Establishing barriers around information limits new market opportunities.
Why market barriers are counter productive
In the early days of the IT industry, companies established multiple technology barriers to prevent competitors from penetrating their customer bases. A customer’s mainframe decision used to dictate the choice of operating system, so-called middleware (such as database and messaging systems), applications software and data networks.
Competitors were blocked because they could not offer compatible products — they did not have access to the technical information necessary to do so. As a result, market growth was limited for all players.
Beginning in the 1980s, however, the “open systems” movement in computing began to break those barriers down. It began with software portability among different hardware architectures, as exemplified by the UNIX operating system.
It has progressed to the point where today, most IT-related information is available in easily accessed, standard formats that are shared openly. As a result, the technology industry enjoys rapid growth and has shown extraordinary resilience through two recessions in the last 10 years.
Giving customers real-time data analysis and response
It is no surprise, therefore, that technology industry entrepreneurs were the first to understand that markets would change as a result of free, unrestricted access to information enabled by the internet and the build-out of high-speed broadband networks.
In this new world, a constant stream of real-time customer and market data speeding across the network not only requires timely and effective means of analysis and response, but by its very nature it is accelerating change, particularly with regard to what customers want and what they value.
To be successful in modern business, access to real-time market information needs to be matched by real-time analysis and response.
Customers, however, are not passive to this approach and there are still significant hurdles to overcome when dealing with their data — access, costs, security and privacy continue to pose significant challenges. However, where unrestricted access to customer data is achieved, the returns are significant and have the potential to lead a company into new opportunities, new markets and new customers.
Data insights can influence customer behavior
Entrepreneurs have created electronic commerce and new media companies; many start-up companies have focused on new ways to organize access to information. Some have fostered the creation of entirely new bodies of information, which have led to the emergence of opportunities to deliver new services to new customers.
Real-time social networks are a potent example. By tapping into the collective knowledge of their members, these networks have created information and influence that didn’t exist before.
This happened first in e-commerce networks such as Amazon, which recommends new products to customers. Today, this ability to influence behavior has spread to mainstream networks, such as Facebook. Emerging peer groups in these mainstream social networks are now evolving into arbiters of preference for their members1.
Lessons learned
Free, unrestricted access to customer data is one sure way untapped potential can be identified and exploited. However, it requires companies to develop business models that enable them to take advantage of the availability of customer information in ways that were unknown or impractical only a short time ago.
Companies not only have to access and make the information usable, they must know who owns the data and who can use it. For example, they must be attuned to the privacy and regulatory issues and differences across many global and local jurisdictions before tapping into the power of customer information.
A company must create a culture where customer knowledge is primary, and ensure its business model enables it to take advantage of the availability of customer information in real time. This will require financial and operational discipline and flexibility as well as state-of-the-art technologies to identify and respond to information in order to react to changes in customer behaviors quickly.
1 “Can't you feel the interactive about to happen?” Connected Planet, 1 March 2010, via Dow Jones Factiva.
