorithms link together?

Answer 32

* Descriptive analysis * Diagnostic analysis * Predictive analysis * Prescriptive analysis

Question 33

What is Netflix's approach to recommendations?

Answer 33

It customizes its home screen based on detailed user data.

Question 34

What has Netflix's recommendation engine saved the company?

Answer 34

Over $1 billion by preventing cancellations.

Question 35

How does Netflix guide its content development strategy?

Answer 35

By predicting viewer preferences using datagraph insights.

Question 36

What role does Gen AI play in the evolution of AI?

Answer 36

It generates datagraphs with richer insights and capabilities.

Question 37

What is the purpose of the shopping graph built by Google?

Answer 37

To provide a Gen AI shopping experience with real-time data on products.

Question 38

True or False: Google and Microsoft are competing in the search market using Gen AI.

Answer 38

True.

Question 39

What is the significance of Netflix's datagraph in content production?

Answer 39

It allows for data-driven decisions rather than relying on gut instinct.

Question 40

What does the term 'moment of truth' refer to for Netflix?

Answer 40

The two-minute window in which a viewer decides whether to watch something.

Question 41

What are the advantages of a graph-based structure for Google?

Answer 41

It helps understand user queries and improve responses.

Question 42

What is one of the main challenges for analog companies in data management?

Answer 42

Determining consumer purchasing patterns across different categories.

Question 43

What is the purpose of summarizing customer reviews?

Answer 43

To provide buyers with a sense of positive and negative feedback without reading all comments. ## Footnote This helps streamline the decision-making process for potential customers.

Question 44

What type of tools is Meta creating with Gen AI?

Answer 44

Tools to help advertisers create ads calibrated to appeal to different individuals. ## Footnote These tools leverage generative AI for more personalized advertising.

Question 45

Which advertising firm has partnered with Nvidia to enhance customized advertising?

Answer 45

WPP. ## Footnote This partnership aims to advance the capabilities of tailored advertising solutions.

Question 46

What partnership is expected to intensify advertising competition with Gen AI?

Answer 46

Google and the Microsoft-Netflix partnership. ## Footnote This collaboration is anticipated to escalate the advertising wars in the tech industry.

Question 47

What is Spotify's AI-powered feature called?

Answer 47

DJ. ## Footnote This feature acts as a personalized guide that refreshes music lineups based on individual tastes.

Question 48

How is Airbnb integrating Gen AI into its platform?

Answer 48

By integrating ChatGPT to reinvent the travel experience. ## Footnote This integration aims to enhance user interactions and travel planning.

Question 49

What have digital companies used datagraphs and AI for?

Answer 49

To design business models that have displaced many leaders in consumer markets. ## Footnote This illustrates the transformative impact of data-driven strategies.

Question 50

What must companies create to compete in a data-driven world?

Answer 50

Distinctive datagraphs and differentiated business algorithms. ## Footnote This is essential for gaining a competitive edge in the market.

Question 51

What challenge do industrial companies face from digital companies?

Answer 51

The need to develop strategies to compete with digitals using datagraphs and algorithms. ## Footnote Industrial companies traditionally rely on proprietary technologies and infrastructure.

Question 52

What is the focus of the next chapter mentioned in the text?

Answer 52

How industrials can survive and thrive in a digital world by developing industrial datagraphs. ## Footnote This suggests a strategic approach for traditional industries to adapt to digital disruptions.