by Andrew White | May 8, 2017 | Comments Off on The Economist Front Page this week: The World’s Most Valuable Resource – Data
I had a great weekend – I hope you did do.
Mine got off to a great start when I spied the title of this week’s Economist: The World’s Most Valuable Resource – Data and the new rules of competition. I dove into the leader and accompanying article with relish (and a good, warm, mug of coffee). Here are a few of the cute lines I spotted in the article:
- “This abundance of data changes the nature of competition.”
- “With data there are extra network effects.”
- “…Google can see what people search for, Facebook what they share, Amazon what they buy.”
And then from the main article:
- “Data are to this century what oil was to the last one: a driver of growth and change.”
- “Most important, the value of data is increasing.”
- “Researchers have only just begun to develop pricing methodologies. Something Gartner, a consultancy, calls “infonomics“.”
- “The fact that digital information, unlike oil, is ‘non-rivalrous”, meaning that it can be copied and used by more than one person (or algorithm) at a time, creates further complications.”
- “And it adds to the confusion about who owns data (in the case of an autonomous car, it could be the caretaker, the supplier of the sensors, the passenger and, in time, if self-driving cars become self-owner in ones, the vehicle itself).”
The article itself is excellent so well recommended. It does a nice job of comparing the previous century and how oil and its “majors” dominated that period, to this century and how the “majors” of the new data-driven economy dominate the current period. The main take-away from the article though is a focus on the lack of a market for which data is traded compared to the growth in markets for oil. So since data is the next big commodity, why is it not traded? This is the question the article spends over half its words on and it’s a good question.
Interestingly, a colleague of mine Alex Linden is quoted in the article. “Trading is tedious,” says Alex. He makes a point and the article goes on to explore the nature of data contracts – many of which you and I sign every day when we find a new web site or purchase a new device. For me there are two sides of this difficult coin:
- Data has value
- Data lacks clear ownership
Even the “data has value” has a few issues not explored in the article. In information theory data has no intrinsic value. The idea is simple: data has value when the access to it changes an outcome of some kind. Thus the change in the outcome, the delta between the original state/outcome and the new, is the value to be realized through access to that data. And such access might lead to action, nor non-action. So the key to valuing data is to gauge the net change in value realized through access to it. But which action do I gauge?
Data can be used in any number of ways. As such, the actions to be gauged could be many, varied, and hard to predict or capture. So in essence the value of data is really quite complicated and it depends on context. However, “infonomics” referenced to in the article, pioneered by Doug Laney, suggests we can at least start with some straight forward models to get a handle on the value side of the challenge. The equations do not purport to be perfect, or even complete, but they can help start valuing data. And if you use the same models with the same assumptions to compare one data to another, even if the actual value is not correct, the differences in data valuations might infer some useful insight worth acting upon.
The other side of of the coin is, for me, the more intractable problem: ownership or more precisely, the lack of enforceable property rights. The article again does a nice job of exploring the challenges here. They are quite easy to demonstrate – e.g. non-rivalrous – but they are difficult to resolve. One key suggestion is that consumers, as in you and me, ought to realize that data we generate has value, and as such, we should not part with it so willingly. If we all shut-up-shop tomorrow and refused to share our data with all and sundry, from websites to travel to shopping to health, much of the so called, “digital economy” would come to a grinding halt.
But at 52, my generation tends to be overly concerned with privacy and ownership compared to those that are in their 20s. Several of the younger generations that grew up not knowing life without a smart phone think we are part of the problem. They don’t see so much of the challenges we talk and write about. So there are cultural and generational differences at work here. This is a far cry from the oil market.
There is of course much talk of regulation. The EU’s GDPR is discussed in the article and this helps portray what might become ubiquitous across the developed world – a growing concern for educating consumers about what happens to “their” data or more precisely, the data they generate through interacting with a sellers product or service. This awareness and possibly increased regulation might then slow down the formation of the market, or it may have unintended consequence and have the opposite affect.
If we all slowed down for a moment and looked at our digital fingerprints, and we just thought about how this data is being used, we might actually “get” that there is money in that data that others are making (mostly) free of our efforts. We might then hold fire with all those signed-but-not-read-fine-printed contracts. So the very actions of government that seek to control data might in fact contribute greatly to the formation of the market the Economist article suggests is missing.
Read Complimentary Relevant Research
Predicts 2017: Artificial Intelligence
Artificial intelligence is changing the way in which organizations innovate and communicate their processes, products and services. Practical...
View Relevant Webinars
Gartner Hype Cycles 2016: Major Trends and Emerging Technologies
Gartner Hype Cycles are designed to empower CIOs and IT leaders to make more impactful investment decisions, and reduce the risks of...
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes, with attribution to Gartner. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.