“In God we trust. All others must bring data.” W. Edwards Deming
Never has one sentence or quote more closely represented the significant shift in society with respect to how we think, work, play—and ultimately live. So we have to ask: What is it about data that gives it this much importance?
The simple answer is, everything is data. Even you and I are data—an accumulation of data or the bank of memory known as DNA. Everything we do and interact with as human beings is packed with data. Whether that means going to the doctor, shopping, having a meal, or simply sending an e-mail—these are snippets of information that tell a story with respect to who we are and what our preferences are.
From purely a businesses or commercial perspective, Deming’s statement should mean only one thing: opportunity (and lots of it). Data-centric organizations have the power to disrupt traditional ways of working and create new economies. Just ask the travel and hospitality industry about Airbnb.
However, for all its value, data alone is inherently powerless. It doesn’t actually do anything unless you know how to use it—or have a guide to start the process, at least. Plus, history has taught us often that a “gold rush” approach usually ends in a lot of disappointment. In this blog, we’ll look at a step-by-step approach on how this journey to profit from data could be undertaken.
Step 1: Cost focus—getting your foundations in order
The easiest place to start would be to look for cost reductions and savings. This gives you a chance to study your existing processes to identify revenue leakages—to see what is working and what could be changed or cleaned up with respect to operational efficiencies.
Obvious starting points would be to analyze the supply chain, procurement costs, employee retention, customer churn, and so on. This exercise should give you an idea of where the business is with respect to risk and opportunity.
Step 2: Grow existing revenue streams
While cost reductions can help with survival, the focus is always to look for ways to grow, thrive, and be highly competitive within the chosen market(s). Data can be used to make better pricing decisions, improve customer experience, or optimize selling strategies. (For example, align selling and go-to-market strategies with regions that have the greatest sales potential, or take away processes that impede time to market.) The goal here is to better understand your customers and sales operations, and to use these insights to enhance existing market offerings.
Step 3: Create new revenue streams
This step builds on Step 2 to encourage creativity and imagination within the organization. For instance, can you customize services or explore how a product could evolve in line with consumer needs (like data you have collected)? A good example of this can be seen with utility companies using smart meter data to provide household equipment monitoring and servicing offers.
It gets even more interesting when data can be used in real time—for example, retailers sending tailor-made promotions to influence customer purchases while they are in the store. These promotions can all be specific to their individual buying patterns, social media activity, and so on.
With the right strategy and infrastructure, the potential to monetize data has never been easier. It’s just a case of recognizing the value of data and putting insight-driven actions into the heart of the enterprise. After all, some say it is the new currency.
For more on this topic, see If Analytics Is The Engine, Then Data Is The Fuel Of The 21st Century.