Big Data: Extending the Business Strategy Toolbox

The business world is rapidly digitizing as companies embrace sensors, mobile devices, radio frequency identification, audio and video streams, software logs, and the Internet to predict needs, avert fraud and waste, understand relationships, and connect with stakeholders both internal and external to the firm. Digitization creates challenges because for most companies it is unevenly distributed throughout the organization: in a 2013 survey, only 39% of company-wide investment in digitization was identified as being in the IT budget. This uneven, disconnected investment makes it difficult to consolidate and simplify the increasing amount of data that is one of the outcomes of digitization. This in turn makes it more difficult to derive insight - and then proceed based on that insight. Early big data research identified over a dozen characteristics of data (e.g., location, network associations, latency, structure, softness) that challenge extant data management practices (Santos and Singer, 2012). Constantiou and Kallinikos' article describes how the nature of big data affects the ability to derive insight, and thus inhibits strategy creation. One of the important insights of this article is how big data challenges the premises and the time horizons of strategy making. Much of big data, while seemingly valuable, does not fit into the recording, measurement, and assessment systems that enterprises have built up to aid in enterprise decision making. And constantly modified and volatile data doesn't easily form into stable interpretable patterns, confounding prediction. As they note, a focus on real-time data 'undermines long-term planning, and reframes the trade-offs between short-term and long-term decisions. While Constantiou and Kallinikos describe the challenges that big data poses to strategy creation, they do not offer insights about how enterprises might ameliorate or even overcome those challenges. Big data is here to stay and every enterprise will have to accommodate the problematic nature of big data as it decides on a course of action. This commentary is an effort to show how big data is being used in practice to craft strategy and the company business model.