Reimagining Your Business [Part I]: Data is the New Oil

This is part I of a three-part series around applying the concepts from the book Driving Digital Strategy by Sunil Gupta.

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What first attracted me to Driving Digital Strategy was that it addressed a common challenge for many of my clients and colleagues today — how to grow and evolve in a digital landscape, be a disrupt-er instead of a disrupt-ee, and stay relevant for many years to come.

There is no magic formula for digital success – but one thing is clear: it takes strong and passionate leadership to make the leap (and we all know, not every leader is convinced they can be disrupted).  An excerpt from the 2014 Digital Leadership Executive Survey by MIT Sloan Management Review and Deloitte details this foundation for digital:

“The digital agenda is led from the top. Maturing organizations are nearly twice as likely as less digitally mature entities to have a single person or group leading the effort. In addition, employees in digitally maturing organizations are highly confident in their leaders’ digital fluency. Digital fluency, however, doesn’t demand mastery of the technologies. Instead, it requires the ability to articulate the value of digital technologies to the organization’s future.” [source]

If you happen to be one of those leaders or influencers ready to seriously reimagine your strategy for growth and what might be possible to serve your customers, Driving Digital Strategy is a great place to start.   

And thankfully for us wannabe disrupt-ers, Gupta provides a detailed framework in which to build and implement a truly digital strategy — based on experience and exploring case studies from prominent companies who have been at the forefront of digital disruption.

Because this series is not intended to provide just a traditional book review, but more of a summary of the concepts with some added thoughts on how you might apply them — there is simply too much to cover in one article.  I’m breaking this into a three part series based on key takeaways we can apply in our thinking to drive new innovation:

• Part I: Data is the new oil
• Part II: The platform revolution
• Part III: Open innovation

There are many more parts to this book including great insight on operational excellence and customer acquisition — but the above set of subjects stood out as truly transformative (and also cool for a growth strategy nerds like us).

If you still have any doubt that data is the one thing that could truly change your business, consider this: ANY question you might have about how to improve your business can be answered with data.  It’s the most important asset in driving growth. 

In the book, Gupta details that data and customers are the critical assets of a company:

“The two most valuable assets of a company today are its data and its customer base.[…] Unlike physical assets, data does not get ‘used up’.  It can be replicated and used in multiple applications without diminishing its value.  In fact, the value of data increases as more data is collected — sort of a ‘data network effect’.”

The data challenge for many businesses is two-fold: what data do we have and should  we have, and how do we derive value from the data being collected.

Data that Drives Decisions

Even the smallest of businesses are collecting data on their customers – if you have a website, social media accounts, a CRM, or even a stack of sign up sheets – you have insight into your customers.   Even so, the more complex your organization, the more categories of data collection you should likely have.  A few key categories of data to consider: marketing data, industry data, and usage data.

First, marketing data is what you most likely have today (even if you don’t use it).  You can track engagement with emails, see visitors to your site and even which pages they spent time on.  You can also use social channels to understand demographics of your followers, their likes and dislikes.  Data enrichment allows you to dig even deeper into building profiles for your customers and prospects.  Most companies are well on the way to tracking this information in a consolidated CRM platform.   The types of questions you can answer with marketing data include:

• What marketing programs are working/converting? And what can we optimize?;
• What is attracting people to our company and how are they finding us?;
• What is our target profile and how do they want to be communicated with?;
• What impact does marketing have on the company’s revenue?

Industry data has more to do with what type of trends and insights you can gain from the customers you serve in your industry.  Gathering it might be take more outside input like a survey or analysis.  The questions this data can help answer:

• What are some industry and customer trends to keep track of?;
• How can we apply industry data to our roadmaps, solutions, business plans?;
• Is there an under served are within our customers or industries where we could add value?

Usage data (the hardest to get in my experience) is understanding HOW your customers use your product including how often, how much, and which components.  By understanding how your customers are actually engaging with your solutions you can gain incredible insight for future development, investment, and even the sale of your business.  Questions that usage data can answer:

• Where do customers get the most value?;
• How should we price our solutions to correlate with our value?;
• What kind of features or complementary solutions make sense?;
• Can we compile some of this data to benchmark for our customers?;
• What business are we truly in?

The last question there is loaded, but reminds me of a great quote from Ted Levitt, Harvard Business School Professor, Gupta shares in his book:

“People don’t buy drills; they buy holes”

Of course, the meaning there that your business can’t be focused on a type of product but instead the solution you are providing to customers.  What if there are better ways to make holes than a drill?  You’d get into that business.  Some companies simply don’t know the solution they are delivering from a purely quantitative perspective and only their customers can tell that story with usage data.   For example, you might have started out as a software company with a specific application — but your customers are actually using multiple applications to achieve the original goal.   How do you adjust?

Converting Data into Dollars

Digging into data might naturally create new ideas and possibilities for your business that can create significant strategic value.  One of the most valuable uses of marketing, industry and usage data is that it can help you determine how to cross sell within your existing customer base.  Gupta spends significant time around this concept asserting that:

“In today’s connected world, sustainable competitive advantage comes from offering a system of connected and complementary products[.]”

To analyze information to come up with a cross selling solution means you need a lot of data – not just your customers’ email addresses and phone numbers, but their pain points, business model(s), usage statistics, business performance and demographic data.  Companies that are not fully realizing the transformative nature of data are generally guessing about what solutions their customers might adopt and can even be bullheaded about opinions on the matter.  The fact remains, data is much more reliable than an opinion in predicting buying trends and projecting growth.  

Your solutions, relationships, platforms and delivery models should account for gathering this data so you can tell a more valuable and useful story about the industries you serve.  If part of your strategy isn’t gathering the data points or at least figuring out how to start gathering the data, you are missing out on a huge advantage.

Another way to derive value from your data strategy is using it to help maximize performance for your customers.  John Deere is a great example of a traditional product company gone digital — by adding software and sensors to their heavy machinery, they began to collect usage data (one example: they collected data from over 300,000 acres to help farmers optimize fertilizer use).   Today,  they provide farmers with a full business management solution including critical data about weather patterns, seed optimization and other key farming metrics that help them plan and project their revenue.  They literally transformed the agricultural industry and grew to a $65 billion dollar company.

Data has the ability to inspire, ignite, innovate and fundamentally change industries — and any company can actively participate in this opportunity.  

Data also tells me an ideal blog is just about 1,500 words.  Up next: The platform revolution.

Until next time,

Julie

P.S. Interested in Part II and III?  Don’t forget to opt in for Branching Out, the Operation Grow newsletter which compiles the most popular blog content in addition to marketing and growth news and updates.