Business Insight Zone

My previous posts in this vein talked about using business information to create value for customers and moving from data to action in your use of business information. Now I’ll address why you need to get ahead on these issues now if you want to surf to business success on the world’s rising tide of data, rather than being swept away by it.

The Floodtide of Data

For years now, we’ve understood that information growth is exploding. The amount of data created and recorded digitally does not merely increase every year — it increases exponentially. Smart people are using this wealth of data in wonderful ways, for instance by bringing revolutionary changes to some fields of science.

In the business world, new social networks are creating huge flows of information, including lots of it that’s useful for commercial purposes — ranging from consumer behavioral modeling to straightforward competitive intelligence research.

On the personal front, it’s tempting to think of all of this as “information overload” and assume that being overloaded is inevitable, given the amount of information out there. But Clay Shirky has suggested that “filter failure” is the more useful term. It’s fruitless to blame the information for coming at you in waves when it’s you who signed on for it. In any event, it’s crucial that we develop better filters both personally and for our businesses, since the flow of information is only going to get larger — MUCH larger.

So we need to change our thinking instead. As individuals, we can apply better practices of information hygiene to our inboxes and the like. (Entrepreneur Ash Maurya has some good suggestions about how to do this.) As organizations, we must practice better information hygiene across larger systems, or else we’ll become victims of information overload rather than profiting from information abundance.

Using Better Systems — and Using Systems Better

The same technological revolution that unleashed all of this information on us promises to help us control it as well, but only if we’re willing to grapple with its complexities.

When I talk about complexity here, by no means do I mean only the technical details of systems run by your IT department. The technological aspect certainly is complex, because what IT implements — CRMs, ERPs, data warehouses, analytics, etc. — weaves into the operational fabric of every department in your company. Beyond that, though, it stands to affect the work (and maybe the psyche) of virtually every individual in your company. That’s serious complexity — and if you don’t get ahead of it, you’re sunk.

The easy case in point is the way that CRM systems often run aground within sales departments. If they’re not brought along the right way, sales reps will distrust CRMs, fearing that they’ll hinder rather than help them make their numbers.

The solution isn’t simply to ignore such attitudes and install a slicker CRM. Social CRMs, for example, can do a better job of using social-media information to empower your sales team. But they’re not a magic bullet, and if you don’t use your current CRM well, you can’t expect a social CRM to bail you out. Rather, you have to take on some hard managerial work to instill open communication habits, organizational discipline, and acceptance of change. Only then will you get salespeople, sales managers, and everyone else in the organization pulling in the same direction. That’s when you’ll get the most out of any technology, whether it’s the latest SCRM or pencil and paper.

The key here is to understand this:

Even the best systems can’t save you from the flood of data if you don’t use them in ways that support your business strategy and your customers’ needs.

What we have to do is to rethink all the ways that our business information systems interact with the fundamentals of our businesses, and then revise our approach to data. As CRM strategist Esteban Kolsky puts it, “All the data we are capturing is becoming too much for our antiquated models of data management to handle.” We have to bring our businesses practices around data firmly into the 21st century.

No one said it would be easy — but it’s worth it.

Marketplace Dynamics

Not only is it worth it, you may have no choice about it if you want to stay competitive. Customers and prospects have too many ways to filter you out these days, and their expectations of you are higher than ever. You need to know who they are and what they want so that you can approach them in relevant ways every time you make contact.

There is also increasing pressure from competitors. Progressive-thinking companies can get a jump on their markets if they’re early to grasp the advantages that go along with data abundance. Laggards will struggle to keep their heads above water.

What’s required of smart companies in this environment?

1. Understanding the fundamental issues: the massive growth of data, the need for better filters and systems to pick out the right data and put it to use, the consequences for early and late adopters in the marketplace.
2. Flexibility of thinking. Your future use of data — even the fundamental models for how you collect and analyze it — may not look like what came before. That’s fine — if you’re ready for it.
3. A willingness to experiment. Finding the “right” answers to all of these challenges is likely to be an ongoing journey marked by plenty of trial and error, not something you’ll hammer out in a day-long summit between IT, operations, marketing, and sales. Understand in advance that successful approaches to this new world of information and technology will be marked by failed experiments on the way, and be ready to dust yourself off and try again.

The data flood can be your friend. But you must work out how to filter, analyze, and use the abundance of good data contained in it — all in support of your company’s fundamental strategy and the value propositions that you present to customers. Otherwise, you’ll be swept away.

What are YOU doing to surf the floodtide of data?

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Image from rappensuncle, used under a CC-Share Alike license.

There’s a useful model from the realms of information science and knowledge management known as DIKW. It can help us think better about how we use business information to succeed.

The Basics

The letters stand for the four levels of a hierarchy, like this:

You don’t have to put it into a pyramid — some people prefer a chain, flow diagram, or something else — but the basic idea is that each level builds on the one below it. Before we get to examples and how all of this relates to taking action in business, here’s the nickel tour of the four levels:

• Data can be thought of as raw facts — words, numbers, sights, sounds, and so on.
• Information arises when meaning or relevance emerges from the raw facts.
• Knowledge comes when we situate information in the context of experience, expertise, or systematic study. In other words, information helps create knowledge when it’s synthesized and related within some larger framework of thought.
• Wisdom is our judgment of (a) what knowledge means or (b) what to do about knowledge with reference to our deeper values (for example ethical or moral considerations), to our desired highest outcomes, et cetera.

Some thinkers, notably the systems theorist Russell Ackoff, sandwich another level, Understanding, between Knowledge and Wisdom. But as Gene Bellinger points out, both connectedness and understanding increase at every level as you ascend through the DIKW model.

Playing Detective

Now, I’m sure I’m going to make any information scientists or epistemologists in the audience shudder as I trample on the fine distinctions of D, I, K, and W, but here’s my informal analogy for it: I think of DIKW through the lens of a detective story.

Picture me as Hercule Poirot . . .

(Note: in real life, I’m younger, taller, thinner, less well-dressed, not Belgian, and have much more hair.)

Picture the drawing room of a country estate. Monsieur Poirot has called together all the interested parties so that he can reveal the identity of the murderer. As he speaks, there is a noise in the background. What does it mean?

• Data = the noise in the background.
• Information = realization that the noise comes from a car engine being revved.
• Knowledge = Poirot says, “Yes, it is Professor FitzGibbon in his racing Jaguar, trying to make good his escape.”
• Wisdom = When some of the party tries to run out and catch the professor, Poirot says, “Do not concern yourselves — we need not chase him. The police have blocked all the roads.”

If my philosophical precision is awry from one step to the next, the main point is still clear — you’re moving up a chain of value from raw data — which often has little use in itself — toward greater context.

• The data at hand (noises in background) becomes real information when it’s put in the context of other facts (a lifetime of hearing car engines).
• That information becomes working knowledge in the context of the larger situation and other information (Prof. FitzGibbon is my prime suspect; the noise is coming from where I saw his Jaguar parked earlier).
• My knowledge of the situation, in the context of my professional experience (decades of detective work), prior actions (coordinated a blockade with the police), and overriding goals (catch the murderer), gives me wisdom about my best course of action in the moment.

This last step not only tells me — and those listening to me — that I need not panic; it also tells me what not to do. For example, my experience tells me that if I try to stop FitzGibbon myself, he might run me down with the car, and that the surest way to stop him now is to let the police do it.

From Wisdom to Action in Business

Note that my wisdom about the situation also implies my best course of action. Some thinkers on DIKW have echoed Peter Drucker when they point out that knowledge is about knowing how to do things right, whereas wisdom is about knowing the right things to do.

Since it can never be said too much, let’s pause to emphasize this point:

In business, we should be working every minute of the day to do the right things.

So let’s take my Poirot example and translate it to a business setting:

• Data = the numbers on a spreadsheet.
• Information = the value of Customer X’s account has declined for three straight years.
• Knowledge = WHY they downgraded.
• Wisdom = what to DO about it.

I’ve been an information merchant for a long time, but I can’t know all the ins and outs of every company, every industry, every situation, so I can’t play Poirot with your personal business challenges. In other words, I can’t tell you how to win more business from Customer X in particular — and probably no one outside your own company can.

More to the point, even having the wisdom to know what to do isn’t the same thing as doing it. You have to have everything in place — personal and organizational discipline, healthy working practices, good communications, etc. — to support action . . . and then you must TAKE action.

Fostering Action at Every Point

I can, however, suggest steps to take at the lower levels of the DIKW pyramid so that you’re armed to take the best actions with every customer you serve. The overriding goal is to reduce the friction and increase the utility at each level so that you’re able to move briskly up the pyramid — and, ultimately, to act swiftly to meet customers’ needs and build your business.

Here are a few key ideas to get you started:

• You need good data, and you need it more than once. If your company has a hard time gathering and handling data — about prospects, customers, the industries you serve, market conditions, or whatever — you’ll lose time and money as you try to derive relevant, useful information from that data. Beyond that, you have to be ready to gather data more often than ever, given the pace and toughness of today’s economy.
• Your own employees might not be the best ones to collect that data. Sure, you’d expect me to say so, given that I worked for several years in Hoover’s editorial department, painstakingly collecting and organizing information on many companies. But there’s a reason customers keep coming back to us, and its the same reason that keeps other high-quality providers of business information thriving within their market niches: specialization wins. Let your sellers sell; let your accountants keep accounts; let your marketers market your wares. And find a good business information provider — whether it’s us or whoever else meets your specialized needs — to handle the data load.
• You need data organized into useful information, and information organized so that it improves your customer and industry knowledge. We can help with this, certainly, but an unavoidable part of this work will happen inside the walls of your own enterprise. If your own organization fails to look forward by coordinating how information flows from sources to users, from one department to another, you’ll end up looking back with regrets about the opportunities you missed by being haphazard. You don’t need a magic bullet — you need the hard work of good organization.
• Your tools must work in unison. This is why we (and some other forward-looking information providers) have done so much to integrate our information into popular CRM systems: it’s not enough that the information exists somewhere and that you hypothetically have access to it — you have to have it available at the point of need so that you — or your busy salespeople, marketers, researchers, et al. — can use it on the spot. But again, this isn’t about signing up for Access Hoover’s and then forgetting all your cares; as anyone who’s ever implemented a CRM system will tell you, there’s a lot of technical and change-management work that goes along with it.

In the next installment of this series, I’ll talk about why it’s more important than ever to think ahead in your use of data for business.

Meanwhile, what else would you recommend for making sure the DIKW model translates into ACTION for your organization?

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Related posts:

• Previously in this series: Does your use of business information lead you back to CUSTOMERS?
• Wikipedia’s entry on DIKW. (Warning: it’s heavy on epistemology.)
• Bellinger, Castro, and Mills on DIKW.
• Nikhil Sharma, The Origin of the “Data Information Knowledge Wisdom” Hierarchy

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Image source for David Suchet as Poirot.

Sorry to shout, but I want to make sure the emphasis is clear:

• CUSTOMERS
• CUSTOMERS
• CUSTOMERS

It’s one of my fundamental tenets of all business, whether you’re running IBM or a taco truck: if you’re finding the right customers, and putting your best efforts into serving customers, and aligning all of your business practices so that you provide maximum value to customers at costs you can live with and prices they can live with . . . you’ll be fine.

Now for a very simple lesson that’s too often overlooked — or undercooked — in companies large and small:

How you collect, organize, and use business information should reinforce your emphasis on CUSTOMERS.

A thousand questions cascade from this one idea, including many that are rather abstract:

• If you’re collecting information by hand — how will you organize it for use in finding and serving customers?
• If you get information from a service like us (and, ahem, we happen to have the most and best business information you can find anywhere), what will you do with it that will help you find or serve customers?
• Do you know all the uses of the information ahead of time?
• Do you have a process for discovering and adopting new uses as you go?
• . . .

And then there are pragmatic questions galore:

• Does everybody in your outfit who needs to know the answers to the questions above know them? (Researchers? Marketers? Salespeople? Your CIO? Your CFO? All the big bosses?)
• Does what they understand mesh with the IT department’s ability to package and deliver the information, whether it’s through a complex data warehouse, a CRM, or simply a set of spreadsheets?
• Does the technological capacity mesh with the ability of your sales ops, fulfillment, and finance teams to track the right account information back to the right customer? Every time?
• . . .

You can fill in the blanks with more questions like these depending on your own situation. (And please feel free to share these questions in the comments.)

Remember that some of the answers to these questions need not be overly complex or expensive. For instance, if you and I decide to open a business together, just the two of us, we might be able to run our whole book of business from a few shared spreadsheets.

Easy, right? Sure — but even then, you and I would need to get some discipline around what information comes in, how we collect it, where we store it, and what we do with it. Even if you run a solo business, you need to answer these questions, because otherwise customers — business! cash money! — falls through the cracks.

Sum it all up, and the real core discipline lies in answering this question:

Which piece of information triggers which action toward which customer?

Until you know that, you can spend all the money you want on a CRM system . . . we could give you the keys to Hoover’s and you could drown yourself in company and industry information . . . you could store terabytes of data . . . and it still won’t drive the performance that your business — and its CUSTOMERS — deserve.

Don’t you agree?

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Related posts:

• Customer ANYTHING.
• Get on the phone!

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Image by Oran Viriyincy, used under a CC-Share Alike license.

Recently, Aberdeen Group researched the performance of 476 corporate sales teams. It published the results of this research in its December 2009 Benchmark Report, Inside Sales Enablement: “Let Them Drink Coffee!”

Below, you’ll find a copy of Aberdeen’s follow-up report focused on Hoover’s customers — who

“outperform[ed] other companies in both [financial] performance and the adoption of Best-In-Class practices.”

You can access this PDF and download a copy for yourself by clicking on the image below or on this link.

Among other highlights, Hoover’s customers outperformed in terms of:

• Revenue
• Lead response time
• Lead conversion rate

All in all,

“Hoover’s customers have out-performed those that do not use their service, in terms of the percent of companies improving their year-over-year sales metrics, by an average of 25%.”

Take a look at the report, which contains other analysis about the performance of sales teams across the board, as well as a mini-case study that explains how Staples uses our Access Hoover’s product to integrate Hoover’s data into its Salesforce.com CRM.

Here at Hoover’s, we’ve always believed that great business information empowers sales teams to do their best. We’re pleased to share this Aberdeen Group report so that you can see the hard numbers that back up our belief.

Feel free to ask questions in the comments, or to drop us a line so we can help you figure out how Hoover’s can empower your sales teams.

If you’re a Hoover’s subscriber, you already know how useful the information and tools on our site are. Well, brace yourselves, because a whole new Hoover’s site is coming your way in 2010.

What’s new, you ask? Here’s a sampler:

• More than 60 million company records (up from 30 million)
• More than 75 million people records (up from 36 million)
• New data elements, including D&B’s proprietary Prescreen Score, latitude/longitude information, and more
• Interactive graphs and charts
• Interactive Competitor Landscape
• A redesigned Build A List tool that makes complex searches easier than ever — and allows you to search for e-mail contacts with the right add-ons
• And on and on and ON.

We’re very excited about these changes, which will be rolling out during Q1 of 2010. In fact, we’re so excited that we’re giving you a sneak preview of the new site right now. Just click on this link, log in with your current information, and take a good look at what’s already been implemented in the redesign.

Keep in mind that what you see now is only part of the whole picture — we’ll continue to update the Preview Site with new functionality in the coming weeks and months.

While you’re there, you can give us feedback on the new tools and layout so that we can make it even better when it debuts to the whole Hoover’s audience in 2010. We’re proud of what we’ve accomplished so far, but we’d love to know what you think about it.

What are you waiting for? If you’re a Hoover’s subscriber, check out the Hoover’s Preview Site now!

Continuing our recent string of product enhancements, we’re pleased to announce release 3.0 of the Hoover’s API, which allows custom integration of Hoover’s data for:

• enterprises with custom data needs (e.g. because they have hand-built CRM or ERP systems); and
• software makers whose apps benefit from having our top-notch company, industry, and people data integrated into them.

Some of the highlights of the 3.0 release:

• An expanded data set — You can now access 60 million company records, including many more non-U.S. records than before.
• New data points — including latitude/longitude information and the D&B Prescreen Score.
• New search parameters — including the ability to search by company URL.

For more information on this release, check out this post at the “New at Hoover’s” blog. And for MUCH more about the API and how your company can benefit from it, click on over to our dedicated Hoover’s API site and blog. (You can even register for a development API key while you’re there.)

The hits just keep on rolling . . .

You may remember that last week I pointed to an interview on social media and competitive intelligence that I did for a Frost & Sullivan newsletter. Shortly after that, I saw a nice note about the interview on Twitter, and thus did I make the acquaintance of the note’s author, Emily C. Rushing of the Haynes and Boone law firm in Dallas. Emily graciously agreed to be interviewed about her work and her ideas on social media. (As a double bonus, she fielded the questions in record time, and in letter-perfect prose.) Here are my questions and her answers:

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Your job centers on competitive intelligence for a law firm. I think a lot of people underestimate the “business” side of law firms, including their efforts in marketing and C.I. Could you give an overview of your professional duties?

I am embedded in the Marketing/Business Development (BD) Department. I report directly to the Director of Business Development and the Chief Marketing Officer. I also support the firm’s BD Managers, who are themselves embedded with the various practice groups, so our department’s organization radiates out into the practice groups. In addition to directly supporting my department, I coordinate with the Managers to provide CI services to all firm leaders, in all practice groups and all offices.

By what career path did you reach your current role?

I must admit that my career did not start out on some well-trod path, but it does make perfect sense in hindsight. I studied sociology and statistics as an undergrad, which I loved, but I couldn’t think of anything to do with it. I got a great legal education at the University of Houston and discovered that my passion was research and writing. I never intended to practice law and instead went straight from law school into the outstanding legal infomatics program at the University of North Texas School of Library and Information Sciences. While completing my MLIS I had the good fortune to work for Greg Lambert (@glambert) at King & Spalding, where I found my direction in information technologies, research, and CI. I worked as a technical services consultant in special libraries prior to accepting my current position in 2008.

You and I met via Twitter when you mentioned a social-media-related post you had seen on my blog. How would you describe your use of social media, personally and professionally?

That’s right! That’s the coolest thing about Twitter — how you can just meet folks via a RT [re-tweet] or a DM [direct message]. What a great resource! I am a huge fan of social media. I am fond of comparing twitter to a non-stop professional conference with all the learning and networking opportunities you’d have previously only found at a formal event or association. I have connected with the most amazing people on twitter. I’m also a big user of the sites LinkedIn, Ning, and JDSupra, among others. I must admit I’m not as active on Facebook, but I see that as a mixed/social site, rather than designed expressly for professional use. In my personal life, I also run an art blog and local events twitter feed, which is a lot of fun and another great opportunity to meet like-minded people.

How do you use Hoover’s in your job?

I rely heavily on Hoover’s for high-quality intelligence on companies that are real or potential clients of my firm. Hoover’s helps us learn more about our clients so that when my attorneys meet with clients we have a great understanding of that client’s situation, corporate strategy, recent activities, and, importantly for our BD strategies, how we can help.

How do you see social media reshaping the work of C.I. professionals?

Social media is, I believe, part of a larger zeitgeist of transparency. The field of CI is still dealing with misconceptions of intel work as related to corporate espionage, and CI professionals still struggle to communicate the real value of ethically-collected intelligence. The very nature of social media, of publicly sharing information about your company and your work and your methods and best practices — all of that — will do nothing but good for the field of CI. Intelligence, and library professionals can all benefit from collaboration and sharing.

~ ~ ~

Thanks to Emily for taking the time to answer these questions — and for sharing her great enthusiasm in our correspondence!

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Related posts:

• Hoover’s user spotlight: April Kessler.
• Hoover’s user spotlight: Kara Moore.
• Using social media for competitive intelligence.

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The phrasing comes from Seth Godin, but the idea is one I’ve been chewing on for a long time: each of us knows all kinds of things, and we all have access to more information than we could ever digest . . . but which information moves us?

Since we at Hoover’s are in the business-information business, you can guess that this is more than an academic question to us. So, let me put it to you:

What data or information changes your business behavior?

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Image by Tom Woodward, used under a CC-Share Alike license.

A while back I talked about our mission to make Hoover’s information a key part of your information ecosystem. You may also recall that we attended Microsoft’s “Convergence” conference to support the launch of Hoover’s integration into the Microsoft Dynamics CRM application.

Now I’d like to share three more relevant items in this vein, all of which can help you decide if it makes sense for you to be using Hoover’s with Dynamics CRM:

1. Hoover’s Integration to Microsoft Dynamics CRM at the Microsoft Dynamics CRM online team blog — Lots of screenshots and descriptions, along with contact information to learn more.
2. FY09 Dynamics Platform Adoption Stories: Hoovers at the Microsoft Dynamics Channel 9 blog — This entry includes Sanjay Jain’s 11-minute video interview with our very own Heidi Tucker and Malcolm Domecq, who explain the integration of Hoover’s into Dynamics.
3. The Access Hoover’s site for Dynamics integration — Go here to watch an explanatory video and to sign up for a “Test Drive” of the product so you can see it in action!

Comments? Questions? Let us know!

. . . as I slump to the end of a tiring — but inspiring — week.

1. Quoth Bill James:

People take information and build knowledge. When you give them new information they will create new knowledge, absolutely and without question.

I take this seriously, not particularly in its baseball context, but because Hoover’s has worked hard for many years to bring high-quality, relevant information to businesspeople. All the time I’m thinking more about how we can do this better, not just in the sense of supplying information better and faster, but in the sense of helping you turn it into new knowledge that fuels your business.

That’s just a sketch of a much bigger idea — more to come.

~ ~ ~

2. You may know that in many cases I’m a foe of business meetings, but I had a great one today. After I came out if it, I tweeted this, half in jest:

A good meeting is one you come out of with a hit list in hand.

After discussing it with a friend — who rightly stumped for the benefit of having a clear meeting agenda — I followed up with this:

Sharp clarity going in, severe clarity coming out should be the goal of a meeting.

If a meeting doesn’t exhilirate you, or scare you a little, or give you relief by answering some of your burning questions . . . what good is it?

~ ~ ~

3. Something to think about if you find you’re having a hard time thinking:

The ability to attend to our environment, to our own feelings, and to those of others is a naturally evolved feature of the human brain. Attention is a finite commodity, and it is absolutely essential to living a good life. . . . Our brains can generate only a limited amount of this precious resource every day.

How can you improve your own attention? Or your customers’? Or your employees’? It might make a big difference to your business.

Related:

• Time is the resource, but attention is the problem.

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Photo by fauxto_digit, used under a Creative Commons license.