Why does it seem to be so hard for established companies to build ancillary big data and analytics businesses? Aren’t the rules similar to those for building any new business?
First you explore prospective customers’ needs, assess your current and desired assets and capabilities, and frame up realistic aspirations. Then you test, learn, and tweak until you have a business and execution plan you are comfortable with. You finally obtain funding and resourcing and execute on it with measurable targets. If you can do it for your core business, logically you should also be able to do it for your new data and analytics business, right?
A number of companies have been successful in the opportunity assessment phase and the execution planning phase. Unfortunately, many have fallen short in truly monetizing their aspirations.
So what’s missing? The short answer is people—the right people.
It sounds obvious, but many organizations fail to realize their potential either because they glaze over this truth or because they feel they already have the right people in place to execute successfully.
Harvard Business School professors Bill Sahlman and Howard Stevenson, who developed the POCD (People, Opportunity, Context, Deal) framework for evaluating an entrepreneurial venture, continually stress the importance of having the right people because "without the right team, none of the other parts really matters."
So in this context, what are the characteristics of the right people? The right people are the ones that operate in what I call the "Sweet Spot of Execution."
If you play tennis, you’ll know the "sweet spot" is defined as the area of the racquet where the maximum response is achieved for a given amount of effort. It’s usually near the center of the racquet, and it feels great. If you hit the ball near the frame at the top or bottom of the racquet head, it vibrates and can hurt your arm. It’s even worse if you hit off the sides. A good tennis player hits a high percentage of shots in that sweet spot.
Similarly, the right people to build a new big data and analytics business are the ones that are able to operate in the "Sweet Spot of Execution." Consider the Venn diagram below (in the form of a tennis racquet). I have found the "Sweet Spot of Execution" to be at the intersection of the four circles, where the right people—the leader or the overall team—have struck a balance between required execution skillsets and execution culture.
If you're trying to build a data and analytics business, it's clear you need to have a leader with data and analytics expertise—but which specific skill sets should this person have?
At the most basic level, the leader of this effort should have an intuitive feel and level of comfort with mathematical algorithms and statistical analysis. He may not necessarily have a Ph.D. in Applied Mathematics or Statistics, and he may not be able to create models and algorithms, but he should certainly be able to look at numbers and statistics and be able to interpret them.
The leader should also love to solve problems, with strong critical reasoning skills and an ability to form hypotheses that can be rapidly tested and iterated—much like the workflow of scientists and management consultants. And throughout all this, the leader should be able to step back from the big data and see the big picture, with a big dose of common sense. Any recruiting activity to find this leader should focus heavily on testing and verifying these capabilities with appropriate case studies and projects.
It’s not enough to only have expertise in data and analytics. One must also be able to have expertise and a track record in building new businesses. There has to be a balance of execution skill sets in both arenas.
Consider the example of a multibillion dollar organization that staffed a dedicated big data monetization venture with veterans from its IT and Strategy departments of its core business. They were put in key roles but had never been in a business-building leadership position, and they did not have the functional data and analytics skill sets described above.
In typical big company fashion, the roles were designated to be career development roles. This would have worked better in an established, core business environment—not in a growing business environment. Choosing an industry expert—perhaps from outside the company—who also had new business building experience would have been a more appropriate choice.
Large companies generally have strong corporate cultures, so the right people need to know how to navigate through the core business processes and political interests. However, they also have to exhibit "out of the box" entrepreneurial thinking and challenge established methods and behaviors.
It’s another balancing act, and success depends on being able to operate seamlessly with both mindsets. Consider the above example of the large, process driven organization and imagine it was staffed with corporate conformists. The leader decided they would benefit from having a different mindset and recruited a senior maverick—someone who happened to be an industry expert on big data and analytics, but was culturally very different.
The intent to broaden the team mindset was good, but it backfired because the cultural divide between the maverick and the conformists was extreme. Particularly in the beginning, when the venture was most fragile, there was miscommunication and some mistrust.
Over time, the situation got better as they began to understand each other more. However, many of the maverick’s initial ideas were subtly sidelined, resulting in siloed initiatives. In this case, both cultural mindsets were represented, but by camps that were on the two extreme ends of the spectrum.
The leader might have avoided this by choosing a team that has the flexibility to work productively in an entrepreneurial environment, while also dealing with the corporate requirements and processes.
So, back to the original question. Why does it seem to be so hard for established companies to build new big data and analytics businesses? Because getting the perfect combination of skill sets and culture is difficult. If the wrong choice is made, it can be detrimental to the overall morale and business.
In particular, finding a manager with true subject matter expertise is hard. When you add on the additional factors—or filters—such as new business building expertise, and the right balance between entrepreneurial maverick and corporate conformist, the talent pool shrinks considerably.
It requires the right level of effort and due diligence to bring on the right talent—and it can be done successfully. As the old saying goes: "measure twice, and cut once."
When you are able to do this, you can expect spectacular results. You are then operating in the "Sweet Spot of Execution."
—Sunand Menon is founder of New Media Insight, LLC and provides innovation advisory, venture incubation, and growth strategy services. Follow him on Twitter at @MenonSunand