Many businesses built by today’s hugely successful serial entrepreneurs such as Elon Musk rely heavily on big data and those who know how, can use it to their advantage, says our business expert Bernard Marr.
Thanks to technology such as artificial intelligence (AI) and big data, today’s entrepreneurs have a leg up on their colleagues from the past (or those stuck in the past) who had to rely on their gut feelings to know if a decision was a good business move. The surge of data available today doesn’t guarantee success in business, but it does provide a lot of good insight on what processes work, what customers want or respond to, and even how to price goods and services. Data and AI can accelerate the success of entrepreneurs and, as many serial entrepreneurs have proven, success builds on success and makes it easier to begin another venture. As we move further into the data age, ‘trusting your gut’ is no longer going to be viable for those that want to succeed in business.
Age of information
Currently, we’re in the perfect data storm. The amount of data is exploding exponentially (10 times faster than traditional business data), exceptional tools to analyse data are being created and the costs to collect and store data are decreasing. Businesses and entrepreneurs who figure out how to use data to determine what action they should take in their businesses will be the ones who get on the fast track to success while leaving those who cling to the past behind.
Using data in ways others haven’t
What do all data billionaires have in common? Whether it’s Reed Hastings of Netflix, Travis Kalanick of Uber, Brian Chesky of Airbnb or any number of other data-driven billionaires, they have all figured out how to collect, analyse and use data in new ways to build their empires. Data is this economy’s gold rush, and those who access it first and use it to create new and wonderful products and services will be the ones to enjoy the riches. While data is not quite like a crystal ball, it can certainly identify trends and help steer budding entrepreneurs to what is most likely to drive success.
What makes data so important?
Today, entrepreneurs know more about their customers than ever before. What they like, what they don’t, issues that are important to them and how they spend their time. When those preferences switch, big data allows business owners to recognise it. The quicker a business adapts to what its customers want, the better business will be. What used to be impossible or take impossibly long to figure out, is now possible by analysing the data we collect every day.
Data can be manipulated, but it doesn’t fall prey to influences, prejudices or bias like humans can. If you want to get the most accurate information, always look to the data first. Referencing what the data tells you gives you a head start from your competitors who might be relying only on forecasting and predictions made by humans.
Companies who use data effectively can find cost savings and ways to make operations more efficient. Running a leaner operation leaves more resources available to create the next big thing while also making your current operation very attractive to potential investors or buyers.
Our current data obsession will continue. As new analytics tools are added, businesses will become better at uncovering insights from the data and leveraging it for their competitive advantage. If you want major profits and sales, there is no choice but to dedicate yourself to building a data-driven culture.
Today’s billionaires used data effectively to launch multiple businesses
The businesses built by today’s serial entrepreneurs and billionaires such as Elon Musk rely heavily on data to give them an advantage and help to build highly profitable—and marketable—companies. Once an investor is interested and willing to buy an entrepreneur out, such as in the case of eBay purchasing PayPal for $1.5 billion and leaving Musk with about $170 million after selling his stock, that money can then be used to create another business. As each business builds and increases in value, there’s more money available to invest or create a new business after each subsequent sale.
Big data can also accelerate failure and allow entrepreneurs to get out of a losing proposition quickly when the data says that the current endeavour isn’t responding well. As you will find in the CVs of most successful entrepreneurs, they have failed in business. The faster you can fail, the quicker you can build a successful enterprise.
Data is the oil that fuels our economy. Even though many entrepreneurs are making fortunes by building businesses on data as their product, service or differentiator, every business can leverage data to gain a competitive advantage even if their main product or service doesn’t revolve around data. Food-tech start-up It’s Fresh uses data for proof that their product really works and family butcher. Pendleton & Son uses data to better understand and serve its customers.
Big data and artificial intelligence allows today’s entrepreneurs insights that were only a dream in the past. The entrepreneurs who leverage those insights the best will be the ones to enjoy the largest success and be in a position to keep innovating and building new businesses.
Tell us how you make the best use of data in your business in the comments below.
Find out more about our business insurance