British mathematician Clive Humby coined the phrase, ‘data is the new oil’ in 2006.
And the expression is still being kicked around today. Back in the pre-financial crisis noughties, calling data the ‘new oil’ was a useful metaphor. It signalled to business people that a powerful new asset was in town. One that fuels the digital services we all rely on. An asset that has catalysed the shift from manufacturing based economies to knowledge based economies. An asset to ignore at your peril.
But 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. A one hit wonder, if you like.
And that’s just one reason why thinking about data as the new oil is problematic. Because applying industrial age thinking to digital age data, creates traps that lead to bad investments, failed projects, and missed opportunities.
Here are just a few ways data and oil need to be thought about differently.
1. 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 heart of the apps, websites, and services we use. It’s changing how businesses work and what they need to pay attention to.
Seeing data as an analogue to oil is an easy way to think. But it's not right. It encourages us to think of data as a dark pool of information to connect infrastructure like pipes to. Large oceans and rivers of data that we somehow need to control. In reality, data is better thought of as the infrastructure itself.
Like railway and electricity networks, data is the critical infrastructure our economies now rely on. Good railway infrastructure gets us places, faster. Good data infrastructure gets us to decisions, faster. And like other infrastructures, data infrastructure needs to be carefully managed – considering things like access, safety, and maintenance.
When we think of data as infrastructure, it also helps us think about it more broadly than just numbers on a spreadsheet. Businesses who treat data like infrastructure recognise the importance of planning and investing in that infrastructure, so that it meets their strategic needs.
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. Developing each of these elements is what gets results.
2. Data is not a finite, expensive to extract resource
One of the reasons that oil is a valued asset is that it’s hard to get hold of, difficult to refine, and finite in quantity. One day the earth’s fossil fuels will run out.
When I publish this blog, I will have created an entirely new set of data points. Words, metadata, headings... And everyday millions of people are doing the same thing. Posting pictures, writing emails, using services, conducting research. Data is everywhere. And we’re constantly adding to the pile.
Want to analyse Twitter to see what people think about a topic? Use the Twitter API. Fancy conducting your own research into climate change in the USA? Use the National Oceanic and Atmospheric Administration’s local datasets. These and many other data sources are free to use, if you know how.
Whilst it might be hard to extract value from all of this data, it doesn’t need the billions of dollars of investment required to be a player in the oil industry. It requires knowledge and experience.
The lesson? The main barrier to entry in this market is skills. Not money.
3. Oil is single use - data can be shared, reused, and reshaped
Once combusted, the value of oil is destroyed. And the act of combustion produces nasty byproducts.
Thanks to the internet and cheap digital memory storage, we can now access, use, and share the same data, over and over again. Whether it’s bus timetables or COVID transmission data, the same data points can benefit many different people. Let’s not duck the storage issue here – there are environmental impacts in storing all of that data. Especially as data centres use electricity as their power source.
But data, if not a renewable resource, is a reusable resource. And a resource that, when gathered together and transformed, can become even more valuable.
4. Data becomes more valuable when shared. Oil becomes less valuable
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. When there’s less oil around and more people want it, prices tend to go up.
Data on the other hand, tends to increase in value the more people access it. This is why many organisations recognise the importance of building shared data infrastructures. If you liberate your data from organisational constraints, your partners and customers can use it too.
Focusing on helping data flow smoothly both inside and outside a business can therefore make data more valuable, by making supply chains more effective, by reducing costs, and by powering innovation. Just like when the Airbus’ Aprocone programme found new ways to share data to improve aircraft design.
