…it is difficult to imagine a more perfect commodity than a byte of data – endlessly and perfectly reproducible at virtually no cost.
It is paradoxical that while data is a commodity, it has the power to be the “ultimate proprietary technology”. For most organizations, data is just overhead. It provides some value but the investment needed to store, maintain, curate and consume it exceed the benefits. Unfortunately, most executives have not yet realized how to fully harvest value from data.
In some ways, this was to be expected because the pattern is familiar from history.
For example this is no different than what happened when the electric motor, was introduced in the early 1880’s. That technology did not generate discernible productivity gains until the 1920s. The story was much the same with computers. By 1987, the personal computer revolution was more than a decade old, when Robert M. Solow, an economist and Nobel laureate, dryly observed, “You can see the computer age everywhere but in the productivity statistics.”
What is needed is new management skills and new ways of working. This journey begins with education but requires behavior change to be successful.
Let’s begin the journey by asking some basic questions.
Why is data valuable? How do you measure it’s value?
To understand its value, you must first understand the properties of data. Unlike other asset classes – data has some unique properties that make it different.
In his book Data Driven, Thomas Redman talks about the “wondrous and perilous properties of data & information”.
He elaborates on some interesting properties.
When it comes to reproducing – even bacteria take a back seat to data. All activities that use data create more in the process. Every operation, every decision, every strategic action – all create more data. Organizations acquire vast quantities of data from outside their borders. Sometimes data is purchased. In short, data multiplies.
Data and information create value when they are on the move:
Data sitting untouched may have potential but doesn’t create any value until it is used. Data is most valuable when it is flying from place to place, helping complete a customer order here, contributing to a management report there, and stirring a new idea in someone’s mind somewhere else.
Data is not consumed with use:
Spend a dollar and its gone. Sell a product and its no longer in inventory. Assign an employee to work on one project, his or her availability for other projects is reduced. Using most assets consumes them. Not so with data.
Data is unique to every organization:
Each organizations data is like a finger print – unique. No other organization has your data or your capacity to make more. What is even better is that an organizations collection of data grows richer each day and is not consumed when used. Unlike a patent, data never expires. Unlike employees, data cannot be hired away. Any investment you make in data is proprietary to your business.
Over the next series of posts, I will talk more about the value of data and approaches for maximizing your return on data.