February 2000. Pets.com, an online pet supplies company, made its Initial Public Offering on the US stock market. Shares began trading at $11 but reached a high of $14. Pets.com were on a roll. In the New Year they won numerous advertising awards for their website, and were ranked number one by USA Today’s AD Meter for their first national commercial. Just 9 months later pets.com was liquidated with a share price of $0.19.
The story of pets.com was part of a wider period popularly termed the dot com bubble, when the phrase “get large or get lost” was a mantra of the times. Many dot com companies like pets.com were able to raise large amounts of money through IPOs without ever having made a profit, or in some cases even earned any revenue at all! When the bubble burst many companies failed completely or lost a large proportion of their market capitalisation leaving investors seriously out of pocket, and wondering what the fuss had been all about.
And now I get the feeling that the same thing is happening all over again. The hype over data and the possible riches it is said to bring can be seen everywhere. Companies are launching head first into data solutions to win the race to harness the power of data. However, by rushing into processes, companies are at risk of losing out in the long run. Here are three reasons why.
1. Companies do not know what they want from their data
Companies are tumbling over themselves in the pursuit of data, but just putting a data system in place can gain little if it is not aligned with the organisation needs and wants. Data on its own is useless, especially if you collect the wrong data.
2. Companies are making short-sighted investments in data systems
Because companies are rushing to get data rather than taking the time at the start to think about the overall process, they are ironically taking longer and more expensive routes to get to the benefits data systems can bring. Many companies are going down the data warehouse route which is hugely time consuming and costly, and often unnecessary. Companies are missing the easy wins, and the value add which can be gained quickly from a focused approach towards data.
3. Companies think they can solve all their problems in one go
There is not necessarily one golden path to getting value from data. Companies often place their faith in one system to provide the ultimate solution. However, different needs and thus different data may need specific systems and processes. This requires thought into how your systems speak to each other and integrate in the long term.
Taking your time means you can get the maximum insight and value from your data
The risk is that companies will rush into investments without fully understanding the as is situation, and what is possible in the long run. Like the dot com bubble companies may find themselves down the line with little to show for their investment. This is not to say that there aren’t huge wins to be got from data. As Fred Wilson, a venture capitalist at the time of the dot.com bubble said, “A friend of mine has a great line. He says ‘nothing important has ever been built without irrational exuberance’”.
The point therefore is to step back. Rise above the hype and focus on your needs and wants, not what the market demands. Ask the questions: What do we want from our data? How do we focus? What type of data are we dealing with? How does this relate to our overall strategy? By taking the time to answer these questions you can ensure you get the right data system for the right job and ensure that you are maximizing the value your data has to offer.