No. 1 in the Seven Mistakes Series
This article is a transcript (with slides) of the video.
In 1996 I worked for IBM. Google didn’t exist yet. Yahoo was the search engine of choice. Netscape Navigator was the most popular browser, and whenever we heard the word “cookie” most of us thought of Cookie Monster.
But a Netscape employee named Lou Montulli had just invented the concept of using “cookies” to track users on web sites. Lou was trying to solve a problem that MCI had in building one of the world’s first ecommerce sites. Oh, in 1996 MCI was still a telephone company, and founder/CEO Bernie Ebbers hadn’t gone to prison yet.
Something else happened in 1996 – Don Peppers and Martha Rogers published their book The One-to-One Future. It was a Best Seller. Tom Peters called it the Book of the Year. Inc. Magazine said it was one of the two or three most important business books ever written.
We didn’t know it but Peppers and Rogers had ushered in the era of Big Data. We didn’t call it that, but that’s what it was. When I was hired at IBM in 1995 it was as part of a special team whose job was to develop, market and sell systems and technology for creating highly personalized marketing – the same pitch you’ll get today from the vendors of Big Data.
In those days the kind of pervasive and persistent user tracking we have now was just a gleam in some marketer’s eye. But we were pioneering the concept of mining granular customer data and customizing the marketing experience around it. We just did it with 1996 technology.
For the next 10 years I spent some portion of each year monitoring, consulting on, and tracking developments in the personalization arena – for both print and digital media – right up to and including the emergence of what we now call Big Data.
I say all that to lend some credibility to this: Since 1996 no company has built a sustainable competitive advantage from Big Data. Despite millions spent on selling it, buying it, developing it, and using it there is almost no empirical evidence to support the marketing claims of competitive impact.
Here’s a question: In a field based entirely on statistical analysis of customer data and with a history that goes back well over a decade, wouldn’t you expect to find some robust statistical analysis of how all those Big Data customers have fared with their implementations?
Yet today you’ll have trouble finding even one such study. After 16 years all the vendors of big data and personalized marketing can offer is anecdotal evidence of success.
Now before you think I’m going jihad on data collection and analysis, I’m not. Analyzing customer, transaction and financial data has its value and its place. It’s just that its place isn’t at the forefront of your competitive strategy or as a replacement for competitive thinking or competitive management.
That’s because as fascinating as all this data is, and it is fascinating, all it gives you is a wonderful view from the inside of your company – how you’re executing, how you’re doing on customer satisfaction, how many times the customers are buying, etc. There is no competitive insight there. There is nothing about the forces driving your customers, or about how competitors are reacting to those forces, or about anything else in the outside world.
But because there is so much of it, and because you can move it and sort it and recompile it and control it and look at it 1,000 different ways it can completely consume and distract you from looking out the window at the real world. That’s why I call Big Data a Weapon of Mass Distraction.
Yet the Big Data message comes at you from every angle. If someone hasn’t come to you selling the idea yet, it won’t be long before they do. Big Data is, literally, everywhere. Dozens of books, hundreds of magazine articles. Web videos. White papers. Every sales angle imaginable.
And it’s not just being sold to big companies.
Recently I completed a large market research project where I interviewed senior executives from 10 Fortune 500 companies. All of these companies sell hardware, software, and services to business of all sizes – from Mom and Pop shops to global corporations.
As I interviewed these men and women about their upcoming products and plans each one, at some point, began to talk about what they could do with Big Data – how they could help companies understand their market, build competitive advantage, show them things they didn’t know, and other benefits. It’s part of their plan. Something they’re banking on to make more sales.
When the sales pitch finally lands on your desk, or you read that next big article that makes you wonder if you should hop on the band wagon, here are three things to remember:
- Big Data isn’t new – it’s statistics wrapped in new marketing.
- Big Data isn’t necessarily better – it’s the same data we’ve always had, just more of it and faster
- Big Data can give you a false sense of control while being a distraction from the real forces affecting your market.
Instead of, or at least in addition to, collecting more and more data on your customers do the following:
- Increase the time you spend studying the external forces that affect your market.
- Determine which of those forces is truly relevant to your business and focus on understanding them.
- Collect data on the entities that move and affect those forces.
- Build a framework or model that alerts you when those forces are changing in ways that affect your success.
This is the basis of Competitive Thinking.