The Power of Data

In the coming years, those organizations that effectively use their data to generate power for their business will succeed while those that do not will fail. In this blog article, I present a classic example of why this is the case and how and why one business will succeed and another will likely fail. But I am getting ahead of myself, let me backup.

When I was a mechanical engineering student at Ohio Northern University, one of the professors, a Dr. Rider by name, had a sign in his office that read:

Data is data, knowledge is power

Ostensibly, the message to students was that simply having information or data about something doesn’t do you much good but what you learn from it is what really matters. A fine, educationally-minded message to be sure. At the time, of course, I wondered; “If I am going to college to gain knowledge and knowledge is power and power corrupts and corruption is crime and crime doesn't pay then why am I paying all of this money to go to college?” I can’t be absolutely positive, but I am fairly certain that I may have completely missed the intended message as a student, as well as the fact that said message is a derivative of a Sir Francis Bacon quote.

During my tenure as a mechanical engineering student, this concept of power would surface again and again when studying such subjects as thermodynamics, fluid dynamics, heat transfer, etc. The interesting thing about power is that there is a time component to it. So, you expend energy to do work, the faster that work is accomplished, the greater the power that is generated. Thus it follows that those who convert data to knowledge faster are more powerful than those that do so slower. But, I am getting ahead of myself again, let me backup; not chronologically this time, but to the impetus for this article.

Last Friday I was enjoying an adult beverage with one of my coworkers after hours, stop me if you’ve heard this one before... My phone rings. It is my older brother. This wasn’t the typical “Hey, how’s it going” kind of call. No, my brother was calling me to rant.

In the interests of full disclosure, ranting is a time honored tradition in the Deckler family. By our definition, a rant is essentially an overreaction to a seemingly trivial matter, upon which one pontificates profusely.  My siblings and I come by this tradition honestly. In fact, it is most certainly an inherited gene from my father, who is known to handle crises with aplomb but suddenly and inexplicably flies-off-the-handle over the fact that the toilet paper roll was left too low. We’d hear about it for days…weeks even. I was once even banned from the family’s Christmas celebration and verbally berated out the door over a game of Euchre. True story. For those of you not from the US Midwest, that’s a card game. Yes indeed, passions can sometimes run high within the Deckler family over what some might consider trivial things.

This particular time, my brother’s rant was over a bookstore experience. He was literally calling me on the phone as he walked out the door of a, ahem, completely fictitious business that in the interests of avoiding legal woes we will call Books-A-Billion, or BAB!, in what I can only imagine would be described as “in a huff”. Apparently, earlier that day my brother had been on the Books-A-Billion website and found that there were 2 copies of the book he desired to purchase at the local store about 2 minutes from his house. Therefore, he decided to drive directly to the store after work to purchase a copy of said book only to find that they did not have the book in stock at that store after all.

Had things ended there, it is possible that no rant would have ensued. Instead, in a subsequent discussion with a manager, she inadvertently happened to speak these fatal words, “Oh yes, well, the website can be up to two days behind actual stock”. Whoops. And...queue the rant. “Two #$@#’ing days!!” my brother yells to me as he walks out of the store in a huff. “They might was well not even have a @#$@’ing website!! %$!$’ing useless!!. That’s how the phone call began when I picked up the phone. I gleaned the rest of the story through careful inquiry later. As I said, this was not a call for pleasantries. It was a rant.

Now here is where it gets interesting. My brother drives home, all the while ranting to me on the phone, grabs his iPad, goes to Barnes & Nobles’ website, finds the book at a store 20 minutes from his house and lo’ and behold they have it in stock and there is a “Reserve” button. He reserved a copy and planned to pick it up the next day. He then proceeded to continue his expletive-laced berating of Books-A-Billion. Awesome. In the annals of rants, this one was truly one for the ages.

Given that I did not receive yet another ranting phone call from my brother the next day, I can only assume that he was successful in purchasing his reserved copy of "Excellent Sheep: The Miseducation of the American Elite and the Way to a Meaningful Life". I believe that the book devotes several chapters to the fact that the way to a meaningful life does not include telling someone that you have books in stock when, in point of fact, you do not...

Here’s what just happened and why it matters. Books-A-Billion just lost a customer for life, a customer that rightly should be theirs because my brother’s next best option is a bookstore that is 10 times farther away. But my brother will never again step inside a Books-A-Billion store. Believe you me, he told me so in no uncertain terms. I will not repeat his exact terms but, trust me, they were not uncertain and they were most certainly “terms”. So, he is willing to forgo the store that is a mere 2 minutes from his house and will instead make a 40 minute roundtrip because he will never again trust Books-A-Billion. Spending 40 minutes of his time when he knows that he will get exactly what he wants is worth it when the alternative is likely an utter waste of 4 minutes.

This is where power as it relates to data comes into play. If you think about it, both the, ahem, completely fictitious Books-A-Billion and the very real Barnes & Noble have the same potential energy (data). The data is simply the inventory of books at stores. Honestly, I can't keep straight if data is the new oil, or new water, or new Fluffernutter; but for our purposes, data is potential energy. Data represents the potential to do something fantastic and awesome, even if you ultimately squander it because you are; according to my brother and heavily paraphrasing, "an awful, awful organization that deserves to 'decay in perdition'". In any event, both businesses; the one that can "decay in perdition" and the good one, are doing the same amount of work with that inventory data, moving the data from their backend inventory system to their website. However, it is the speed with which that data flows, the time component, that means that Barnes & Nobles is generating more power from their data than is the completely and utterly fictitious Books-A-Billion.

This power manifests itself in many ways, such as earning and keeping customers. At the very least not completely and unreservedly alienating them. And, it  empowers innovations like that “Reserve” button. In contrast, a “Reserve” button makes zero sense if you can’t move the data between systems in less than two days. What would be the point of reserving a book for 24 hours if that time has come and past before the reservation hits the inventory system? Nada.

This is why it is not the data, or the work that the data does but is, in fact, the power an organization is able to generate from its data that ultimately means success or failure. And being able to generate true power from your data begins with a solid data strategy that spells out exactly what data is valuable to the business, why that data is valuable and how best to strategically leverage that data to generate power for the business.

It may, perhaps, seem like an elementary point. Today, big data and predictive analytics is all the rage, but what good is big data and predictive analytics if you can’t even get the basics right? What I meant to say is "the baaaaaaaasics". Honestly, if you can’t get “small data” right, you don’t need big data or predictive analytics. In fact, in such a scenario, I don’t need a single ounce of data at all to make a 100% certain prediction about your business. You will fail.

Perhaps it is coincidence that the Books-A-Billion store that is a mere 2 minutes away from my brother’s house sits in a building that was vacated by the bankruptcy of the previous tenant…Borders. On the other hand, if Books-A-Billion doesn’t fix its data power issue, history is likely to repeat itself.

And, just in case you were wondering, there is a happy ending to the story. I still enjoy Christmas with my family. All was forgiven a few days later. That being said, ever since I have taken extraordinary care at family functions to never, ever trump my partner’s ace…