"Navigating the Data Economy: Shifting from Extraction to Equitable Exchange"

When British mathematician Clive Humby proclaimed in 2006 that "data is the new oil," his analogy likened data to oil, emphasizing its raw and unrefined state. Much like oil, data requires refinement, processing, and transformation into something valuable; its true worth lies in its potential. However, over the past 16 years, Humby's profound insight has morphed into a cliché, losing much of its original meaning. Unfortunately, many businesses misunderstood the essence, perceiving data as inherently valuable, to be extracted, amassed, and either utilized or abused.

Regulators responded in a similar fashion, viewing data, akin to oil, as a potential disaster waiting to happen. They positioned themselves as the thin red line preventing catastrophe, leading to a race to the bottom. Brands sought to maximize data collection, regulators aimed to make examples of wrongdoers, and consumers found themselves caught in the crossfire.

As we venture into the new data economy, a fresh metaphor is needed—one that shifts focus from merely exploiting a resource to building equitable and sustainable relationships with consumers. The reality is that data is not a resource passively extracted from consumers; it's more akin to a currency actively invested by consumers to unlock specific benefits.

Consumers are vociferously expressing that they no longer accept a passive role in the data economy. They demand agency over how their data is used, seeking real, ongoing control over a transparent exchange of value, rather than superficial one-time "consent" serving as a fig leaf for extractive data policies.

This shift in consumer sentiment is not a passing trend; research indicates that younger consumers, more attuned to the exchange of value, are increasingly willing to share data with brands. Gen Z consumers, in particular, exhibit a propensity to configure data preferences when interacting with brands, signaling a clear direction in consumer expectations.

For younger consumers, data sharing is a reality, but so is data control. Brands must keep pace by embracing responsible data practices and implementing the controls that consumers increasingly demand. This involves delivering meaningful end-to-end control over how data is collected, stored, and used, going beyond one-time consent banners and convoluted privacy policy copy. Intelligent whole-lifecycle controls are needed, allowing consumers to decide precisely how their data can be used, with rigorous enforcement across the entire data ecosystem.

Brands must leverage these capabilities to realign with consumer values, moving beyond narrow, legalistic compliance with new regulations. Proactive measures, such as empowering consumers, exceeding their expectations, and solidifying the position as trusted partners in an ongoing exchange of value, are essential.

As businesses grow, opinions on necessary steps abound. Adopting a 'good data beats opinion' philosophy becomes invaluable. Almost everything can be tested, measured, and improved. If it can be measured, it can be improved. Encouraging people to generate new ideas, explore opportunities, and test them provides valuable insights, ensuring that every test, even if unsuccessful, contributes to new learnings.

Real-time access to critical data is paramount for business success. Beyond knowing total revenue, profit, or costs, understanding the key performance indicators (KPIs) influencing them is crucial. Micro data, not macro data, holds the true value, and businesses must recognize this distinction.

It's not merely about having data; it's about having a Data Practice—a consistently executed set of principles for managing data. Four key principles come to the forefront:

1.      Data Provenance (where did my data come from?): Understanding the origin of data is crucial to assessing its quality, identifying errors, biases, and ensuring valuable insights.

2.      Data Privacy (what am I allowed to do with this data?): With the rise of AI, data usage laws are evolving. Compliance with regulations like CCPA and GDPR is imperative to protect consumer information.

3.      Data Protection (how can I make sure I don’t lose the data?): Ensuring controlled access to data safeguards privacy, but protecting data from loss or damage is equally vital.

4.      Data Preparation (how do I go from data to useful data?): Raw data, like raw oil, requires refinement. A robust strategy for data preparation is essential for leveraging data for insights effectively.

The ability to democratize data and transform it into valuable insights is crucial for organizations. Data-backed decision-making positively impacts revenue growth and profitability. Data governance, coupled with data privacy and data management, plays a pivotal role in achieving these benefits. Defined policies, procedures, and standards ensure the effective and efficient use of data, fostering trust and high-quality data availability across the organization.

Mature data practices not only improve core operations but also provide a competitive edge. Leading organizations differentiate themselves by creating entirely new and improved business models through advanced data utilization. As with the oil industry's evolution, digitalization efforts will shift toward creating data sets that drive business value.

Unlike oil, data possesses a unique characteristic—it can be infinitely reused and enriched through use. It's imperative for businesses to recognize this and adapt their data practices accordingly. In the evolving landscape of the new data economy, a thoughtful and consumer-centric approach to data is the key to building sustainable and mutually beneficial relationships.

Special Thanks:

I would like to extend our sincere courtesy to The Drum , WIRED , Forbes , Kenway Consulting and Kearney for their invaluable contribution to this article/publication. Their expertise and support have greatly enriched the content, and I am grateful for their collaboration