The big data rush: How small businesses can strike gold

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Small businesses can benefit from the current big data rush. With hard work and a little luck, companies can profit from the onslaught of data.

Never in the history of the world has there been such a large window of opportunity for a small business to make a small fortune with data; however, the window is closing fast. In 1848, a handful of California locals discovered gold in the Sierra Nevada hills. For these lucky few, gold was sitting out in plain sight waiting to be harvested. By 1849, the word had gotten out, and it wasn't so easy. People came from all over the world to stake their fortune, taking San Francisco from a small settlement to a world renowned mecca of opportunity.

During this time, it wasn't as easy as picking up gold from the ground. But with a little work and the right tools and skills, you could still do well. By 1855, the opportunities for the small gold-seeker were gone; if you were going to make it in gold, you'd better come with a lot of people and resources.

We're in an equivalent period now with big data. In gold rush terms, it's not 1848 anymore, but it's not quite 1855. We're in the big data rush period, where a small business with some hard work and luck can really do well. The convergence of mega-trends that are much bigger than you or I, such as social media, amazing advances in technology, and the mass-consumerization of information technology, have created an explosion of information that makes the neo-Internet era of the mid 1990s look like a fourth-grade math problem. Many companies are aware of this; however, they're still struggling with the best way to take advantage of all this data. This creates great opportunities for small businesses. But no opportunity like this comes without peril.

Big Data

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There's no way to completely insulate yourself from falling by the wayside in your pursuit of thebig data dream. Fortunately, there are smart things you can do to increase your chances. As a byproduct of Silicon Valley, I've had the good fortune to work with some of the greatest technology companies in the world, like Sun Microsystems, Hewlett-Packard, and eBay. But I've worked with medium and small companies as well. In fact, for the last 20 years, I've run my own micro-business as an independent consultant. And although I have a steep background in data and information, in practice I'm a management consultant who helps leaders and managers with organizational issues. So as I reflect on the best practices to share with a small business that wishes to take advantage of the big data rush, my suggestions have more to do with leadership and strategy than technology and information.

Growth and strategy

Let's start by understanding what a small business is, what a strategy is, and some of the ways big data can be used in a small business's strategy. I wish I could offer you a good metric to define a small business, like a revenue threshold or number of employees. Unfortunately, in my experience, you can't do it that way. A big data strategy should really fit with the size and maturity of your company, not an arbitrary revenue target or number of employees. In this regard, we need a good growth and maturity model to help us best isolate a small business from the rest of Corporate America. The model I typically use to help me assess where big data will fit into a company's strategy was originally created by Larry E. Greiner, a professor of management and organization at USC's Marshall School of Business.

Check out the results of the latest Tech Pro Research survey on big data. 82 percent of companies reported implementation paying off.

In Greiner's model, as a small company emerges, it evolves under the guidance of creativity until it reaches a crisis of leadership. Leadership is initially established by a visionary (or small group of visionaries) who draws people in on the promise of greater things to come. Communication is unstructured to keep the company agile, and most if not all activities are focused on connecting its offering (product or service) with a market. Revenues are crucial at this point; this instinctively drives the behavior of the organization. Everything is terrific until the onset of its first growth crisis: the crisis of leadership. This happens when the initial founders can't keep all the moving parts together anymore, even if they wanted to (which they don't). Communication breakdowns start plaguing the company and the overwhelming management demands leave the creative leadership team with an incessant migraine. The incumbent leadership reluctantly realizes that it needs to release the reins to managers who are better equipped for and disposed to dealing with the organization's issues. For the purposes of seating in a big data strategy, this leadership crisis will be the upper bound of what we consider a small business.

The exciting news for small businesses today is that traditionally, big data strategies were reserved only for the larger, more mature companies. When I started my career as an information management expert, all of my work was done with large companies like MCI, Silicon Graphics, and Sun Microsystems. That's all changed with the disruption caused by the mega-trends we referenced earlier. Now, anybody with a good idea and a little bit of capital can play in this space. To be successful though, you must get your strategy straight. There are too many people jumping into big data (even large companies), with no idea of whether it makes sense to do so. With a good understanding of your strategy, you can avoid many of the pitfalls these companies encounter.

A strategy then, is a basic framework for making important organizational decisions, such as which products and services to offer and what markets to enter. Without a strategy, a small business leader runs the risk of flailing around the marketplace without any clear guiding principles. This is what I called unstructured creativity and it usually spells disaster. Structured creativity, on the other hand, rides on the shoulders of a preconceived strategy and gives small businesses a fighting chance. Big data can help a small business's strategy in a few ways.

Big data leads the way

There are three ways I've seen big data benefit a small business's strategy: as the core strategy, as a support for the core strategy, or as a key capability that supports the core strategy. I feel the best opportunities for small businesses right now are using big data as a core strategy. What many people don't realize about the gold rush is that the big winners weren't the people looking for gold—it was the merchants selling the supplies to the gold-seekers. For instance, Levi Strauss made his fortune from the gold rush by selling denim overalls to the prospectors. Of course the rest is history; now his name is synonymous with denim blue jeans. Like the days of the gold rush, companies of all sizes are looking to capitalize on big data; however, they need the right tools. The small businesses that have the creativity and knowledge to create these tools are cashing in big.

The secret to success with this approach is a commitment to product or service excellence. I remember having lunch with Mark Davis, one of the co-founders of a small business called Kitenga. Kitenga started as a small search analytics firm, providing a commercial overlay on Hadoop that really brings unstructured text and multimedia data to analytic life. The company was eventually bought by Quest Software, which was recently acquired by Dell, where Kitenga plays an integral role in Dell's analytic suite (full disclosure: Dell is one of my clients). When I asked Mark about the critical components that made the company successful, he said they focused on two things: making great products and attracting great talent.

I also spoke recently with Bill Bosler, an oil and gas expert who's currently looking at ways to apply big data techniques to his industry. An industry veteran, Bosler recognized the need for oil and gas companies to synthesize the communication between the hundreds of systems that are typically found at an oil and gas facility. Each system has its own language and procedures, all of which are documented in unstructured text making holistic management a near impossibility, especially for a new hire. Bill explains that with an advanced knowledge of natural language processing (NLP), big data techniques can be used to:

  • Extract the data from each system
  • Align the information
  • Unearth semantic concepts
  • Understand semantic relationships using a common ontology
  • Ultimately convert this unstructured data into structured process flows

These are the kinds of tools large oil and gas companies need to drive efficiencies and scale their systems with limited resources.

Breaking through with big data

Although anchoring your whole strategy on a big data concept holds the best opportunities for small businesses today, it's not the only way you can succeed with big data. You may not have the passion or the talent to develop the next big analytic platform or service—and that's okay. You can certainly use big data in your strategy to create the breakthrough products and services that support your competitive advantage. I work with companies of all sizes on developing or fortifying their existing strategy with big data, so small business can benefit from this approach just as much as the big boys.

Remember, a key outcome of developing a strategy is understanding which products or services to develop and which markets to serve. To do this, you need a general orientation, or a driving force. This is a concept pioneered by Ben Tregoe and John Zimmerman several decades ago. Although there are quite a few driving forces, the vast majority of businesses focus on one of two common driving forces: either products-offered or markets-served. A products-offered company develops breakthrough products and looks for markets that will buy its products. BMW is a good example of a products-offered firm. In contrast, a markets-served company understands a market (or a small set of markets) very well and builds products that it knows its markets will buy. American Express is a good example of a markets-served company; it understands the luxury market well and caters to its needs with everything from the exclusive Centurion Card (aka the black card) to outrageous luxury vacations. Big data can play an important role in either strategy.

I recently chatted with Nikola Krgovic, who works with a company consisting of a small online auction platform called Limundo and a small online marketplace called Kupindo. This is an example of a products-offered company. To compete with giants like eBay, this company must develop something extraordinary—and it does. With a small crew of only 40 people, the company has already attracted 400,000 active users and sells over 8,000 items per day. Nikola explains that his company uses big data techniques to improve the users' experience. The constant mining of its weblogs has produced valuable insights, which drive the development of its breakthrough products (its websites).

Big data strategies also fit well today with markets-served companies. In fact, this is the most common application of big data analytics today, understanding markets. Customers of Dell's Kitenga Suite are most likely looking to better understand their markets by combing through all their internal (e.g., operational logs) and external (e.g., social media sites) unstructured data. And although a Kitenga seat may be a little pricy for a small business, the concept driving the value a product like Kitenga brings to a company is certainly relevant to a small business's strategy. The better you understand your target market, the better your competitive advantage will be.

A third and final application of big data to your small business strategy involves key operational capabilities. As you develop your strategy, you first understand your driving force, then you understand your product/market mix, and finally you understand the key capabilities that will support your strategy. Whether or not your core strategy involves big data, you can certainly build an analytic culture to give you an operational advantage. In addition to improving the users' experience, Nikola's company uses big data to analyze its weblogs for fraud patterns. This greatly reduces the company's risk, making it more operationally efficient.

Conclusion

In closing, I'd like to applaud your interest in taking your small business to the next level with big data. Like the gold rush of 1849, there are several ways to capitalize on this limited-time window of opportunity. Many people like Strauss cashed in by selling to the gold-rushers—you can do the same by putting big data at the core of your strategy. Some people traded their gold for vital necessities like food and clothing- you can do the same by using big data to support your core strategy, whether it's products-offered, markets-served, or something else. And some people just kept their gold or sent it home to their family. You can do the same by fortifying your organization's wealth of key capabilities with a culture of big data analytics.

Keep in mind that not all people made it in the gold rush days. Many came up blank— or worse, paid with their lives. Fortunately, your big data pursuit isn't life-threatening; however, for a small business, there's a lot at stake. Be smart about what you're doing. Take some time today to flesh out your strategy and clearly understand how big data fits into your overall success. And who knows, with a little luck, you just might strike gold.

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