Is data the New Oil? Mission Drive Explains
Data is not the new oil
It’s the new infrastructure
Data is a very different resource from oil. For a start, data becomes more valuable the more people use it. Whereas oil is a single user asset…
‘Data is the new oil’ was a term first coined by Clive Humby (co-founder, with Edwina Dunn, of retail data company, Dunnhumby). And the term is still kicked around today. At the time, it was a useful metaphor for a shift in many western economies, when oil reliant manufacturing economies gave way to ‘knowledge economies.’ These were reliant on digital tools, and calling data the ‘new oil’ signalled to executives that a powerful new asset was in town.
Thinking about data as the new oil is a limiting mindset
Why? Because applying industrial age thinking to data, creates traps that lead to bad investments, failed projects and missed opportunities.
Businesses with leaders who treat data like infrastructure, embrace different value creation methods, helping those around them adapt accordingly, which in turn drives value for their organisations.
Oil is a resource – data is infrastructure
Oil was the core resource of the industrial age. Now, in the information age, data is at the core of the apps, websites and services we use. It signals a shift in how businesses work and what they need to pay attention to. Data and oil is an easy analogy, but it’s not right. In reality data is better thought of as infrastructure.
Like roads and electricity networks, data is a critical infrastructure our economies rely on. And like infrastructure it needs to be carefully managed – considering things like access, safety, and maintenance.
When we think of data as infrastructure, it also helps us consider it more broadly than just numbers on a spreadsheet. Data infrastructure includes the tech and tools we use to work with and manage data, the policies and regulations that govern its use, and the people and communities who access, use and share it.
Oil is single use. Data can be reused and reshaped
Once combusted, the value of oil is destroyed. And it’s easy to think of data similarly. But thanks to the internet and cheap digital memory storage we can now access, use, and share the same data, over again. Whether it’s bus timetables or COVID transmission, once set free, data can benefit many different people. Which makes it a renewable resource.
Data becomes more valuable when shared. Oil doesn’t
It’s easy for us to understand the price of oil. Check out today’s cost of Brent Crude for example. Oil prices are largely linked to the economic concept of supply and demand.
Data on the other hand, increases in value the more people access it. This is why many organisations recognise the importance of building shared data infrastructures. If you liberate data from organisational constraints, partners and customers can use it too.
Focusing on helping data flow makes supply chains more effective, reduces costs and powers innovation. Just like when the Airbus’ Aprocone programme found new ways to share data to improve aircraft design.
Oil moves along supply chains sequentially. Data moves in many directions
From an Uber driver’s perspective, the journey of oil is clear. It gets extracted, distilled into petrol, pumped into the car, and turned into energy and emissions.
Data’s journey across Uber is very different. It starts inside and outside Uber’s business. It comes from many sources: drivers, users, social media, the weather. And informs different decisions, simultaneously. For example, knowing there’s lots of demand in a specific area and adjusting journey costs accordingly.
Multi-lateral data flow – a new mindset for leaders
Like oil flowing along a pipeline, information used to flow in just one direction in a business – up. From managers to the board, and back down again. But this approach is slow, dated, and squashes innovation.
When data can flow up, across, and down a business, it enables high-quality decision making, improved productivity, and more responsiveness.
The key to managing and improving this flow of data is first thinking of data as infrastructure. Then treating data like infrastructure – planning it, maintaining it, helping others benefit from it, and developing it for your future needs.
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