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?

~

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?

~

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

~

Image source for David Suchet as Poirot.

“Apple’s not THAT much better in terms of functionality, no matter how slick the outer design may be.”

“Apple’s biggest cash cow isn’t impressive for a technology company — it’s more about a business model than actually inventing new things.”

“Apple is a closed system. They insist that you play their game for both hardware and software.”

[Apparently I didn't make it clear enough in the first go-round of this that these things are what Apple's detractors say.]

Oh-by-the-way, Apple just posted terrific quarterly returns. If you had had the foresight to buy $1,000 of Apple stock at the start of 2005, it would be worth $6,184 as I write this. (Over the same period, $1,000 invested in the S&P 500 would have turned into $901.)

The best quote from that Dow Jones story (just linked) on Apple’s great quarter:

“What it confirms to us is Apple’s proprietary competitive advantages and that customers value Apple products greatly and believe its premium is more than justified,” [Kaufman Brothers analyst Shaw] Wu said.

As a result, analysts are hesitant to transfer Apple’s strong numbers to other electronic makers.

Durn tootin’. Apple’s not a bellwether for other companies; it’s a company that makes its own weather.

Consider that this is true even in the face of an economy that has stymied many consumer brands.

[The detractors can cry about Apple's prices etc. all they like. I'm sure Apple doesn't mind.]

Now, what if we all set aside our complaints about how bad the economy is, about how we can’t be expected to compete toe-to-toe with Company X, about how our industries are different from Apple’s (or Amazon’s, or Cisco’s, et al.) . . . and then we set about the task of making our companies into businesses for which an Apple-like premium is justified?

What would happen then?

~

ADDENDUM: Here’s a story on the same theme from a different industry:

• 22 Magazines Are Actually Kicking Butt In 2009

The money quote:

What’s Meredith’s secret to surviving and thriving in such a tough environment?

Patrick Taylor, also of Meredith Corporation, says these titles “do a good job of building their brand” — especially on the Internet.

He says that by creating and maintaining easy-to-use websites, magazines create more exposure to their title. At the same time, they open up another avenue for ads and ways to sign up subscribers.

Simple, right?

~

UPDATE, an hour later: Early comments made it clear that the first version of this was overly subtle, so I added the sentences within brackets, plus quotation marks around the title and opening lines.

Are you getting enough feedback? How detailed is it?

One of the key premises of “deliberate practice” is that its practitioners — think Tiger Woods or Yitzhak Perlman — thrive on continuous, fine-grained feedback. It’s not enough for Woods to think that he hit a bad shot, or for Perlman to think that a phrase of Bach he played wasn’t fluid enough. They want to know exactly what went amiss so that they can improve it.

(If you’re new to the topic of “deliberate practice,” you might want to start here.)

Hard as it is for anyone to perform at the level of Woods or Perlman, in a sense those two men have it easier than many businesspeople, who often don’t know ahead of time what their feedback is going to look or feel or sound like. For many people in business, feedback isn’t nearly as easy to discern as a sliced 3-iron or a flatted quarter-note.

Sure, sometimes you can tell when you blow a sales call. You can tell when the prototype of your new product doesn’t work. And you can certainly tell if you miss a revenue number. But do you know why?

We’re often left to guess. We pick up all the messy pieces and try to figure out what went wrong, even though we often don’t know — can’t know — all the factors in play.

Given these realities, we may never be able to enjoy feedback as instant or granular as musicians and athletes get. So what do we do? What feedback can we get? And how can we put that feedback to use?

I have some ideas of my own that I’ll lay out in a separate post. But right now I’d like to round out my thinking about this by hearing from you:

What do YOU do to collect and use relevant feedback in YOUR work?

~

Photo by Marcin Wichary, used under a Creative Commons license.

My agenda for today includes a few hours of driving on the stretch of I-35 that connects Austin to Dallas, where I’ll spend the next two days at the Inbound Marketing Summit. (If you’re there, please find me and say hello.)

I’ve been doing more traveling for work lately, experimenting as I go with different approaches to maintaining (or even increasing?) my productivity. But now I want to tap your brains with some informal poll questions so that we all can benefit from our collective experience as business travelers.

So, my hearty road warriors . . .

• How do you stay productive when you’re traveling?
• What pieces of technology do you rely on when you’re traveling?
• What are your key sources of information on the road?
• What types of work can you not do on the road — and what types can you do better on the road?
• How do you evaluate whether a particular piece of business travel is worth it?
• What’s your best advice for someone taking on a lot of business travel?

Please, friends, educate me (and each other!) in the comments thread.

~

Photo by skez, used under a CC-Share Alike license.

My college classmate Michael Webber is now on the faculty of our alma mater, and he’s been writing up a storm over the past few years in support of innovative ideas for the energy future of Texas, the United States, and the world.

In this Texas Monthly article (free registration required), Michael lays out several pro-business, pro-environment, non-Flash-Gordon-esque ideas that could move Texas away from its position as the country’s top contributor to global warming, and make it instead “the leader in reducing air pollution and greenhouse gases.”

Green Star State

What I like so much about the article is that Michael has focused on non-partisan approaches that would use limited government activity (sometimes simply in the form of getting out of the way) to open the door for waves of entrepreneurship — something that Texas has always had in spades, and especially in the energy sector. One passage makes this point especially well:

Contrary to the fears of some politicians, our incipient greenness has not been bad for business. The clean-technology sectors are booming, creating jobs and revenues in many locations that needed them badly. But we’ve barely begun. Texas used its natural gifts to become the leader of the world’s energy industry, and we can once again use them to lead the green energy revolution. Just as we were blessed with the nation’s greatest allocation of oil and gas, we have also been graced with the nation’s greatest collection of renewable resources. Arizona and Nevada have the most sun, the Dakotas have the most wind, and Iowa is the most prominent supplier of corn ethanol. But Texas has the most combined wind, solar, and biomass sources of any state. We can make a lot of money putting these resources and other clean energy capabilities to work.

The piece goes on to give details on everything from underground carbon sequestration to algae-based biofuels. If you have any interest — even a purely commercial, non-environmental interest — in the future of alternative energy, it’s well worth a read.

~

Photo by cjc4454, used under a CC-Share Alike license.

Don’t own one, but Amazon’s Kindle certainly seems like a nifty machine (especially when you do things like this with it). But the price tag on the new Kindle aimed at the education market has earned the product plenty of pans in the early going.

Given my earlier views on the subject of dedicated e-book readers versus multipurpose gadgets like the iPhone (see links at the bottom of this post), you won’t be surprised that this item from ZDNet’s Between the Lines blog caught my eye:

• Amazon Kindle’s $489 price tag makes iPod Touch a better buy

The concept of the Kindle is great, but it’s highly limited in certain ways (connectivity, format of books, etc.), it’s expensive, and it doesn’t do nearly as much — or have nearly the storage — of competing products like the iPhone and iTouch.

Will people read books on a handheld electronic device? That question has already been answered with a resounding Yes, and I can’t see that trend doing anything but grow in years to come. But I doubt the Kindle — at least as currently configured and priced — is the platform where very many e-books will be read.

~

Related posts:

• iPhones and e-books: sometimes I DO predict the future.
• Is the iPhone the answer for e-books?

~

Well, it’s happened at last: sales of Nintendo’s Wii are finally slowing down:

• Bloomberg: Nintendo Forecasts Miss Estimates as Wii Sales Slow

Mind you, the company is still projecting an operating profit of $5 billion for the fiscal year that ends 10 months from now. Not bad for missing estimates in a dismal market.

~

Related posts:

• The Nintendo Wii: Hitting its way into the Hall of Fame.
• The Wii little dragon-slayer of the video game industry.

~

Chuck Salter wrote a typically smart take on some of the technological advances in American medicine in this article:

The Doctor of the Future

It’s recommended reading if you care about health care. I’ve met Chuck and admired his work for years, so don’t take what I’m about to say as a criticism of him or his article.

He first points out some of the key problems with medical care in the United States: “Although we have the world’s most expensive health-care system, 24 countries have a longer life expectancy and 34 have a lower infant-mortality rate.” Then he explains how new generations of both doctors and technology are helping to address those problems, and how the “ability to expand and harness knowledge . . . makes cutting-edge information technology such a powerful driver of the emerging health-care revolution.” The article is interesting and well-reported, and it’s not Chuck’s job to go into every aspect of the health care equation in this country — which, you may have noticed, is complicated.

But as you and I think about addressing problems, we ought to be leery of putting too much emphasis on new technology to get us out of old problems. This applies just as well to great big problems like health care and climate change as it does to smaller ones like, oh, declining cash flows or increasing employee turnover in your own business.

Mind you, I like my high tech, and indeed I spent several enjoyable years covering it for Hoover’s, but it’s a trap to focus on technological solutions to the exclusion of behavioral ones.

Here’s what I mean: the advances that Chuck is writing about — things like social media-enabled telemedicine and robot-assisted surgery — clearly can do wonderful things for American medicine. But it wasn’t the absence of these things that led to the problems we face. We’re not 35th in infant mortality because we lack technology or money; we’re 35th because we haven’t behaved as smartly as (at least some of) the 34 countries ahead of us.

If you’re umpteenth in your industry, it’s probably not strictly because your technology is poor. It comes from a thousand little and big things that have compounded together over the years to render the whole less than the sum of its parts — just like the American health-care system.

Now, set aside your pipe dreams of technological fixes. How can you BEHAVE differently this week to put yourself in a better position?

~

Photo by kokopinto, used under a Creative Commons license.

Here comes the Sun . . . but why?

Yesterday I spent a good chunk of time talking to two of my Hoover’s colleagues — Josh Lower, who has covered Sun Microsystems throughout this decade, and Seth Shafer, who has done the same for Oracle.

Unless you spent the day sequestered in jury duty or something, you’ll know we were talking about Oracle’s proposed acquisition of Sun, which has been all over the business headlines.

Several parts of the deal’s logic seem clear:

• Oracle adds Java and Solaris to its software stable. Check.
• Databases! Get yer databases here! Check.
• Oracle has been great at integrating big acquisitions, as another colleague, Jeff Dorsch, pointed out earlier. Check.
• This moves Oracle beyond “mere” competition with SAP, and puts it right in the data-center wheelhouse of Hewlett-Packard and IBM. Check.

The lingering question for all three of us:

What makes Oracle so sure it can integrate Sun’s hardware units into its own software business?

All of us have been watching the tech sector long enough to understand that “Larry Ellison’s ego” could be a sufficient answer to this question. Still, that would be a pretty scary answer, considering the size of the acquisition.

Seth raised the point that Oracle could come out looking pretty good regardless of what happens with Sun’s hardware units. If they never fit, Oracle can blame the economy — or say that the Sun units were in worse shape than anyone realized, or that Oracle realized they could get more value out of them by selling them to other hardware companies. But if the integration does work, then Ellison looks like a wizard for pulling off something that no one else even imagined.

Or maybe there’s a reason no one else ever imagined it.

Your thoughts?

~

Photo by cat’s_101, used under a Creative Commons license.