Harnessing data to boost business

Data is becoming the currency of today’s economy. If used judiciously it has the power to revolutionise our ability to solve a host of social problems – from widening access to healthcare to eliminating waste in our energy system.

But, at present, we are not being judicious enough, with the result that consumers do not trust the businesses that are mining their data. Mistrust also comes from the perception that consumers are being exploited, their identities being converted into capital they never see. Data-driven businesses need to get out in front and earn the trust of the consumers whose data they are harvesting.

So, though it is the US and China that dominate tech, what can European businesses do to help build societal trust in the data economy? Xynteo’s Europe Delivers report held conversations with industry-leading CEOs to find answers to this question. The report suggested three key ideas for getting the job done:  

Seize the early-mover GDPR advantage

In 2018, Europe took a first step in creating this governance, with the implementation of the General Data Protection Regulation (GDPR). Through imposing a common set of data rules across Europe, GDPR enables businesses to manage data more effectively across its borders, while protecting consumers by requiring that privacy is embedded into the design of the system.

There are, of course, concerns that GDPR could place European businesses at a disadvantage; most notably by restricting the development of the artificial intelligence needed to win in the ‘algorithmic economy’.

While unevenness in regulatory frameworks can sometimes create a disadvantage, GDPR may actually give Europeans a head-start in building fluency in how to develop and run profitable business models against a backdrop in which consumers are – a) much more circumspect about how their data is used, b) expect a return for its use, and c) wield the power, thanks to technology such as blockchain, to decide who gets to use it. In this future, trust isn’t a nice-to-have brand characteristic, but a fundamental precondition to securing access to the data required to compete.

For businesses accustomed to using free, human data to power AI, this shift will pose a challenge. Some tech start-ups – like CitizenMe and Datacoup – are emerging to help people make money from their data, but at least for now, this alternative has limited reach, as it requires too much effort from consumers. But as the public comes to see data as an extension of human identity, there is likely to be much more innovation in this space. 

Demonstrate data’s vast societal benefits

Businesses’ use of data has traditionally focused on driving greater productivity. Finnair, for example, has used PACE software, to optimise flight profiles and cut fuel consumption in its A350 fleet. These kinds of efficiency improvements more often than not translate into societal benefits. Finnair’s PACE programme is also delivering progress towards climate aims – the airline’s ambition is to cut CO2 emissions by 17% from 2013 levels by 2020.[1]

These efficiency improvements are critical. But our use of data can go even further to increase our collective capacity to transform society.

Take our cities. Data can help us radically improve how we organise our urban centres, so that they can accommodate the 1.3 million people who move into cities every week, while also reducing emissions and improving quality of life. In 2018, McKinsey assessed 50 smart cities across the globe, finding that current applications could improve quality-of-life indicators such as health, safety and commuting time by 10-30%. All while advancing 70% of the UN’s sustainable development goals.[2]

Agriculture is another area in which data capture and analytics can drive markedly better outcomes, not least for smallholder farmers. For example, Yara and IBM are combining their complementary capabilities – agronomic knowledge and data expertise – to innovate and commercialise digital agricultural solutions. These will allow farmers, both professional and smallholders, to optimise farming practices and, as a result, increase yields, crop quality and incomes.[3]

Open up to unleash data’s full value

One of the biggest technical obstacles to putting data to good use is that it is often collected in silos. If it is held in disparate systems, its full value cannot be extracted.

Regulators are in some cases pushing businesses to open up their data. In some cases, businesses themselves are trying to drive data-sharing in their industries. One example comes from the oil and gas industry. Aker BP, Norway’s largest privately owned oil company, is advocating for the total liberation of data – which would see the players on the Norwegian Continental Shelf pool data in order to achieve maximum efficiencies in their operations and drive new value creation.[4]

Implicit in these initiatives to liberate data is the increasing recognition by businesses that it is not the data itself that gives competitive advantage, but rather its analysis and application.

On the horizon

As we seek to reengineer our economic system, we need to apply lessons from our recent past. Since the industrial revolution, governments, businesses and consumers have been engaged in a dangerous dance in which the overriding objective is to convert as much of the natural world into capital, as cheaply and quickly as possible.

With data, we risk falling into the same pattern – this time converting as much of our resource base into bytes of information. Data is undoubtedly a game-changer, but to harness its potential in a positive way we need to be clear about what our aims are. Only then can we effectively use it to build healthy, efficient societies and thriving, competitive businesses.