In our series Startup Mentality, we aim to deliver content that motivates and inspires those who run startups or aspire to run them – from C-level executives to entry-level staff. Our contributors have lived the startup life. They have persevered through successes and failures, and they are still forging ahead, building businesses and breaking down barriers.
In an age where data is power, it would seem that most of that power is in the hands of massive corporations. One would assume, based on size alone, that start-ups and mid-sized companies cannot compete. In reality, the opposite is true; small competitors disrupt large corporations despite far less access to data, and this disruption is because those companies are more nimble and able to more quickly apply the insights gained from data.
We spoke to some of the data insights experts, and here is what we learned.
Small businesses are better equipped to utilize big data insights
“Although larger companies may have greater access to data, the more crucial question is around what they’re able to do with that data,” says Matt Baker, vice president of strategic planning for accounting software provider FreshBooks.
Baker explains that the size of the data pool doesn’t matter; it’s what you do with it. In fact, less than half a percent of data is ever utilized, according to the MIT Technology Review, and over 60% of all data within an enterprise goes for analytics, according to Forrester Research. Though small businesses have less access to data, studies suggest they’re often in a better position to act on this data.
“According to our research, 54% of small businesses said they make the most out of the data their business generates,” explains Baker. “Startups and small businesses have a huge opportunity to challenge industry giants around making the most of data at their disposal.”
Why corporations are often unable to put their data to good use
By not putting their data to better use, large corporations are potentially foregoing significant financial benefits. According to Forrester, a 10% increase in data accessibility could add $65 million to the income of a typical Fortune 1000 company.
So why aren’t major corporations fighting to better utilize their data? Baker says he saw their apprehension first hand in a previous role as a management consultant.
“I often came across large businesses that were able to access large volumes of market research, customer data, and other types of business intelligence,” he explains. “However, their decision making was slower due to internal bottlenecks around their corporate culture, or their need to get certain stakeholders on board in decision-making.”
Data without flexibility is often useless
While large corporations often have very precise rules, strict parameters and red tape to work around, startups are typically able to react to insights much faster, and implement significant changes much more quickly and effectively.
“Small companies are nimble, and use that advantage to move, experiment and learn faster,” says Joshua Berkowitz, Head of Product for bookkeeping software provider Bench Accounting. “Small companies also don’t have existing business models to defend, which gives them the freedom to try things big companies can’t.
SaaS products allow for democratization of data
Berkowitz adds that the software tools that help organizations sift through and utilize data were once limited to the world’s largest corporations. Today, however, a new generation of affordable software as a service (SaaS) products are enabling companies of all shapes and sizes to collect, interpret and act upon the insights hidden in their data.
“Newer, more accessible analytics tools provide smaller companies metrics and insights traditionally were available to large companies,” he says, adding that metrics like churn, repurchase rates and customer acquisition cost would otherwise take hours to calculate manually, assuming the data was even available. “Now small businesses can understand what’s happening under the hood of their business with SaaS analytics products and a limited amount of setup time.”
Small businesses are putting the data to work
For small businesses looking to better utilize their data, Berkowitz recommends starting with fundamental questions like:
- Who are my customers?
- How much is each customer spending?
- How much does it cost to acquire a new customer?
- Are my customers re-buying or churning?”
“These questions have always been the most important ones for startups to know the answer to,” he says. “Luckily, it is now easier than ever to find them.”
Berkowitz adds that while it’s important to dive deep into the numbers it’s also important not to lose sight of the bigger picture. After all, if startups are unable to make significant, seismic changes based on the data they gather, they lose the biggest advantage they have over their large incumbent competitors.
Insights are at the heart of ISM Connect
Providing data to ISM Connect is at the core of our products. Within our screen networks and our situational awareness products, understanding who’s in a venue or building is imperative to providing real, actionable insights to customers. At our heart, ISM is an data company comprised of data analysts and data experts.
“We provide timely analytics products to customers, both venues and advertisers, around interesting metrics of proof of play, foot traffic and demographics. As we look forward, we want to speed up the data life cycle and provide more accessible and automated insights to customers, which will inform decision making. ” says Brad Soricelli, Head of Data Analytics at ISM Connect.
Jared Lindzon is a freelance journalist and regular contributor to Fast Company and the Globe and Mail.