digital mindset 1/2 Behaviour & transformation

When I entered the sector, operating an ISP (Singapore, 1991) - looking back ISPs were the first disruptor (telcos) - I got to interact with the early global internet industry and user community.  I found the participants atypical, strange even, the way they got things done, interact…remarkably open, social, highly collaborative, participative, unusually transparent.  And oddly after paying for internet access, everything else appears to be free!  It seems at once contrarian yet effective, not a combination we are used to.  Piqued, I have been tracking its effects since. 

That behaviour is no more strange.

This is my take on a digital mindset.

I’ll look at three of its characteristics; openness, customer-centricity and data-consciousness.  And begin with culture.

Culture begets behaviour; collective behaviour governs the organisation

Some 18 years later when I began deliberately to look at the changes being wrought by the internet, of which the internet startups were in the front seat, the first thing I noticed was that the startups operate differently.

What struck me is that they have similarities of behaviour that I encountered back in the early 90’s.

“Free and open’ was what made the internet work then, and it’s a critical principle now. I didn’t have to ask permission to build my first websites.  I had unfettered access to material that helped me teach myself how to code. As I learned more, I quickly came to understand that the internet was so much more than a network of cables and wires that connected computers around the world. It was a platform for the purest expression of freedom, openness and possibility that I had experienced in my life”  – Chad Dickerson, founder of Etsy

“The Internet is characterized by openness and collaboration.” - Pony Ma, CEO of TenCent quoted in the China Daily, 18 Dec 2015

“…transforming this 146-year-old institution will take more than just talk. And so to win its place, Goldman Sachs is starting to open itself up in ways that once would have been unimaginable. It’s letting in outsiders, forging new partnerships, and showing its vulnerabilities—even learning to become less secretive.” – ‘What does it mean for Wall Street that a rising number of tech companies have no plans to go public?’, Bloomberg, 18 Mar 2016

Openness was a common theme as I waded through the cases.

Closed vs open

A true short story….

In the early 1990’s we, operators of ISPs, then the only visible internet industry participant, attends annually a conference, INET.  During evening drinks, a ritual was to share statistics on the growth of data traffic out of a country among a group of regulars from different nations.  It increased yearly relative to telephony traffic.  We knew change was coming but the telco executives I spoke to merely swept that aside.

The early participants – the ISPs were, in fact, the first disruptor, of the telco space.  Today telco infrastructure is essentially IP (same technology as ISPs) including fibre/4G/5G/6G.  Their main source of revenue is broadband (data plans in celco-speak), not telephony.  The transformation is ongoing and at this point, many still cannot quite figure out the digital economy - how they can work within it - stuck in the old ways.

‘Convergence went through a mini-5G hype in the ’90s.  But it struggled.  Until the internet.  Isn’t broadband a converged ‘telco’ pipe for text, voice, video?  The difference is that the telco does not control the services around it.  And to think triple-play was and is still a key telco strategy when consumers prefer the flexibility to mix and match what they like, when they like through the internet. [With triple-play,  a telco offers converged bundle of services - telephony, text and video (cable tv) delivered through the telco cable in your home.]

Old telco is classically top-down.  They controlled the entire ecosystem that offered telephony++, the rationale for triple-play.  Partners were few and they had to adhere to strict rules.  They command-controlled everything.  They are a closed system.

In contrast, the ISP ecosystem is different, opposite actually.  ISPs rely on partners by definition (internet = internet of networks) ie. other ISPs in order to function.  The interconnection model of old telco (the reason international calls are costly) does not apply as the ISP model is based on cooperation.  If an ISP is roughly of the same size, the partner ISP would interconnect at no cost, this in contrast to the telco model where payment is in the algorithm.  They are a more open system.

Telcos would adjust better to become a serious player in the digital space if they think open, and act it and play by the rules of the digital economy.  After all, the ISP is really the foundation of the new ‘telco’ (re-read para. 3).  Triple-play, I’ll wager will lose major telcos a bundle, a costly experiment in the wrong era.

Open models lead to collaborative ecosystems & new ways of getting things done

Banks are going through the same journey.  Like telcos they are famously closed.  Fintech is forcing a more partner-centric model, directly or being prodded to by progressive regulators.  Thus we have banks working with fintech and banks adopting open API.  I’m not sure how many banks realise the future of banking is cooperation but regulators seem to.

If you think through these two examples, you’ll find similarities of old vs new in your industry.  The way the internet transformed the telco industry is modernising banking and other sectors now.

Back to my short story…in those early days, the command-control mode was still there but watered down.  I sense it was peer-levelling.  When we needed help, there was then zero internet expertise in Singapore, they readily offered, gratis, whilst the norm was to pay for it.  The team developed the skills required to operate an ISP through the ISP community treated as one peer to another.

Openness is the operative trait of new (digital) culture.  It leads to new ways of getting things done.

Perhaps triggering a shift in thinking …..

Internalisation vs externalisation

Along with a closed (‘er) culture, organisations are traditionally tasked internally.  It’s changing gradually.  This may be one reason.

“No matter who you are, most of the smartest people work for someone else”

                                                         Bill Joy, co-founder of Sun Microsystems

The internet connects, with massive reach, to information and resources that were once nigh impossible to locate.  A partner, an expert or …. a community may be less expensive and better for a specific task than an internal resource.  The community-driven approach, a crowdsourcing method can even be more impactful.

Take software, the second sector after telcos to be disrupted.  Open source software power just about the entire global internet and are used by most of the startups including the largest.  It is orders of magnitude cheaper than traditional software, in part because they are community developed.  To a user, this is good software at low costs.  But unconventional!  

Having an open mind helps.

‘John Fluevog, a designer of high-end shoes created open source footwear by allowing customers to submit designs. They get to put their names on the shoes.  The best ones get put into production’

To a brand like Mr Fluevog, crowdsourcing is an effective technique.  With the ‘crowd’ participating by co-designing the shoes, he gains fresh ideas, knows what customer wants (instead of best guess), gets plugged in to the latest trends.  And it doesn’t cost him extra designers.

Print media, classically internalised can benefit from without.  Traditionally articles are written internally.  They are top-down, command-controlled operators.  Editors decide what readers should read.  Until the internet, they were in the best position.  Reddit, where it is the readers, shows an alternative way forward.  New media like Medium, Quora and YouTube practice Bill Joy’s principle.  Indeed their business models are built out of externalisation (next para.).  But as with anything, it should be a mix and I note, until the industry finds a fix for fake news like they did for spam years back, the pendulum has swung a degree back towards traditional print media.

I call all these ‘externalisation’, use of external resources that includes open API to engage partners, crowdsourcing to encourage customers and the public to partake in aspects of day-to-day operations.  And an externalised (vs internalised) culture for those that can both see the benefit and practice it for suitable tasks.  Such as practitioners of the sharing economy with a business model that is largely based on the crowd. 

Most of us will readily agree with Bill Joy but how many will practice what he’s suggesting?  It’s a mindset thing, difficult for habits to change.  Which is too bad for some!

‘While Facebook focused on creating a robust platform that allowed third-party developers to build new applications, MySpace did everything itself. MySpace cofounder DeWolfe later acknowledged that its decision to keep all development in-house was ill-advised at best’

  - “Innovation, Openness & Platform Control”, Geoffrey Parker, 3 Dec 2013, IDE/MIT

An open, externalised strategy it seems worked for Facebook.

It also worked for Google.

Google’s PageRank mirrors the internal versus external argument.  Instead of a committee categorising content (internally, like Yahoo originally did), PageRank hands the role to algorithms and websites (outsiders) - websites will only link to another if the content is good ie. by linking to one another, websites rank each other and those with more links equates to better content, thus the superior results of Google search - winning the search engine war.

It’s a challenge for traditional firms to think up something like this, what more, use of unconventional (for now) ways....but have the mind set along the lines of peer-to-peer (model, vs centralised) and externalisation.  Cultivate an open outlook!  Imagine the number of internal staff required to categorise the world’s websites ie. savings through externalisation! 

Allied to externalisation is new respect for partners, customers and the public.

In the next post, we’ll discuss customer-centricity, an important strategy for firms battling it out in the digital era.

digital mindset 2/2 Customer-centricity

This is the 2^nd of two posts.  The first post (here) raised  the idea that culture is changing in the digitising economy, in part driven by the competitive environment, ‘customers are a click away, so are competitors’.  This levitated the once less important priority of firms, customer service, to significance.

Customer-centricity

With heightened competition, new respect is natural but that’s only part of the trend.

“From the outset, the key to Jeff Bezos’ success has been his intense and unwavering focus on customer satisfaction and on his audience: the end user.  He refined and perfected this model in books, and then scaled and expanded it while always keeping consumers front and center, often anticipating their needs before they realised them”

                 – Jamie Dimon, CEO JP Morgan Chase on Amazon, Time, 30 April ’18

An aside - I consider Amazon a prime example of a traditional business, remade brilliantly for the digital era, applying the new rules and methods, with the right ethos.

It can also lead to a new sales funnel.  Traditionally marketing develops would-be customers.  Today, it can be customer-led.

‘OnePlus, which sells about 70 per cent of its phones outside China, has become a must-have phone for techies who appreciate its clean build and fast performance, according to analysts. Like Xiaomi, the company has built up a dedicated following through user engagement forums and events and it uses that feedback to develop new products.’

– How popular phone brands Oppo and Vivo win without celebrity executives, South China Morning Post, 30 Sept 2019

Even more impactful are comments left on products and services online. Good remarks lead to more sales, conversely for adverse customer experiences.

As the economy digitise, customer service cannot now remain a marketing line.  It is no more a cost centre.  It boosts revenue.

Some personal experiences....

I don’t know if it’s only me but many organisations I interact with seem to priorities internally, making things simpler for the staff.  And if it makes it easier internally, it makes it less convenient for those they serve, like filling multiple forms and in full when the first form has 90% of the details, like asking me to call back instead of leaving my number, filling in full details for an auxiliary service when they already have 95% of the data, ......... long list!

Such broken processes lose a percentage of customers, particularly online.  Curious consumers included.

It could be the lack of manpower but if the manager is endowed with a digital mindset, he would not stop there but ponder alternatives, perhaps taking a leaf from Omidyar who demonstrates externalised thinking.

‘Omidyar had built eBay to be not just a shipping site but a community…for practical reasons.  As eBay gained popularity, so many buyers & sellers came that he could not possibly answer all of their questions about how to use the site.  By including their email, Omidyar allowed users to communicate directly among themselves to solve each others’ problems.  And Omidyar created a message board that allowed users to share information with the entire community without routing it through him.  The more self-sufficient the users became, the fewer demands they put on his limited time.’

– The Perfect Store…This book is about Amazon; the first two chapters
               show how the community can be engaged and how important that is

The manager would likewise iron out kinks in the end-to-end customer processes over time in a deliberate manner.

Customer-centricity is the act of putting the customer centre in a company’s strategy, and meaning it…. and in decision making, with the aim, always, of seeking to make things easier/faster/convenient, continuously, for customers and treating it as a relationship.  The organisation innately believes this is the best way forward and for it to profit.

In the digital economy, it is about end-to-end experiences, more respect for customers and if possible inclusion of customer/consumer in the processes.  Being involved may please them.  Humans are social creatures. But a business may want to do that not because more sales can then be pushed to them but because their satisfaction brings more sales, directly and indirectly, like leaving good comments.  These days, online feedback is as impactful, if not more, than brands.

As the processes are end-to-end, a customer-centric mindset should permeate all levels of the organisation, not left to customer service.  Perhaps even to the extent of framing goals in terms of customers.  So applying tech is to make it easier for customers, creating a community to empower customers is to assist other customers and so on.

We’ve heard this “customers are the sole reason why companies exist” so is it not time we mean it?

With that, a final point.  To deliver the best possible service, personalisation is likely the most impactful where the idea is to know each customer well enough so that personal experiences can be tailored.  That’s where data comes in.

Data-conscious

Data supports the customer process.  And in turn the business, like improving loan loss ratio for a bank.

Okay, data privacy is a major issue but who says it can’t be used legitimately for the benefit of customers, like for car or health insurance that incentivises consumers to be more careful.  I actually like it if an ad pops up as though it knows I am looking intently to buy a door knob, rather than hoping because I viewed an eCommerce site.

There is already an overdose on this subject and what with The Economist hailing it, placing it squarely upfront and into our nomenclature.

Here I would just like to suggest that like customer-centricity, data awareness should be nurtured into every nook of the organisation, all, cognisant on the role of data.  Data-driven decisions cannot be made only at the strategic levels.  Data possibilities are best recognised at the point of origin, whether from the marketing personnel manning event registration, technicians fixing problems or the sales folks.  Organisations have internal suggestion boxes to make an improvement to the organisation, perhaps this should be extended to data. 

Lastly businesses may want a thought through plan, less they regret specific data in the future that they can’t now have to make a critical decision.  That’s the data plan.

Digital-mindset

It is a people issue.  To transform, carry out digitisation or adjust to the digitising economy requires a slight shift in thinking.

Be open!

What do you think?  Input, comments appreciated.

What can digitisation do for a business?

Put simply, it increases revenue.

It broadens the customer base.  This we already know. 

It can lead to a new sales funnel.  Traditionally marketing develops would-be customers.  Today, it can be customer-led.

‘OnePlus, which sells about 70 per cent of its phones outside China, has become a must-have phone for techies who appreciate its clean build and fast performance, according to analysts. Like Xiaomi, the company has built up a dedicated following through user engagement forums and events and it uses that feedback to develop new products.’

                     – How popular phone brands Oppo and Vivo win without 
                        celebrity executives, South China Morning Post, 30 Sep, 2019

Even more impactful are comments left on products and services online. Good remarks lead to sales, conversely for adverse customer experiences.  Today, comments left by happy customers are as impactful, if not more, than brands.  New products or services of quality from smaller firms now can, if attention is diligently paid to customer service online, build their brand. 

In the digital era, word-of-mouth has gone mainstream.

Digitisation, however, is not only about sales and marketing, a common misconception.

It also reduces costs, say, of goods design, marketing or R&D and in general of frontend operations.  [IT reduces costs of backend operations, improves productivity and efficiencies.] 

            Frontend operations                  Backend operations

            Marketing/branding/PR              Processing; sales, transactions, financials, etc

            Business development               Inventory

            Sales                                          Logistics

            Customer service                       IT

It improves effectiveness of customer-facing activities such as consumer engagement (sales development) or customer service. It makes things convenient for customers. This leads to more sales.

It reduces guessing, helping managers execute better, for example by identifying products that customers like or the features they want.  It does so more effectively than through traditional market surveys and is less costly.

‘John Fluevog, a designer of high-end shoes created open source footwear by allowing customers to submit designs. They get to put their names on the shoes.  The best ones get put into production’

…an example of co-creation, co-design with customers.  John Fluevog gets new ideas, knows what customer wants (instead of best guess), get plugged in to the latest trends, save a designer or tow.

These are examples of the use of digitisation for conducting business.  It covers a gamut of business.

Digitisation is simply how business is carried out over the internet.  Or to be more complete, business operations; ranging from the sell-side (marketing, sales, product design) to R&D, business development, customer services ..….and to tasks like keeping track of trends, gauging customers’ wants; many of these in situ.

It is about growth, about revenue, about improving margins.

To be clear, it realigns existing processes while also introducing new techniques to operate in the digital space. Online marketing, for example, is more effective for some campaigns.  Digitisation uses the internet or rather its machinery - business models, rules, methods, tools, engagement platforms – and technology (tech), to do that.  It is a new way to carry out business operations.

Think of digital as another channel to carry out your business, alongside conventional means and digitisation as the mechanism.

This is a ‘quickie’ on digitisation.  An in depth post is here – what is digitisation and how does it affect businesses.

Digitisation, digitalisation, digitization, digitalization, digital economy

#Digitisation, #digitalisation, #digitization, #digitalization, #digital economy

@Digitisation, @digitalisation, @digitization, @digitalization, @digital economy

Data, business & the economy 1: The modern factory is a data factory

     Economics = Land, Labour, Capital               [foundation of economics]

                  Economics = Land, Labour, Capital, Data      [...in the information age?]

Data has value; that we know from the exploits of new economy firms Google, Facebook, Baidu et al.

Such startups, primarily data firms (revenue derived from data), are increasing in numbers.

And with machine learning conventional firms are increasing the role of data in their business.  They now see value in data, once discarded from their daily operations.

This is the beginning.

As society digitises, more data will be tapped and monetised to benefit businesses, governments, citizens.  The latter in ways that is unthinkable a decade ago, even now!

What will industry look like as the data economy enters mainstream?  What is the effect on society? Will the suppliers, we, be compensated if data as The Economist suggest is the most valuable resource?  Will governments offer up their massive data (privacy contained and managed) - now sitting fallow, for a fee?  Can this compensate for the tax we pay?  This post ponders.

Once superfluous, data is becoming important for business in the information age

Alibaba rose with a business model that unlike traditional retailers holds no stocks.  Instead it hosts a digital platform for sellers to list their products.  That is, Alibaba makes money by providing data for buyers and sellers to transact.   The foundation of Alibaba business is data.  Likewise, AirBnB’s and Grab’s revenue derives from data, not physical assets.

Most internet startups are either based on data or data forms a crucial part of their business.  This is similar to the early stage of the industrial revolution.  Just as the new firms (Ford, US Steel, Standard Oil, JP Morgan) then created businesses around commodities such as oil, steel and industrial machines, this one is on data, computers and the internet (Uber, Google, Facebook, Ant Financial).

And while there have always been firms profiting from data, it was never at this scale.  The way data is collected is different too.  Unlike the labouring of traditional data firms, these next-gen firms employ crowdsourcing (a method to source from the crowd, individuals, to participate in an activity, paid or unpaid, but of mutual benefit, over the internet (see crowdsourcing; a tool for business), us, largely based on day-to-day usage of services, itself unusual.

Is data or rather the revaluation of data pointing to new dynamics in the economy?

One effect of data on industry – see Datarisation and its transformative impact on industries

Anything that can be digitised, turned into data – products (music, books, software, media), services (voice phone calls, recruitment, photography, computing), transactions (money) -  and delivered over the internet will have its value reduced, some to zero, transforming industry…messaging apps (telephony and telcos), Amazon (books and retailing), Uber (transportation and taxis), Paypal (money and finance industry), Netflix/YouTube/Spotify (video/music and movie industry).

If your industry involves products that can be digitised, it’s a candidate for transformation.

Yes. 

We have bandied the term ‘information age’ about for decades, but never quite figured out what it all means.  We now have an instance, data has value.  It affects the way business is done.

The modern factory is a data factory

The process is similar to the factories we are familiar with.  Instead of raw materials as input and workers turning them into physical products, these new forms of factories take as input data produced from the usage of services (and other sources) using computers to ‘manufacture’ informational and quasi-informational products.  These ‘finished products’ – specific, tailored information are used to support the sales of ads. They also add value to physical products or to services or to businesses while nuggets of information, refined data and data itself have a market.

The difference is that instead of a factory, this modern version is a digital platform.  Instead of miners, consumers produce the raw material.  Instead of the assembly line, networks of computers use analytics, machine learning and AI to assemble insights of information. 

This suggests that a new form of production is emerging just as moving assembly lines did in the industrial one. 

Prof. Yochai Benkler of Yale in his treatise “Coase's Penguin, or Linux and the Nature of

the Firm” suggest a new resource in the production of goods and services through the open source model” …he is referring to a form of crowdsourcing.  With the open source model, participants from all walks of life partake, out of interest, on a project, be it software, an encyclopaedia (Wikipedia) or even shoe designs.  See Open source business model

This also suggests that personal effort, personal data has value.

In the second post here, we ask if the ‘miners’ that is you and I, should be paid and if this solves the issue of personal data privacy.  Further, we’ll argue that governments could monetise the data throve they have, using the proceeds to benefit society, perhaps reduce tax.

Data, business & the economy 2: Should the ‘miners’, that is you and I be paid?

In the prior first part here the value of data is explored, suggesting that the modern factory is a data factory.

Should the ‘miners’, that is you and I be paid?

There are undercurrents.

Jaron Lanier first wrote about payments in his 2013 book, Who owns the future? suggesting that we get paid for the data we provide.  The rationale was that data tech firms treat data as material, which comes to them at no cost. 

Governments have started considering ownership of data, “Ownership of personal data underpins these issues, which is why debates on introducing the concept of ownership of data as a legal right have recently emerged at the EU level and beyond. In 2017, issues concerning ownership of data occupied regulators’ minds in the United Kingdom, Australia, India, as well as the European Union.”…..regulation is probably the only way the data firms could lose control of the data they make their money, if,… and obviously huge battles lies ahead with this approach.  A more amenable way is for the firm to share ownership with the ‘miners’.  Or an indirect way is for the data firm to allow the user to make available his data to, say, insurance firms, so his premiums are lowered.

Berners-Lee of W3C, a consortium that determines Web technology standards, launched in 2018 a development platform called "Solid" aimed at giving users control of their data.

Judging from their high-profit margins, there may be a case. 

And, I think, inevitable that some payments would be made to the ‘miners’ when society adjusts to the new economy, in the form of tokens (exchange for services), or what I call nanopay, tiny amount, say, 0.01 cent or fractions of a cryptocurrency.  Tiny, because consumer’s data in isolation has little value, aggregated it has.

Payment solves the issue of ownership of data and privacy.  If ‘miners’ choose to monetise all or some of it, privacy becomes a non-issue since now they make the decision.  Laws should, however, be enacted to protect the minors and regulations against unscrupulous use of data.

“The majority of people between 18 and 34 would be willing to let insurance companies dig through their digital data from social media to health devices if it meant lowering their premiums, a survey shows. – june ’18

Data related to insurance could be in their personal data wallets that should include compartment for the car (how they drive), health, data from usage of online services, and so on.

Thanks for coming this far in the article and be sure to leave your comments.

If so, data wallets aplenty

If personal data has value, we will need somewhere to store it.

Data wallet is a contender.

Beginning with basic data such as sites visited, over time this wallet could store our buying habits, usage data, online behaviour and meta-data.

The consumer can then use it to trade for services eg. bus ride (an instance in the US), make a purchase, reduce insurance fees or watch a paid YouTube channel.  It’s bartering all over again, re-imagined and likely through an online exchange.

A retailer may want to be in that exchange to sell, perhaps at a discount, for consumers’ data.  Or pay consumers access to their data for insights.

Data analytics firms will compete to process personal data; for a fee, a digital token, an exchange or even pro bono.  Processed data adds value to the owner.  They will aggregate data from selected consumers based on clients’ requirements.

Privacy, data, ownership & nano-payments

Is there conflict with the digital model of monetising consumer data exchanging it for using a service? The Cambridge Analytica case where Facebook provided the data implies yes.  But that is a case of abuse.  It’s clear now that personal data should not be sloshed about. After the storm settles an appropriate model will result together with new laws.

Will the service providers stop providing free service? Unlikely because they depend on consumer data in the first place.  What’s more likely is a compromise.

Considering the massive profitability of such firms, there could be space to share it with consumers through nano-payments.  The fines being imposed by EU and others to follow could be the starting point to determine the value.

The issue of privacy vanishes if it is the consumer who decides.  Obviously like money, there should be regulations and a legal framework to protect against the unscrupulous.

If this scenario pans out, we determine if we want to share our data.  We determine our own privacy or more specifically the level of privacy and how it is shared; all, some or specific forms for a price.  It recognises that data has value.

Businesses will have their own wallets and similarly used for trade and for leasing.  Perhaps even the government.

And what of governments?

Governments have a lot of data. 

In an era where data has value, would it be allowed to lie fallow in their data vaults?

This data can benefit society.  And businesses, for which they will pay for.

Government data does not have to be released raw to the buyer.  Instead, they could be processed in-house.  Only the results are provided.  Other ways are to supply anonymized data or partially processed data, stripped of consumer names.

Monetised, the government will now have a new source of revenue, businesses get insights to better their businesses, the tax burden on citizens perhaps reduced.

In this scenario, probably shocking to some officials only because it’s radical presently actually benefits the economy and in particular the citizens.  Patient data from government hospitals can help produce better medicine or lower insurance prices.  Municipal data can reduce crime.

However, governments cannot simply provide data but what if this is treated like a municipal license, say, an annual license to access specific slivers of anonymised data under specific terms?  Obviously, privacy must be respected but there are ways to handle this as discussed earlier.  Data regulations and a legal framework should also be in place.

In a digital economy, it would be a waste if data is left idle when it could be optimised to benefit the country.  As economists say, money needs to move around to improve the economy.  If data now has monetary value, wouldn’t this apply?  It should, so the first data regulation, on sovereignty is puzzling.

In the concluding post here, we ask if businesses could monetise their data besides using them to improve business.  And what could the data ecosystem look like as it grows from its beginnings today.

Data, business & the economy 3: What can businesses take from this?

In the first part here the value of data is explored, suggesting that the modern factory is a data factory

The second here suggests that the ‘data miners’ that is you and I, should be paid and this could solve the issue of personal data privacy.  Further it argues that governments could monetise the data throve they have, using the proceeds to benefit society, perhaps reduce tax.

Data sovereignty at odds with the digital global economy?

Data sovereignty, to me, was incongruous when governments first raised the issue.

If data has economic value and is the basis of the digital economy, shouldn’t the principle of ‘free trade, free movement of goods’ apply as global economic activity digitises?  In this case cross-border data flow.  Data sovereignty impedes the flow.

Pharmaceuticals could improve its R&D if they have easier access to consumer data globally.  Global firms that advertise online would benefit from consumer data worldwide.  Banks aiming to take advantage of digitisation to offer services globally and fintech firms are affected if they cannot access customer data in another country quickly.  Data sovereignty hinders.

Perhaps when data sovereignty first appeared bureaucrats were not cognizant of the emerging digital economy.  Or they were distracted by the major data leaks.

The internet is borderless.  That’s how internet business models and digital commerce operate, on the borderless premise.  Restricting the flow of data will be detrimental to digital commerce.  Data leaks are related to data storage.  Security is really a separate issue.

With the digital economy gaining significance I expect the notion of data sovereignty to be diluted, with strict regulations applied only to data with national security implications and a light touch to the rest.  Processed anonymised data should have freedom. Permissioned data should too.  The exception is geopolitics.

Data commerce and data ecosystem

As the value of data increases an ecosystem will revolve around it.

Data, by then permissioned and regulated will be traded, by businesses, consumers, government entities and with that the data ecosystem enlarges:

• Data exchanges, marketplaces and a futures market allow buyers, suppliers and brokers to lease, supply, process and trade data.  Data could be anonymised, raw, categorised, packaged.  They will be stored in secure data vaults, some offline.
• A pharmaceutical firm may lease data from a specialist heart centre to identify traits to improve their R&D into drugs for treating heart diseases.  But they may utilise a broker to package data from 10 heart centres around the world instead.  Data brokers could source them directly or from the exchanges instead.  Transactions would be done on blockchain-based platforms.
• Face recognition tools are available from a cloud provider today.  Projecting this into the near future, myriads of data analytical cloud services could allow anyone including the pharmaceutical firm to use specialised tools instead of having an expensive in-house team.
• Because in isolation, consumer data has no value, platforms will emerge to serve as aggregators.  Consumers would upload their data wallets into their secure data vaults.  These sites would have the tools to analyse consumer data.  Independent data analytics firms can draw specific insights, adding value to the consumers.
• Data consultants will know what’s available in the market.  They could also to help companies craft data plans. 
• New career categories will emerge: data managers, data architects, chief data officer, data consultants, data brokers, data salespersons, community managers, data regulators

What can businesses take from this?

Data adds value; from insights to improve business operations from its day-to-day operations to direct monetisation.

Much of the focus today is on analytics, machine learning and AI to derive the insights.  But what if data is looked upon also as a revenue source?

Like the digital data firms today.  Facebook’s service generates data for monetisation and also for partners.

Obviously after the Cambridge Analytica fiasco, passing user data to partners is controversial but perhaps it is a growing up experience.  With regulations, proper procedures in place and allowing only specific forms of data such as permissioned data or anonymised data and only to qualified partners, society can benefit.  Such as better medicines.  Users could take a small share of that revenue.

Conventional firms can do the same, in a different way.  Here is one.

If you could listen to a group of customers and consumers chat freely about a product, wouldn’t that information be useful to a business selling that product?  If it is about features they like, wouldn’t that take the guesswork out of the new version of the product?  Involving customers is akin to designing a product the consumer wants.

This example uses a community model.  It’s similar to Facebook platform engaging consumers.

This method, largely bypassed by businesses but evident with startups, can if applied properly, bring valuable data from customers.  And in many cases, you don’t need the complexity of data analytics.  The crowd provides the insights.

Create a digital community, say, of off-road motorcycle enthusiasts around your brand.  Participate and listen in to their conversations.  From time to time, introduce a topic.  If it is on ‘useful add-ons’, the bikers will bring up what they like.  That’s input to the product division.  Unlike surveys or study groups, where the participants may feel compelled, the community model provides a natural setting and a better flow of authentic ideas.  Do this in a transparent manner, so they know what is going on.

How the community manager engages the community, in particular, the topics introduced, determines the type of data generated.

Industry would find such data useful.  They would be willing to pay for it.  So besides using the data internally, they could lease this data (note that this is processed data so there’s no personal information) but don’t forget to reward those contributing ideas.

Data, the digital economy and economics

I’m no economist but data, I’ve noticed in my years studying the digital economy, is not valued economically and neither are its impact (and digital models’ impact) on economic measures such as GDP and productivity appropriately reflected.

Should they?

Consider the following:

• The primary assets of most online firms are now data
• Data is now being deliberately collected as input to businesses, like raw material
• Online firms have a significantly lower number of workers relative to traditional ones
• The open source mechanism replaces internal manpower with external ones
• The sharing economy demonstrate more efficient allocation of resources
• We are witnessing the data industry as a new sector in the economy  

They are a new form of inputs in the production of services and goods, new forms of production, all made possibly through the internet, digital technology and mechanisms of the digital economy.  A common factor in these, crowdsourcing (see crowdsourcing; a tool for business), enabled by the same, has redefined the role of the consumer – once consumer only consumes, now they also produce.  And in doing so, created value in data and introduced a new form of economic production. 

Conclusions

Data now has value.  With that data ownership will move back towards the creator, including the consumers.  Online firms that depend on consumer data will remunerate the consumers for the data.

The socio-economy will alter; with new form of wages and a corresponding change in the tax code while the concept of jobs is redefined.

Finally, would the foundation of economics be adjusted, in the information age?

  Economics = Land, Labour, Capital    [foundation of economics, formulated in the industrial age]

  Economics = Land, Labour, Capital, Data                                       […and in the information age]

I think so.

Thanks for coming this far in the article and be sure to leave your comments.