Can an effective data strategy help an organization build a sustainable competitive advantage?

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Business people discussing data strategyIn the previous post, I argued that an effective data strategy involved playing both offense and defense. Today, I'll address whether and how such a game plan or blueprint can yield meaningful business results.

After all, that's the whole point of all this data and technology, isn't it?

The short answer to the query in this post is yes. Tech behemoths such as a Amazon, Netflix, Facebook and Google find themselves in such strong positions today for many reasons.* At or near the top of the list, though, are the impressive troves of data that each has collected – and, more important, that they actually use to make business decisions. By way of contrast, book stores and legacy publishers are struggling in large part because they fundamentally don't understand their customers.

That has never been a bigger problem.

Considerations

The longer answer is more nuanced. All of the data in the world and the "perfect" data strategy won't guarantee anything approaching a permanent competitive advantage. As for whether an advantage today is sustainable, that depends on your definition of the term as well as your timeframe. As The Economist showed recently, never before has the long term been shorter, especially with tech firms. Long story short: In an era of Uber, AirBNB, Lyft and their ilk, disruption to established incumbents abounds.

This begs the question: How can an organization make its data – and related strategy – as sustainable as possible? Consider the following factors:

  • Be agile. The need for speed has never been more pronounced. Organizations that adopt a "set-it-and-forget-it" to big data and data management are very likely to miss the boat on key opportunities.
  • Recognize the inherent limitations of planning. Dwight D. Eisenhower said it best: "Plans are worthless, but planning is everything."
  • Embrace new tools such as Hadoop to easily incorporate new data types and sources. This isn't simply a matter of buying a new server or repartitioning a relational database. (I'll be addressing this in more detail in the final installment of this series.)
  • Be paranoid. Revisit your strategy on a regular basis. An untouched five-year plan today is about as valuable as a bag of hammers. What's more, keep your data close to your vest. This is exactly what AirBNB is doing by refusing to share meaningful renter information with regulators. (Ethically, I have a problem with this, but the data strategy is spot-on.)

Simon Says: There is no debate here.

Data may or may not be the new oil, but there can be no debate: An effective data strategy can absolutely help a company build a sustainable advantage. Heed the advice in this post and, all else being equal, your organization will reap bigger rewards.

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What say you?

* Critics such as Robert Reich believe that they're too powerful, but that's a conversation for beers one day. For my part, I find the use of the term monopoly here to be misguided.


In the final post in the series, I'll discuss where Hadoop fits into a data strategy.

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About Author

Phil Simon

Author, Speaker, and Professor

Phil Simon is a keynote speaker and recognized technology expert. He is the award-winning author of eight management books, most recently Analytics: The Agile Way. He consults organizations on matters related to strategy, data, analytics, and technology. His contributions have appeared in The Harvard Business Review, CNN, Wired, The New York Times, and many other sites. He teaches information systems and analytics at Arizona State University's W. P. Carey School of Business (Department of Information Systems). He also runs 5marbles, an Agile software-development shop.

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