Posted on: Monday 20th of April 2015
There are many ways in which the ‘data is the new oil’ analogy works: the common need for extraction and refining; the way both became vital resources driving wealth creation across every aspect of the economy; the way they changed both how wealth is created and who the key players are; the way they both created new corporate superpowers that swept all before them – and new regulatory battles (witness the EU’s complaint against Google for anti-competitive practices).
The new solar?
But there is also a darker side that both sides share. Fossil fuels generate toxic emissions which threaten catastrophic climate change. Current approaches to the collection and use of personal data create their own form of toxic emission: a catastrophic loss of trust. This is leading to its own form of climate change as data becomes more and more a source of conflict rather than an opportunity for additional wealth creation.
The difference between oil and data is that while it took 100 years for oil to realise the full impact of toxic emissions, with personal data it’s taken just 10-15 years. This is the ‘Perfect Storm’ Ctrl-Shift talks about.
The quest for new, less polluting sources of energy is now underway. That’s also what we need with personal data: ways of unleashing data’s value while sustaining rather than destroying trust. If data is the new oil we’ve got a problem. What we really need is the new solar power.
When strengths turn into weaknesses
The more obvious this becomes the more we see corporate and brand strategies shifting as companies realise that willy-nilly exploitation of personal data just isn’t sustainable.
A few years ago a zeitgeist had grown up that everything new, cool and exciting was centred on Silicon Valley and ‘digital’, especially new data goliaths such as Google and Facebook – and that in contrast, ‘traditional’ brands selling good old fashioned products and services were past it, fuddy duddy, behind the times, no longer really relevant.
But now a new perspective is dawning. Could the data giants’ supposed strengths actually be a weakness? All that mistrust. All those regulatory inquisitions. That frightening over-dependence on just one revenue source – advertising and its even more frightening dependence on the myth of ‘better targeting’. Perhaps good old fashioned brands have an advantage after all: the fact that they are not ‘data kraken’ as the Germans call them.
Now. Not having massive amounts of data can hardly be said to be key to competitive advantage. But having trust – in your integrity, in what you do with customer data – is. Likewise, not being 100% dependent on advertising revenues can be a strategic blessing. It gives you greater freedom to explore new service and revenue opportunities.
The opportunity is for traditional brands to leverage their strengths of trust and flexibility to leapfrog oil and ‘go solar’: to develop new information services that put customers in control of their data and help customers use their data to add value in their own lives.
This doesn’t mean the Silicon Valley data behemoths are suddenly out of the running. Far from it. They’ve still got awesome momentum. But it does mean things aren’t as black and white as they seemed just a short while ago. They can’t assume, as they did in their first flush of youth, that everything and anything is possible. They have to accept they face limits. And responsibilities. For them, this is much an existential and cultural crisis as it is a strategy shift. But it’s inevitable. And essential.
Meanwhile for traditional brands, what once looked like a position of ‘left out in the cold desperately playing catch-up’ is beginning to look rather different: ‘Hey! We’ve got everything to play for!’
Just watch what happens as this realisation gains ground.