Data Overload Can Stunt Business
There is often a sense of mutual envy, or at least mutual appreciation, between startups and big firms. A study last year by the London Business School looked at their different approaches, and found that the startups often aspire to the financial security, brand strength and access to resources the big guys have, while the established firms envy the dynamism, responsiveness and dramatically lower cost structure of startups.
Small businesses know their best way forward is to find unprotected niches, focusing on markets the big guys don’t want or cannot address in a cost-competitive way and trying out new ideas that established firms might find too risky. But equally important is focusing on the way you work and adopting tactics that big companies cannot match.
The Achilles heel of large companies today is a way of working that values deep expertise, careful analysis and systematic decision-making. Big firms are run by accountants and engineers. They have been seduced by big data and business analytics. They have compliance, safety, regulatory and audit functions that monitor their every move.
There is a danger to this way of working. It can lead to analysis paralysis – an urge to keep collecting data, to make sure all risks are resolved, at the expense of moving forward. It also breeds sterile decision-making – a reluctance to take any information into account that cannot be quantified.
As a small business, you have two key advantages. One is the capacity for decisive action. Your ability to focus and act quickly will always be greater than that of your larger competitors. The other is your capacity to act on emotional conviction – on your intuition or belief. Big companies are still in thrall to experts. You have more freedom and can tap into intuition or emotion-based arguments in ways that big firms cannot.
In practice, this means you should:
• Keep any analysis simple and focused. You can cheaply gather basic market and pricing data, and generate simple competitor intelligence in a couple of days. That is enough to get you moving forward.
• Think about what has worked previously. In a world with too much information, it is helpful to develop simple rules to cut through the complexity.
• Hold separate discussions about data collection. Many meetings are a waste of time because the purpose isn’t clear – some people think they are making sense of an unfolding situation, others think they are trying to make choices. Schedule a decision-making session for a later date.
• Use rapid prototyping and market testing. Always look for ways of trying out your ideas on users in a low-risk way.
The twin drivers of business success are decisive action and emotional conviction. A few large firms, such as Amazon and Facebook, are good at this; most established firms are not. As a small company, these attributes are part of your genetic makeup – don’t lose them!
Is data overload negatively impacting your business?
Adapted from an article by Julian Birkinshaw, Guardian Small Business