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.

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.