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Big Data as a strategic Tool
Constantiou and Kallinikos (2015) argue that information is the basis for developing a strategy. As Cox and Ellsworth (1997), O’Leary (2013), Zikopoulos, Eaton, Deutsch, Deroos and Lapis (2012 p. 123), George, Haas and Pentland (2014) and McAfee & Brynjolfsson (2012) suggests, big data should be used for better, more accurate and faster managerial decisions. This makes big data an important strategic managerial tool for understanding external environments. O’Leary (2013), McAfee, Brynjolfsson (2012) and Constantiou and Kallinikos (2015) state that is should be the basis for managerial decision and facilitate innovation.
A study conducted by McAfee and Brynjolfsson (2012) conclude that the more data-driven a company characterized itself to be, the better it performs with regards to financial and operational results. It enables companies to analyze environment trends and disruptions enabling them to stay competitive on the market. Henceforth, conclude that decisions based on evidence are better and have a lower risk than decisions based on intuition (McAfee & Brynjolfsson, 2012).
Big data is mainly associated with analyzing the external trends. Obviously, external Information collection is crucial for understanding the surrounding environment of an organization in which it acts in (Porter, 1996). Therefor, concluding that information is an important tool to generate competitive advantage in a fast changing environment (Kaleka & Berthon, 2006, Porter, 1996).
Constantiou and Kallinikos (2015) state that big data have claimed to affect the way organizations view, analyze, assess and address environmental trends. According to Constantiou and Kallinikos (2015) tools have been developed in order to cope with the increasing processing capacity of information technology to develop suitable strategies. Evidently the environment is changing in a fast pace. This means that data needs to be used as soon as it is collected, this in order to maximize usefulness and relevance for what it is intended for (McAfee and Brynjolfsson, 2012).
As Zikopoulos, Eaton, Deutsch, Deroos and Lapis (2012 p. 24) state, big data is valuable in order to understand what customer’s perception is about the organization’s offerings. Hence, giving the organization a competitive advantage. As Porter (1996) state tradeoffs between different internal activities is what makes a competitive strategy successful. In the long run it is impossible for a company to focus on everything. Information on external environments can be a tool for choosing the right activities (McAfee & Brynjolfsson, 2012; Constantiou & Kallinikos, 2015).
Helping the organization to choose the activities customer’s preference. From an external point of view, big data can also be a tool for finding out what customers’ preferences are regarding the competition’s products and offerings (Zikopoulos et al 2012 p. 24).
Looking from an internal perspective on strategy Constantiou & Kallinikos (2015) state that information is needed in order to sustain expertise and internal resources to be efficient. They provide examples of lowering transaction costs with business partners, focusing on internal efficiency. In addition, as McAfee and Brynjolfsson (2012) and Constantiou and Kallinikos (2015) conclude that the risk reduction is a key enabler for successful internal strategic decision making.
Concluding that big data is both beneficial for the effectiveness of the internal environment as well as for understanding the external environment in order to have an competitive edge.
Strategy the Definition
Literature about strategies in business context is rather freely defined, there are several definitions around and there seem to be lack of a standardized definition. Hax (1990) state that a simple definition of strategy is hard, rather it depends on the nature of the organization. However, he further argues, that there are universal validated elements that can viewed as strategic. Reading the literature, it is easy to stumble upon articles that use the strategic concept in a rather inaccurate way. There are for instance peer-reviewed articles that do not distinguishing between competitive strategy and business strategy, for instance Parnell (1997) defines the business strategy as a competitive strategy, and Mithas, Ramasubbu and Sambamurthy (2013) excludes discussing competitive strategy in favor for business strategy when discussing IT investment for competitive advantage. Hence, a coherent theoretical standard needs to be developed and the first step is to define the word strategy.
The word strategy is generally defined by the Swedish Academy’s dictionary as ‘Konsten el. Metoden att föra krig: välplanerat tillvägagångsätt’ translated it means the art or, method to wage war: well-planned approach, the Oxford dictionary defines it as ‘A plan of action designed to achieve a long-term or overall aim”. The word stratos means army and agein means to lead (Cummings, 1993). In summary, it can be concluded that it is the way to act on the market with current resources. Hence, it includes the organizations internal environmental resources. The focus is on how these are used to cope, and take decisions, on the external environment.
1! Introduction
2 Definitions
3! Theoretical Framework
4! Big data’s role for information creation
5! Methodology
6! Result
7! Introduction to the empirical findings
8! Introduction to analysis.
9! Conclusion
10! Reference list
11! Appendix
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Big Data: A Tool for all Strategic Decisions
