If you ask 10 experts what Big Data means, you’ll get 15 different answers. Big data has become such a hot topic over the last few years that everyone with an opinion is clamoring for attention. The signal-to-noise ratio is way out of proportion; most of what I hear makes little sense, or has little relevance on how to solve tomorrow’s problems. So, with the eclectic mixture of expert advice floating around, it’s important to decide exactly what big data means to you. If you are a leader, how you define big data has important implications on your subsequent strategic decisions. As an information strategist, I define big data in a way that helps companies build a competitive advantage.
A competitive definition
To define big data in competitive terms, you must think about what it takes to compete in the business world. Michael Porter’s classic work on the five forces of competition has made a recent resurgence due to its reemerging relevance. In short, Porter nominally recognizes that every company has competitors, but also calls out four other distinct areas of competitive concern: customers, suppliers, new entrants and substitute products. If you accept this model, which I suggest you do, then you must explore big data in a way that supports your competitive position in each of these contexts.
To put yourself in a favorable competitive position with customers, you must hold most if not all of the bargaining chips in the vendor/consumer relationship. To do this, your offering must be both valuable and unique. The credit reporting agencies have mastered this model. There are only three places to get your credit information, and it’s terribly important information if you plan to apply for a loan. You have the same effect with the DMV. If you don’t like their service, there’s nowhere else you can go, and without their cooperation, you won’t be driving many places. In both of these cases, the consumer needs the company more than the company needs the consumer. You want big data to create this type of dynamic for your company as well.
The same holds true for suppliers, only in a different way. When supplies are freely available, there’s no pressure to conform to supplier demands. A travel agency trying to sell Disney products knows what it’s like to be controlled by its suppliers. Disney calls the shots, and doesn’t entertain negotiations with agencies, even though they’re the vendor! You must avoid this with big data; to be competitive your big data must be available without risk.
To prevent new entrants from diminishing your competitive position, there must be a high barrier to entry. To practice medicine in the United States, you must go through extensive schooling and certification. Since many people don’t have the talent and resources to pursue this route, so doctors hold a respectable competitive position within this dimension of consideration. We can define big data in these terms as well; it must have characteristics which prevent other opportunists from entering your market.
To prevent substitute products from diminishing your competitive position, you must ensure you satisfy a need that can’t be satisfied with any other product or service. This reinforces the concept of uniqueness, but adds a more horizontal focus on function. In the Request For Proposal (RFP) process common with government engagements, there’s the concept of a single source provider. That means only one source that can satisfy the needs of the requirements. It’s a pretty good position to be the sole bidder for a contract like this! In the same way, your big data effort should comprehensively cover a need, with no practical substitutes available.
Then of course, there’s competition. Even astute strategists well-positioned from a competitive standpoint, will find themselves faced with competition. The key is choosing your spot, and doing it well. It’s not necessary to be number one in your market. I’ve consulted with Visa for years, and they’re clearly number one in their market, with MasterCard a distant second. Then there’s American Express who has far, far less market share than even MasterCard, but they’re very content where they are. They’re not trying to dominate the payments industry like Visa, and it’s a perfectly good strategy.
Distilling the definition
Assuming you plan to innovate with big data to build a competitive advantage, let’s synergize and distill what we know about big data, and what we’ve now considered about building a favorable competitive position:
- Big data is traditionally characterized as a rushing river: large amounts of data flowing at a rapid pace.
- To be competitive with customers, big data creates products which are valuable and unique.
- To be competitive with suppliers, big data is freely available with no obligations or constraints.
- To be competitive with new entrants, big data is difficult for newcomers to try.
- To be competitive with substitutes, big data creates products which preclude other products from satisfying the same need.
So here’s a general refinement of what I’ve discussed, and the definition I use to frame further exploitation of big data for competitive purposes: Big data is the massive amount of rapidly moving and freely available data that potentially serves a valuable and unique need in the marketplace, but is extremely expensive and difficult to mine by traditional means.
This is good for general discussions, but for your strategic purposes, you need an operational definition more specific to your environment and conditions. When considering an information strategy that involves big data, this is one of the first things you should do, as it drives the rest of the conversation. You now have the basic constructs for how to define big data in competitive terms, so take a day or two with your executive team to work out your specific definition. Once in place, you’ll have a strong foundation for building a solid big data strategy.