JUNE TOP READER PICK Finding real strength in numbers through data partnerships

Register now

First in a series of three articles about the changing nature of data strategy for businesses. Excerpted from Data Leverage: Unlocking the Surprising Growth Potential of Data Partnerships by Christian J. Ward and James J. Ward. Reprinted with the authors’ permission. More data strategy and data privacy articles can be found at Ward PLLC.

If you speak with executives at a multi-billion dollar industry leader and then speak with small business owners, you’ll notice some striking similarities. They all know that there is an opportunity for a more proactive data approach, but they are convinced that they aren’t properly positioned to take advantage of it. This pattern of thinking is common: you’ll see it not only in your own company but also in many of the businesses you deal with. Highly successful companies, even ones with global operations, are sometimes paralyzed by a lack of a data strategy from the top down.

It doesn’t have to be this way. Amazon is one of the most famous turnarounds in this regard. By now, Amazon’s transformation from mere online bookseller to the world’s leading infrastructure-as-a-service company is well documented. Amazon’s AWS cloud services platform has completely changed the way companies manage, share, and integrate data.

Amazon consciously transformed itself from selling copies of books to hosting and powering the websites and platforms of Netflix, SAP, Adobe, Pinterest, and millions of other businesses.

Why and how did they do this? Jeff Bezos drove this transformation with a memo to all of the company’s business division leaders around 2002. The memo is detailed and granular but boils down to the following highlights.

• All teams will henceforth expose their data and functionality through service interfaces.
• Teams must communicate with each other through these interfaces.
• There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no backdoors whatsoever. The only communication allowed is via service interface calls over the network.
• It doesn’t matter what technology they use. HTTP, CORBA, Pub/Sub, custom protocols — doesn’t matter. Bezos doesn’t care.
• All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions.
• Anyone who doesn’t do this will be fired.

There is certainly a lot more that went into this strategy, and the effort to transform Amazon took years, but it was Bezos’s vision to enable data to be internally and externally accessible that created one of the most flexible and successful data partnership platforms ever.

More importantly, the second-to-last bullet above is what created the ability for data partnerships to drive the value of the business forward. By making all data services and datasets externally available, Bezos and Amazon were setting up their data strategy for the future, which is what all businesses should be doing.

Complete Series
Finding real strength in numbers through data partnerships
Understanding the true nature of data and the rights of its subject
Understanding the role and need of a data protection officer

Over the last two years, we’ve seen some form of the following paragraph on a presentation slide at almost every data-focused conference attended. The quote has been stolen, and re-stolen, from a TechCrunch article by Tom Goodwin, in which he said: "Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening."

Each of those companies has created massive value by crafting data partnership approaches and then delivering a value greater than any one dataset could provide on its own. This is data innovation, combined with masterfully executed consumer marketing and user experience. Each one embraced the Amazon vision of open data structures, internally and externally, to power their go-to-market value proposition. In other words, when it comes to data partnerships, the whole is often greater than the sum of its parts.

Uber, for example, has taken a mashup of location data, points-of-interest data, GPS signals from cell phones running its app, driver app signals, weather, and traffic route information to build an incredibly disruptive service. Each one of those datasets existed before Uber, and many of them were available for free or at limited cost from one or more platforms. But it was Uber’s ability to build meaningful partnerships to access the data it didn’t have and then integrate it with internal data that figuratively and literally drove Uber’s growth.

The same can be said for Amazon, Alibaba, Airbnb and even more companies that don’t begin with the letter A. Their approach to data isn’t just a decision on which infrastructure to use or how to speed it up. Their approach is about accessing as much data as possible and using that access to create value.

While your company may not be a global data powerhouse, remember, neither were any of these companies. However, at some point in their existence, they made the decision to have a data partnership strategy, and so should you.

For reprint and licensing requests for this article, click here.