Selling data is nothing new. Marketers have engaged in a brisk trade in personal information for many years. The growing ubiquity of data, however, combined with new ways to analyze massive, diverse and fast-moving information increases the value of data significantly. Data is the the fuel for the modern analytics engine.
Suddenly, the only thing keeping us from predicting the behavior of the animate (customer, worker) and inanimate (weather, supply chains, machine maintenance) is the size, relevance and timing of the data we can bring to the analytical table. Accurate prediction is an economic gold mine. The gold rush is on.
Ahead of the curve
Some people had this vision a while ago. The CEO of FedEx is famous for saying, “The information about the package is just as important as the package itself.” Remarkable when you consider that he said that in 1978, long before the information age hit its stride. He was on to something decades before people started talking about Big Data. He recognized this fact sixteen years before FedEx’s first website.
What started as a business delivering overnight packages is now a major global logistics network. The data FedEx collected for years is vital for building out new, more complex services. Their Data is their gold mine and it would take a competitor years to get anywhere close to where FedEx is at this moment in time. Meanwhile, FedEx continues to amass even more information, to mine more gold.
Age of Hunch
If there is a name for the time before ubiquitous data and powerful analytics, it would be the Age of Hunch. Employees took time to train, and managers were selected from those employees who had a good sense of hunch; hunch for who was a good worker; hunch for when the stock market would change; hunch for new products and services; and hunch for how to sell and to whom.
But we live in the the Age of Analytics…the heir to the Age of Information, descendent of the Age of Hunch. Analytics is king only because it has access to the right data at the right time to make decisions. Without that data, the king is quickly a commoner. This is why disruption happens so quickly now and the average lifespan of a company is less than fifteen years. Those who survive possess and can act wisely on information.
But hunch won’t die quietly. Watching the 2012 U.S. Presidential Election, there is a war raging between the pundits, who hold claim to predicting the outcome of the vote in ‘psychic style’, versus the new breed of analysis jockeys who swear by their mathematical models. Wolfe Blitzer versus Nate Silver in the Octagon. We’ll know who’s right in four days.
Age of Analytics
It will be increasingly clear that great data and analytics beats hunch, but before we get too cocky about our math, we have Nassim Taleb, author of Fooled by Randomness, warning us that randomness exists and that everything isn’t fully explainable. That’s something to keep in mind while we strive for more and better data and smarter and more predictive analytics. We need to keep our heads about us even as Big Data gets so much hype lest we lose sight of what we don’t know. The better our models get, the less we know what we don’t know. But let’s go back to the gold rush.
The concept of information as an organization’s most valuable asset is covered very well by Gartner’s Douglas Laney. He coined the term infonomics in the late 1990′s to describe his research into the value of information and its management as an asset. At the time, the data warehouse was the bank vault for information, but this changed significantly and we now manage onsite and offsite data, upstream and downstream feeds, and the ecosystem that makes it valuable. For added fun, real-time streams and in-memory data impact data’s valuation greatly and make the enterprise information ecosystem the critical logistics network for mining data’s gold. To be sure, data is gold, but there’s no market without the tools to connect, understand, anticipate and act on that precious metal.
And mobile, in the form of sensors and handheld devices like smartphones, bumps the value higher. Knowing location on top of preferences, skills, sentiments, recent activity and other factors is a leap forward for information economics and work efficiency or digital customer experience. Mobile data is 24 karat gold.
Lessons from 1849
Remembering back to grade school and lessons about the California Gold Rush, the enduring millions weren’t made by the people who showed up with picks and shovels. The gold rush created business for people like Levi Strauss and those who sold the picks and shovels more than for the average get-rich-quick ’49er. The opportunists came and left, including the pick and shovel sellers, but the companies who developed infrastructure to mine gold in consistently profitable ways were the enduring winners and built the cities of Sacramento and San Francisco into what they are today.
I believe we have the same opportunists in the data marketplace at this moment, fueled by hype and driven to get rich quick as data scientists or selling picks and shovels. I won’t name them, but they solve narrow problems and leave companies without an effective means to truly value data as an asset that creates insight and action.
I don’t envy the enterprise that needs to sort through the claims and counterclaims to get to the right information and make wise investments.
The value of data
Pundits versus statisticians