Data isn’t the New Oil: It’s always been valuable

By Bryce Turner

You’ve probably heard of Clubcard, the world’s first serious loyalty programme. But you probably haven’t heard of Clive Humby, the British mathematician who launched it.

Humby is a smart guy. He was shoulder-tapped in 1995 by supermarket chain Tesco to help build its loyalty card programme. Humby’s efforts revealed such deep insights about shoppers that Tesco’s then-chairman, Lord MacLaurin, said the data scientist knew “more about my customers after three months than I know after 30 years.” Humby famously responded by saying, “data is the new oil.”

It was a neat phrase. But I take issue with Humby’s use of the word “new.”

Data has always been valuable. It’s just that humans never really had the right tools to capture, process and analyse data on a large enough scale to generate deep insights. We now have these tools, and the world has changed rapidly because of them.

Humby was a pioneer of data analysis, but he was a tiny speck floating on a trend wave that has washed over all aspects of business for the last 60 years. In 1975, Intangible Assets accounted for 17% of the value of the S&P500. In 2020, they accounted for 90%.

In other words, companies are no longer the sum of their physical parts (real estate, machinery or processed goods). Even the smallest firms can possess a giant, entangled web of invisible and imperceptible intangible assets (brand, software, know-how or …. data).

Since the dawn of time

The ability to collect data is one of those things that separates humans from animals. Crows, dolphins and elephants all gather data about the world, sometimes with great perspicacity. But only humans write their own observations down to reveal deeper insights.

The importance of record keeping is fundamental for understanding human history. Without data records, there would be no history. It’s that simple. The oldest known written record is an Akkadian cuneiform tablet dating to 1750 BCE. It features a rather terse customer complaint about copper ingots. Plus ça change, plus c’est la même chose.

Speaking of history, gathering data was a crucial part of the world’s oldest profession. No, not that one. I’m talking about intelligence. Military generals have depended for millennia on the use of scouts to discover the truth about enemy numbers, terrain and local sentiment towards the king.

Conversely, bad intelligence can lead to poor decisions. In China, during the Three Kingdoms period, a general named Zhuge Liang deterred a force of 150,000 enemy soldiers from attacking a city he held with a measly 100 troops simply by bluffing: he sat on top of the fortifications and played a lute. The opposing force, not knowing the true size of Zhuge’s army, feared a trap and retreated.

During WW2, the British set up Operation Mincemeat, which was a feint using a corpse and a briefcase to divert German resources away from the real planned Allied invasion location of Sicily.

In fact, the screen on which you are reading this article would be impossible without the scientific process, which depends on data and experimentation. Data is integral for testing chemical reactions, observing the stars or simply noting that a particular attempt did not produce a working lightbulb.

Entering the Information Age

How’s this for a mind-blowing statistic: all the words ever spoken by humans equate to about five exabytes (equal to 1000 Petabytes or one billion gigabytes). That’s a lot of data, right?

Well, not really. It is estimated that by 2025 the amount of data that will be created each day on the internet will be a whopping 463 exabytes. That’s 463 followed by 15 zeroes of data – every day.

This explosion of data is driven by two key factors: machines are getting more efficient at collecting data and there is a greater number of these machines on earth. For example, of the eight billion people alive on this planet today, 6.5 billion own a smartphone. But that’s just the tip of the iceberg.

According to Statista, by 2025 there will be 75 billion Internet-of-Things (IoT) devices peppered around cities, homes and businesses across the world. The “wearable technology” market alone was valued at $US40.65 billion in 2020, which could rise to $US392 billion by 2030.

Although about 40% of the world’s population still lacks regular internet access, those who are online use the internet so much and so often that they might as well be cyborgs. Users of the video-sharing site TikTok, for example, number more than one billion and each of them spends an average of 95 minutes per day scrolling through the highly addictive app.

Thankfully, it’s also getting easier for people to consume online content. For instance, 5G (the fifth generation of cellular networks) is up to 100 times faster than its predecessor generation, which means devices will soon receive incredible amounts of data so they can display impressive technology like augmented reality and let automated cars drive on our roads.

All this data flowing into company databases is already helping them find new customers, provide better services, develop more durable products, popularise their services, reduce waste and much more. Business leaders can also make better decisions when they are informed by accurate data. This means the companies that embrace data will continue to outperform their peers who struggle to grasp the power of the Information Age.

Because that’s what data is: power. The Latin phrase “scientia potentia est” (knowledge is power) is about recognising the supremacy of intangible assets across time and in every era. But it might be more accurate to say, “knowledge is powered by data.”

After all, Clive Humby was right to point out that while data is valuable, if it isn’t refined then it cannot really be used. In other words, only by pairing data with analysis can data be turned into a valuable asset.

Without decent analysis, the enormous volume of data humans are generating is little more than distracting noise that ends up obscuring value rather than revealing the value of this powerful intangible asset.

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