21Weeks » Velocity

Data is the new .com

Thomas Butta — Fri, 04 Nov 2011 17:07:11 +0000

Activation and action are key.

By Roger Ehrenberg
Roger Ehrenberg is the founder and Managing Partner of IA Ventures.

Throughout my business career, I’ve observed that people love to label current fashions. “Web 2.0,” “Cloud” and “Social” are three which are currently in vogue. In my lifetime likely none was bigger than “.com,” describing a business and its recognition of the importance of the Internet. Remember when long-established businesses would change their names by adding a .com extension, only to receive a salutary stock market reaction? This was an equity market story that was destined to have an unhappy ending, from which the public markets still have yet to fully recover. Needless to say, the Internet has changed billions of lives in positive ways too numerous to mention, but those benefits didn’t come from labels, stickers or launch parties. They emerged from businesses new and old building and re-positioning their strategies to harness the Web’s true power, and to engage with customers in more and better ways than was previously possible. Nobody gratuitously adds .com to their names any more, and as far as I know I haven’t heard anyone refer to an Internet-based business as a .com for at least five years. That said, I’m beginning to detect a similar phenomenon in companies touting a characteristic particularly close to my heart: the use of “data” to describe a value inherent in the business. And in many if not most cases, it’s not true and I’m not buying.

It doesn’t take a genius to know that data is everywhere, and that it is growing exponentially across virtually every dimension: bigger, faster, deeper – and perhaps even more messy. Every business uses and generates data, but this doesn’t begin to capture what it means to be a data-driven enterprise or where data is viewed as a discrete asset and treated as such. It is a fundamental issue of strategy and culture, and the mere presence of data is not itself an indicator of having deep and relevant data DNA. “Hey, our business generates a lot of data, BIG DATA” is a phrase I hear frequently which I assume is supposed to get me excited. It doesn’t. “Hey, we’ve got this thesis that as our business scales we’re going to build a monster data asset that can better help us attract, retain and monetize happy customers. It will help us create competitive barriers and we’re planning for this from Day 1. We’ve shared some early data with a data-hacker buddy and feel this is a promising avenue for building company value.” Hey now, NOW you’ve got my attention.

There is a world of difference between the mere presence of data (say, an inert corpus of data accumulated from customer transactions) and its activation (putting that same data in a form that can be analyzed in real-time to provide intelligence about trends, pricing, feature attributes, etc. and classified and stored in a way that subjects itself well for future analysis). The data-driven enterprise will embody the notion of creating and leveraging its data asset in everything it does, and will use it to drive current and future decision-making, not merely retrospective analysis. There isn’t some checklist to determine if a business has a deep data culture or not; believe me, if you are one you know it. And if you toss around labels that sound good but ring hollow as there isn’t a bridge between headline and application, then, well, you probably lack the culture I’m describing.

There isn’t anything wrong with not being a data-driven enterprise. I mean, we all can’t be data-driven, can we? Well… I take that back. There is something wrong if a business isn’t data-driven in some way. Online or offline, it doesn’t matter. Commerce generates data. Businesses need to learn from and leverage data to remain competitive and grow. Whether you operate a barber shop, an enterprise software business or sell virtual goods online you have the potential for creating a valuable data asset. But I’m here to ask you a simple question: “Where’s the beef?” Because without it don’t talk about it: just get it. It’s never too late to adapt but it requires core cultural change, and half-hearted efforts simply won’t work. Just as building an online culture has been critical for all businesses to compete in the 2000s, building a data culture has become an essential element for success in the 2010s and beyond.

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The Road Not Taken

Thomas Butta — Mon, 29 Mar 2010 23:31:00 +0000

I was reminded the other day of Robert Frost’s famous poem from 1915 – The Road Not Taken. Frost’s simple, but poignant musings about choice, inertia, and courage have direct relevance to business decisions today. Executives charged with mapping a course of value creation would do well to heed Frost’s own experience. Here’s why.

For all intents and purposes, most executives today find themselves in the woods too – albeit the economic woods – as they search for ways to make their organizations more viable. What choices do they have? What actions do they take?

The choices executives have for creating and capturing value are the same two choices every organization have had since time began. 1) Drive profits through cost reduction. 2) Drive growth through revenue creation. What actions, then, are executives taking today?

The most common choice executives make is to march down the well-worn road of the bottom line. This is the path of saving money – reducing spending and cutting costs. Nothing is spared as costs are slashed from fixed and variable expenses, overhead, and investment spending. Headcount is reduced, raises are frozen, marketing is cut, R&D is trimmed, suppliers are squeezed, and payables are extended. The list goes on and on. Driving value from the bottom line is the clearest and most common choice executives make when faced with the fuzzy conditions of uncertainty. And that is exactly what is happening today as they confront this particularly acute economic downturn.

In the race to the bottom line, however, most organizations sacrifice – if not ignore altogether – the other road to value. That is, the path of the top line. This is the path of growth – of revenue creation, market share, buyer interest, brand allure, momentum, customer loyalty, leadership perception, and brand equity.

The path of the top line is a brave one, which is why it is the road not taken when times are tough. It requires executives to not only hunker down as the storm rages, but to also be prepared for action as the storm abates. This is not the path for the feint of heart. This is the path for the few, the committed, the courageous.

I have been through three recessions and have worked with dozens of companies in that time. I have studied what organizations have done to enable them to come out the other side as winners. I can tell you without a doubt that you cannot cut your way to sustainable success. The only way to create long-term enterprise value is to commit to the road not often taken. For those executives that choose to commit to an integrated path of efficiency and growth, they will not only stick it to the man, they will also stick it to their competitors.

Economic uncertainty requires being smart and prudent. Yes. But it also requires belief and conviction. Yes. Yes. The time is now to accelerate through opportunity. Go ahead – prepare your organizations. Up the downturn. This course of action will forever make the difference.

My next post will highlight some companies that have taken this path.

Making Change Happen

Thomas Butta — Thu, 04 Mar 2010 02:08:00 +0000

Many of the companies we talk with don’t have a clear structure for enabling powerful change to happen quickly. After years of being in the hot seat of transformation, we have observed a common set of change qualities within the organization itself that increase the odds of success.

There must be a culture of risk-taking and openness to doing things differently
There must be healthy respect for other points-of-view
There must be a sense of urgency and a commitment to velocity
There must be a relentless focus on the endstate. Any distraction will cause confusion and inefficiency.
There must be a structure that enables alignment between product, sales and marketing. Most often, everybody operates in their own little world and, some times, at cross purposes with one another. This kind of integration isn’t easy. Getting it done requires focus, discipline, and a game plan that demands real-time collaboration.

As you look to undertake your internal change initiative, start inside first. Then beware of the three forces that will always test your mettle. One, the dynamics of change often stress even the strongest of cultures. Two, inertia is very, very powerful. Three, there is an ever-present tendency to blur the lines, compromise and soften the edges of bold thinking.

The organization that is organized for — and committed to — change, both mentally, and structurally, is the organization that has the best chance of remaining focused, moving quickly, and, ultimately, winning.