Small Firms and Big Data
We all know the power and potential of Big Data to help businesses become more competitive. What is not so widely known, or discussed, is that Big Data threatens to create a deep divide between the have-datas and the have-no-datas. What I mean, is that the big corporations gain advantage by crunching the numbers while small firms are left to stumble in the dark. They are at a disadvantage to big competitors, which have the financial muscle to buy Big Data and expertise to exploit it.
Over the past ten years I have worked with many small firms to help them source and make sense of Big Data. What have I found? ‘To use it’. That is the significant point when it comes to small firms and Big Data. Most often, small firms do not know how to use Big Data to gain competitive advantage. While cost of data is often prohibitive, lack of expertise to exploit the data is as, if not more, significant.
Small firm owner-managers often rely on well-honed intuition to hold their own against data-rich, bigger competitors. In many cases they’re justifiably proud of their competitive intangibles—a gut sense of the market and the flexibility to change quickly. But is this sustainable and what are the implications for the UK economy?
The UK Federation of Small Business states that at the start of 2020, there were 5.94 million small firms (with 0 to 49 employees), 99.3% of the total business. SMEs account for 99.9% of the business population (6.0 million businesses), three fifths of the employment and around half of turnover in the UK private sector. So, this Big Data challenge is a ‘big’ thing for small firms in the UK.
In my experience, once small firms are given access to Big Data the key to successful adoption is integration with their marketing and NPD process. This does not have to do away with their intuitive and flexible approach to understanding customers and competition in their markets. Rather, the data complements these essential small firm attributes.
I have found that successful exploiters of Big Data are small firms that adopt, often for the first time, a considered approach to segmenting and targeting customers and positioning existing and new products to them. ‘Using the data’.
They were then able to envision new product innovations that precisely targeted what customers wanted, rather than reacting to competitors’ actions or pure gut instinct. One small-firm owner-manager said that Big Data had changed their ideas about how to grow its customer base. Another said, “Now we know precisely who our target customer is.”
So, what to do? Governments and Universities can play important roles in bridging the larger firm-small-firm Big Data divide, providing funds and expertise so that small firms can get access to, and learn to integrate it into their marketing and NPD. This is critical, given that COVID-19 is creating profound changes to how customers shop and what they are shopping for. If UK small firms are to respond, and survive, then access to and the capability to exploit Big Data will be key.
Geoff
