How Big Data Can Drive Strategy

Strategy illustration by the Hiking ArtistStrategy is a funny old word.

Although it’s bandied around a lot, almost everyone has a different meaning.

If asked, for example, what a general’s strategy is in war, most people would say, “It’s to beat the enemy and win.” But surely apart from traitors and the deluded, that is every general’s strategy.

In business, there is similar confusion. So, finding myself thrown back in to strategy development, it seemed like a good idea to brush up on the meaning of the word before going any further.

A seminal, and very wordy, definition came from Kenneth Andrews in 1971:

“Strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it tends to make to its shareholders, employees, customers and communities.”

I had to read that a few times, but stripped down, it looks like, “decisions that show a company’s goals, its plans to achieve those goals, where the company will compete, what kind of organization it intends to be, and how it will add value.”

After doing that, I found an even shorter definition at the Strategy+Business website:

The result of choices executives make, on where to play and how to win, to maximize long-term value.

So far, so dry.

That’s why examples help. One came yesterday at the MBA Association of Ireland’s annual conference where Rob Reck was speaking on Big Data.

Principal Analyst at Paddy Power (@PaddyPower) a €5.7 billion ($7.8bn) gambling and gaming company, Reck said data has been used to first test, and then differentiate, services in the market place.

The UK-based Zoopla (@Zoopla), for example, collected data on house prices and released it. This turned a real-estate listings site in to one with a lot more value to visitors.

Even though the initial data release was incomplete, Zoopla figured users would correct any errors they found. This strategic move helped set them apart in the market, Reck said.

“They took a decision to do that and not just be an advertising company for real estate,” he said.

Illustration courtesy of the Hiking Artist on Flickr.