Big Brands Meet Big Data. The Newest Innovator’s Dilemma.

Marc Parrish VP, Customer Retention & Loyalty Marketing, Barnes & Noble

Big Data is moving too fast for Big Brands.

Source: Google Insights News Search This poses a great risk to the world’s great retailers.

They don't pivot…

…or move quickly enough to take advantage of the astounding amount of customer information that's becoming available. Most brands are sticking with their everyday practices of data management and consumption.

Meanwhile, Data is exploding

Source, IDC

Percent Generated By Consumers (making it incredibly valuable)

Amount of Data captured, stored and replicated

The Innovator’s Dilemma Well-managed companies often fail…

…. because the same management practices that made them industry leaders also make it difficult to assimilate the disruptive technologies. In the end it allows others to steal their market from below.

0

5

10

15

20

1 2 3 4 5 6 7 8 9 10

Sale

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Time

High Margin

Medium Margin

Low Margin

Disruptor

Two Types of Innovations Sustaining

• Improve performance of established products

• Meet demands of mainstream customers in major markets

• Products vary in difficulty, cost, time to market, etc.

• Established firms

Disruptive • Generally underperform

established products in mainstream markets

• Have new features that fringe or new customers value

• Cheaper, simpler, smaller, more convenient to use

• Entrant firms

Example (1910)

Sustaining Disruptive

If I had asked people what they wanted, they would have said faster horses. -- Henry Ford? } }

ford cars manufactured 10,000 1908 472,350 1915 933,720 1920

Newer Example (1955)

Sustaining Disruptive

Living Room Stereo $299

Transistor Radio $80

($1999 today) ($699 today)

Newest Example(s) (2000)

Sustaining Disruptive

Newest Example(s) (2005)

Sustaining Disruptive

The Yellow Pages Response

Unsustainable….

Clearly, manipulating data well can reap benefits, and avoid the grim reaper.

So…..what to do in this scenario?

• Huge Amounts of Data

• Dramatically falling prices – Cost to store data in

2011 is 88% cheaper than in 2005.

….. Spend less, get more?

No! Spend more, and get greedy!

Source, IDC, EMC

Why is Big Data so difficult for Big Brands (and others) to consume?

• No skill set to get inside it, absorb it, analyze it, mold it

• No democratization of data across the company that allows business owners to incorporate the data into their plans

• They don't full grasp how Big Data can be a competitive advantage!

What is the Risk? • As storage prices drive to a commodity -- the

inevitable consequence of technology -- retailers will increasingly need to compete on knowledge of their customers, which Big Data provides.

• Open APIs & Social Media makes customer preferences open to all, so disruptive competitors who can offer better customer insights will emerge (quickly!) and steal your customers….

• This is “personality-based disintermediation”.

The math that creates innovators (with anxiety)….

Source, IDC, EMC

Source, IDC, EMC

Source, IDC, EMC

Source, IDC, EMC

It will be the difference between merely sustaining, and adopting disruptive innovation.

The Big Data Gap …

It’s common to all retailers, and easy to overlook. The faster you close it, the more opportunity you find.

It’s progress or bone pile.

Thank You

Marc Parrish linkedin.com/marcparrish mparrish@book.com