Ignore Your Business, Rake In The Profits
Want to uncover interesting ways to drive value from data? Most organizations focus primarily on internal opportunities that support their business, such as understanding customers better, determining how to more effectively price and promote products, or figuring out how to make the supply chain more efficient.
These are valuable, but in recent months I have seen a new, recurring trend popping up across industries that I believe is going to soon become quite common: Look for ways to provide value to external, third party stakeholders through analysis of the data that your organization initially collects just for itself.
This trend is about totally ignoring your own business. Don’t focus on your customer, your products, or your supply chain. Instead, take a step back and think about how the information that your company is collecting might be of value to third parties who may have nothing to do with your core business. Privacy considerations must be taken into account, of course, but in many cases adding value for a third party requires only aggregated data that doesn’t raise privacy issues.
At first this sounds a bit radical, but upon further reflection it doesn’t seem like such a stretch. A few examples include:
A cellular company leveraging its customers’ GPS data in aggregate to provide traffic status for a traffic or map application
A financial institution analyzing card purchases to provide more accurate measures of consumer-level market share to manufacturers and retailers
A farm equipment manufacturer leveraging sensor data and farmland yields to develop better estimates of the potential yield of land for investors
In each of the above examples, internal data is analyzed in a way that provides no value to the organization itself. However, the analysis does provide value that third parties would be more than willing to pay for. The data required was collected for internal purposes initially and is certainly still used for internal purposes. However, as analytics continue to become strategic, revenue generating endeavors, it makes sense to look for ways to add completely new revenue streams. Put another way: can your organization get into the data and analytics as a service business?
Note that I’ve discussed looking for unexpected value in data at other times as well. However, the context then was unexpected internal value, not the concept of unintended external value.
As outlined in “The Amazon Whisperer” from Fast Company, one company has built its entire business model around this concept. The fascinating article details a unique and different way of building a business. C&A Marketing studies customer reviews on Amazon and looks for mentions of product combinations that don’t exist. For example, multiple buyers of a waterproof radio mention in their reviews that they wish there was a rechargeable, wireless version to go in the shower. Once identifying a product gap, C&A then manufacturers exactly what Amazon customers are asking for. C&A is now a nine figure business!
What is most interesting to me about C&A Marketing is that they don’t stick to a specific type of product. They pursue any opportunity where there is a product gap not being served by the larger vendors. In traditional retail, it wouldn’t be possible to get the distribution and brand recognition required to succeed. However, a key quote from the article is, “On Amazon, the consumer doesn’t look at a brand’s full line of products; she looks at Amazon’s full line, meaning a tiny company with one [product] can compete against anyone.”
“The Amazon Whisperer” example is a little different in scope than a large organization using its own data to find new external opportunities. However, the mindset is similar. It is about stepping outside your own view of the world and what you were thinking of offering to the world and instead looking at what the world wants. From the conversations I’ve had with clients, I am convinced that some of them are going to make quite a bit of money in very unusual and unexpected ways by following this path.
To get your organization heading down the path, I suggest a very simple starting point. Bring together a few people for several hours. Bring an inventory of the various data sources your organization has access to. Then, brainstorm ways that the analysis of that data can be of value to anyone except your organization. Don’t talk about understanding your business with the data, but rather talk about what opportunities the data can support for others outside the organization. You might just find some very intriguing ideas to pursue.