From 2000 to 2015, 52% of Fortune 500 companies disappeared. Since 1955, the life expectancy of a Fortune 500 company has dropped from 75 to 15 years. We are living in a time full of both change and opportunity.
When my parents were in high school, they bought widgets from the store, companies purchased commodities and value was derived from physical products. In the late 1980s, Bill Gates saw an opportunity. Famously convincing IBM executives that they were right, hardware was the future, he became the world’s richest person by selling Windows and other software. Also rising during that era were consulting services. Together, they transitioned the economy to a focus on both services and products. Steve Jobs moved the needle again in 2001 with the iPod. Solving the friction CD players gave users, Jobs ushered in a consumer-centric economy. Now we have transitioned into yet another new era -- one that's relationship-based. From the friendly barista at our neighborhood Starbucks to Google letting us know where we parked our car, the modern economy concentrates on building relationships with consumers.
While Starbucks has an advantage of multiple touch points in nearly every metropolitan area across the globe, many companies rely on a different asset to build relationships with their customers: data. During the early 2000s, banks and oil companies were the most valuable corporations. Now companies that collect, maintain and use petabyte upon petabyte of data top S&P’s market capitalization list. In many ways, consumers have come to expect contextual ads and smart suggestions tailored specifically to their needs. At the root of this personalization is data. Companies with the most potential to grow and snag market share use data more efficiently than their competitors. Let me explain the steps we followed at Overstock.com and how you can apply them to your own business:
1. Understand The Basic Business Objectives
While it may sound juvenile, you have to start by asking some basic questions centered on the four W’s: Why are we changing? What are we trying to achieve? Who are we solving questions for? When do we need to accomplish this migration? Only once general alignment has been agreed on does it make sense to delve into specifics.
2. Define And Prioritize The Jobs To Be Done
Having come up through product management, I know it is crucial to understand the overarching goal of a project. Leadership should sit down and ask questions such as: What use cases are we going after? Who is an active vs. passive player in the process of collecting, warehousing and disseminating data? How do their needs differ or align? How are we going to prioritize various ideas?
3. Define Your Modus Operandi
First, it is vital to start with problem space, not solution space. Understanding the constraints and the lay the land make implementation much easier. As the old adage goes, “an ounce of prevention is worth a pound of cure.” Coming from the retail industry, I understand the temptation to try and develop everything in-house. The problem is, most companies are not like Facebook and don’t have resources to develop Cassandra-type databases. It is important to have an honest assessment of your strengths and weaknesses, taking into account resource constraints and timelines. Many times, it pays to let the experts in a given field be the experts.
4. Select A Data Vendor And Database Structure
“What? You waited this long to pick the solution?”
Yes, and so should you. Different vendors and structures have different pros and cons. Trading reliability, accessibility and partitioning are topics of discussion best had after goals and use cases are well-established. In addition to use cases, it is important to assess the viability and reliability of vendors. Are they on Round E funding? Has their core engineering team been growing or shrinking? Have they worked with companies at your scale? These are all questions that should be considered carefully.
5. Define Quality And Maintenance Processes
Everyone in the company needs to play by the same set of rules and operate on the same set of principles. Additionally, as new technologies emerge and new features get added to your product, how are you going to update, and who is going to be both accountable and responsible?
6. Management Buy-In
I cannot stress this enough: Change starts at the top. If your leaders are not on board and leading by example, selecting a data vendor and creating a data-driven culture are doomed to fail.
In Q1 2017, the five most valuable companies in the world were Apple, Alphabet, Microsoft, Amazon and Facebook. They overtook the likes of Exxon Mobile, GE, ICBC and Citigroup with a clear data strategy. In our modern world, data is the new currency. It yields insights consumers have come to expect and is vital for any tech company looking to expand.
