Data, Once upon a time, oil companies ruled the globe. An immense, untapped valuable asset of the 18th century — oil, was the world’s most valuable resource. It was the key functionality of everything from the
government to local companies. Without it, progress would halt, and economies would shrink. Fast forward to the 21st Century, and data is like Oil in the 18th Century: an immensely untapped valuable asset.
Imagine sitting on your couch and controlling a video game character through a mall or market, except it’s not a game. Yes! You guessed right, and it’s a robot shopping for you while you sit comfortably at your home.
And this is even more amazing because present-day technology — phone, radio, internet, brings the world to you. But if the trend continues, robots will soon bring you to the world and at the speed of thought. This here is the power of the most useful resource of the 21st century — DATA.
What is Data?
Data refers to extensive databases created by the digital revolution in the most formal and technical sense. As computers and the Internet became a core tool of virtually every organizational activity, they have generated volumes of raw data. Over time, it became clear that if the vast amount of data produced could be tapped and organized, it would have tremendous commercial and organizational applications. Initially, only huge organizations with substantial resources and sophisticated computer capabilities could afford and/or had the expertise to do it. But now enough has been compiled that access to Data’s advantages is rapidly becoming more mainstream.
Amazon is a classic example of how Big Data can be used to build new business models.
In short, the development of information technology paved the way for the information age, and Data is a natural outcome of that broad cultural trend. It has been a boon to big business as it has tapped into Big Data to enhance everything from product development to marketing.
How is Data the New Oil?
Many industry experts have recently attested that data, not oil, is now the most valuable resource in the world. The concept behind “data is the new oil” is that just like oil, raw data isn’t valuable in and of itself, but, rather, the value is created when it is gathered completely and accurately, connected to other relevant data, and done so promptly just like oil.
I would venture to argue that in today’s environment, especially regarding widespread concerns of the health-related and economic implications of COVID-19, that data is in more demand than ever.
The demand for accurate and up-to-date data, and further methods of organizing and utilizing said data to make informed decisions, is through the roof. It’s undeniable that there is great value (e.g., monetary, health, safety, and otherwise) in getting access to new information faster.
DATA COMPARED TO OIL
- Data is an essential resource that powers the information economy, so that oil has fueled the industrial economy.
- Once upon a time, the wealthiest were those with the most natural resources. Now it’s a knowledge economy, where the more you know, the more data you have.
- Information can be extracted from data just as energy can be extracted from oil.
- Traditional Oil powered the transportation era, in the same way that Data as the new oil is also powering the emerging transportation options like driverless cars and hyperloop (1200km/hr), which are based on an advanced synthesis of data inform of algorithms and cognitive knowledge without the use of fossil fuel.
- Traditional oil is finite, and Data availability seems infinite.
- Data flows like oil, but we must “drill down” into data to extract value from it. Data promises a plethora of new uses — diagnosis of diseases, the direction of traffic patterns, etc. — just as oil has produced useful plastics, petrochemicals, lubricants, gasoline, and home heating.
- Oil is a scarce resource. Data isn’t just abundant. And it is a cumulative resource.
- If Oil is being used, then the same oil cannot be used somewhere else because it’s a rival good. This results in a natural tension about who controls oil. If Data is being used, the same Data can be used elsewhere because it’s a non-rival good.
- As a tangible product, Oil faces high friction, transportation, and storage costs. As an intangible product, Data has much lower friction, transportation, and storage costs.
- The life cycle of Oil is defined by process: extraction, refining, distribution. Relationships define the life cycle of Data: with other data, context, and itself via feedback loops.
Ways to Tap From Data
You can benefit tremendously from data as a business owner to drive positive outcomes for your business and customers while still maintaining and facilitating the highest level of data protection. The five ways you can tap and benefit as a business owner from data are:
Personalize Your customer experience
You can collect customer data from many different channels, including physical retail, e-commerce, and social media. Using this data to create comprehensive customer profiles from this data, you can gain insights into customer behavior to provide a more personalized experience.
By sharing data with businesses, customers expect companies to know them, form relevant interactions, and provide a seamless experience across all touchpoints. By understanding customers’ needs, you will optimize the customer experience and develop longstanding relationships.
Take a retail clothing business that has an online and physical presence. You could analyze your sales data together with data from its social media pages and then create targeted social media campaigns to promote your e-commerce sales for product categories that the customers are already interested in.
Inform business decision-making
You can use data to guide business decisions and minimize financial losses. Prediction for data can suggest what could happen in response to changes to the business, and descriptive analytics can indicate how the business should react to these changes.
For instance, a business can model changes to pricing or product offerings to determine how those changes would affect customer demand. After collecting sales data on the changed products, enterprises can use the data to determine the success of the changes and visualize the results to help decision-makers choose whether to roll the changes out across the business.
3. Data helps you understand performance
Simply put, data helps you see the performance. Sports teams are a great example of businesses that collect performance data to make their teams better. There isn’t a professional team today that does not employ a team of data collectors and analysts to help support and improve play on the field. They are always updating data about who’s doing what well and how that can help the team excel overall.
Have you ever wondered how your team, department, company, marketing efforts, customer service, shipping, or other parts of your company are doing? Collecting and reviewing data can show you how all of this is performing and more.
If you’re not sure about your employees’ performance or marketing, how will you know if your money is being put to good use? Or if it’s bringing in more money than you spend?
One example: Say you have a top-performing sales rep that you send most leads to. However, when you delve into the data, it shows that she closes deals at a lower rate than one of your other sales reps that receive fewer leads but closes deals at a higher percentage. Performance data provides the clarity needed for better results.
Improve Operational Efficiency
Organizations can improve operational efficiency through data. Gathering and analyzing data about the supply chain can show where production delays or bottlenecks originate and help predict future problems. If a demand forecast shows that a specific vendor won’t handle the volume required for the holiday season, an enterprise could supplement or replace this vendor to avoid production delays.
Mitigating risk and fraud
Risks are everywhere in business. They include customer or employee theft, uncollected receivables, employee safety, and legal liability. Data can help your organization understand risks and take preventive measures.
Efficient data deliver optimum levels of fraud prevention and overall organizational security. Data management, alongside efficient and transparent reporting of fraud incidents, results in improved fraud risk management processes. Furthermore, data integration and data across the enterprise can offer a unified view of the fraud across various lines of business, products, and transactions.
You can also use data to limit losses after a setback occurs. If your business overestimates demand for a product, it can use data to determine the optimal price for a clearance sale to reduce inventory.
Data has the power to drive powerful change in business
Field service companies are generating huge amounts of information which, if used right, can help them predict anything from issues a customer is likely to encounter to how likely it is that a customer will become a long-term, loyal patron.
Gut feelings can only get you so far on the journey of growing a successful field service business. Transitioning to a data-driven business where decisions are made based on concrete information and accurate predictions helps grow a much more sustainable, successful venture. Data can be the most valuable, untapped resource in your business, and it is up to you to take advantage of those insights.
Data: The Ultimate Renewable Resource
It’s clear that data really is the new oil and that the main impact on humanity isn’t how tech giants are monetizing our attention units and how data can improve our lives.
Are sounds familiar, doesn’t it? Oil causes pollution, yet it was also responsible for lifting a large majority of the world’s population out of dire poverty. We must manage the dark side of data, but the advances in data fuels are worth the effort.
Like oil, there will be huge rewards for those who see Data’s fundamental value and learn to extract and use it.