Data or oil – which is the most valuable?
The question isn’t new. As far back as 2006, UK Mathematician and developer of the groundbreaking Tesco’s Clubcard, Clive Humby declared,
“Data is the new oil. It’s valuable but if unrefined it cannot really be used. Oil has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity; so must data be broken down, analysed for it to have value?”
In this article, we look at this comparison and discuss how accurate, helpful and relevant it might be. How far can we sensibly match the value of these two apparently essential commodities?
Many academics, CEOs and economists across the globe have been articulating Hunby’s neat and tidy theory for many years. Others have dismissed it as riddled with flaws. For them, the theory is simplistic, glib and just not very useful.
Are we watching the Kentucky Derby?
Recently, it’s seemed as though we’re watching the closing stages of a famous horse race – with the two favourites frantically swapping between first and second place. In the last decade, the value of personal data may indeed have accelerated well beyond that of oil. But then, in recent months, we’ve witnessed ‘black gold’ making a spirited comeback. For evidence, we need to look no further than fuel pump prices, alongside record oil company profits.
But then again, the advantage is back with data. Isn’t it more valuable than ever? It’s now firmly in place as the cornerstone of every smooth functioning society. Without it, wouldn’t ‘life’ come crashing to an unseemly halt? When a business treats data like the asset it is and makes full use of its potential, huge opportunities open up. Good data beats opinion every time. Its insights enable organisations to make better decisions towards avenues of growth.
Back to where we were a century ago
At the base of the discussion is the theory that, in this new digital age, information and what you extract from that information is akin to oil early in the 20th century. A huge, untapped resource that—depending on how you extract, refine and make use of it—can reap massive rewards, especially for those who own it. The value of this raw material lies in its refinement into a commodity. In the case of oil, it’s the energy extracted – for data, it’s knowledge.
Those who favour the comparison between oil and data point to the fact that those who controlled oil also controlled the economy. They declare that data today is no different. Data analytics is now fundamental to business. Information and the knowledge and insight gained from it make data even more valuable than its hydrocarbon older cousin.
Control brings profits and power
When we further explore the power of data, we learn that the world’s information is essentially controlled by 5 borderless, global mega-corporations that are more powerful and larger than most governments. They make mind-blowing profits and wield enormous power. The result? Many now call for anti-trust break-ups of these companies. Take Google as an example. It now owns around 80% share of search whereas, when it was split, Standard Oil enjoyed a mere 79% share of the American market.
These mega-businesses habitually exchange access to their systems for our personal information. So – what happens when two of them control close to 90% of all new internet advertising and the rest of the internet economy suffers? That’s why they advocate a break-up of the monopolies as seen in the oil sector a century ago.
The comparison breaks down
However, when we dig deeper into the facts, do we see the oil vs data comparison start to break down?
Let’s look at oil. It’s a finite resource that one day will ‘run out’. Not so data, which is infinite and reusable. Oil requires large resources to be transported. Data, on the other hand, can travel around the world in milliseconds. Furthermore, the more we use data, the more useful it becomes. It neither converts into exhaust fumes nor dissipates, having provided light and heat.
As it becomes ever scarcer, oil becomes harder to extract. On the contrary, data’s growth seems unstoppable. IoT means more data than anyone can conceive is being gathered every day. In raw form, data mutate into any number of forms. Environmentally pure, it can represent almost anything a computer can process.
Oil, however, is oil. Crude oil transforms into petrol, diesel, jet fuel, road surfaces, plastics and lubricants. The process generates countless forms of pollutants and causes untold damage to the environment.
So – where does this leave us with the oil vs data comparison? Wouldn’t it be more accurate and useful to shift our metaphor? Maybe it would be apt and helpful to compare data to ‘clean’ energy sources, such as sun, water, and wind – commodities that we have in abundance and should continue to have for centuries to come.
Are you making the most of your data wealth?
However we feel about the oil vs data debate, we can all agree as to the immense and essential value of data to business. Some questions for you and your organisation.
Do you understand its true value and potential?
Are you aware of the enormous quantity and variety of information you’re holding?
Do you also know how data management and visualisation tools can give you that level of understanding – providing you with the vital insights you need to maximise your growth potential?