Classifying Business Types

Something that struck me when browsing WordNet for types of premises was that shop types (such as toy shop or computer store) are best characterised by the types of goods they sell. Pretty obvious stuff, but it led me to think about how businesses are classified. Common codes such as NAICS or SICS group the types of business in a loose hierarchy e.g.:

AGRICULTURE, FORESTRY AND FISHING
|-.        AGRICULTURE AND HORTICULTURE
  |-.        AGRICULTURE
    |- CATTLE FARMING

One of the key topics of research I delved into at Calaba was in the realms of what we called multidimensional classification (cropping up on the web these days as faceted classification). The key to this kind of classification is decomposition of monolithic classification hierarchies into multiple orthogonal hierarchies. The key example we always used to illustrate this process was a hypothertical Yahoo category hierarchy that ran Sport / Soccer / Italy / Teams / AC Milan - a category for websites about the AC Milan football club. The Teams category is repeated under each country name in the directory. If one wanted to include an English website about the football club, one would have to introduce an English category at some arbitrary point in the hierarchy requiring even more duplication. What we did at Calaba was to split these hierarchies out into their orthogonal components: subject, location and language. The user could browse each axis in combination or independently.

Anyway, the same concept can be applied to business classifications. Separate out the function of the business and the subject of that function. Typical functions might be Retail, Distribution, Manufacturing or Publishing. These are then qualified by the types of products or services that are retailed distributed, manufactured or published. e.g.

<businessType>
  <Manufacturer>
    <product>Cheese</product>
    <product>Butter</product>
    <product>Yoghurt</product>
  </Manufacturer>
</businessType>

The larger the business, the more types of business it performs and the wider the range of products and services it deals with. This scheme is extensible in a distributed manner. When someone invents a left-handed hammer then the various businesses in the tool supply chain can just add it to their descriptions instead of waiting for a government department to add it to their industry classification scheme.

Permalink: http://blog.iandavis.com/2002/12/classifying-business-types/


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