Turning Our Data Sights Outward

A few weeks ago, Christopher Ahlberg, CEO of Big Data startup Recorded Future and founder of the visual analytics software firm Spotfire–now part of Tibco–said something interesting to me. Reflecting on his company’s approach to Big Data, he said, “It seems to me that we have squeezed all the juice out of the internal information. Maybe it’s time we focused on the whole world of external information.” That’s what his new company does; it focuses on analyzing events, people, and predictions on the Internet.
While I am not sure I fully agree with Ahlberg—I’d argue there is still some juice in the internal information orange—I do think he’s onto something. In Big Data and analytics in general, I think emphasis is shifting to external information. It’s increasingly the best source for what your customers are thinking, what’s happening in your supply chain, and the relevant risks in your company’s geographical outposts.
Of course, Ahlberg and I are not the first to feel this way. One of the first was Peter Drucker, who in a 1998 Forbes ASAP article (sorry, no online version) decried the fact that most information systems were focused on internal accounting data, and suggested:
“They [the information systems] have aggravated what all along has been management’s degenerative tendency, especially in the big corporations: to focus inward on costs and efforts, rather than outward on opportunities, changes, and threats… The more inside information top management gets, the more it will need to balance it with outside information – and that does not exist yet.”
Now, with Big Data and external-facing analytics, it is beginning to exist. I wish we could ask Drucker what he thinks about it.
In the Big Data world, it’s no secret that much of the data in question is external. Whether one is addressing Internet data, human genome data, social media data, “the Internet of Things,” or some other source, chances are good that it doesn’t come from your company’s internal transaction systems. The exceptions to this pattern are most likely to be in the telecommunications and financial services industries. They both have vast amounts of unexploited internal transaction data. Even there, however, internal data can often be profitably supplemented with external data.
For external data to become embedded into decisions, products, and services, many managers will have to change their mindsets and habits. They’ll have to regularly survey external sources of data to see what might be available and how it might support their organizations. They’ll have to determine decision rules and thresholds for external data: when does a brand sentiment monitoring application that’s trending downward trigger a need for action? When should concerns about a supplier’s supplier make us seek a new supplier? When is there enough political risk to evacuate our personnel? Well-managed firms are pretty good at knowing when to take action on internal data, but with external data it’s much easier to just sit back and watch.
The other necessary capability with external data is to build ecosystems of data suppliers. Some industries, like consumer products and pharmaceuticals, are already good at this. They don’t get direct data on what their consumers buy, so they have to purchase it from third-party syndicators like Nielsen, IRI, and IMS Health. Companies like Procter & Gamble and Merck have gotten very good at both partnering with and applying pressure to data suppliers. Other firms will have to do this too.
We may also see the further rise of “data clubs” in which companies who furnish data to a cooperative can get some back in exchange. IXI Services, a division of Equifax, is one of these. Banks supply information (at the zip code level) on their customers’ assets to IXI Services, and they can get back data on non-customers’ assets. Factual, a big data collection startup, is doing some of these types of deals as well.
Emphasizing external data will feel like a new world for many companies and managers, but it will also be a better-informed one. There is already external data out there that could better inform your decisions and actions; the time to start using it is now.

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