Shifting the Paradigm: From Data to Outcomes

Damon Thomas - 10th June 2024

In today’s digital economy, data is often heralded as the “new oil,” a precious commodity to be mined, hoarded, and monetized. This perspective has driven companies to place immense value on the data they collect, leading to a competitive culture of secrecy and data hoarding. However, this emphasis on the intrinsic value of data itself may be misplaced. Instead, the real value lies not in the data but in the outcomes it can generate. By shifting our focus from data to outcomes, we can foster a more collaborative and innovative environment where data is shared more freely, and revenues are derived from the value of the results rather than the raw data.

The Overemphasis on Data

The current landscape of data valuation is deeply rooted in the belief that data itself is a valuable asset. Companies invest heavily in collecting, storing, and securing vast amounts of data, often with the aim of gaining a competitive edge. This mentality is driven by the assumption that more data equates to more power and, consequently, more profit. This has led to a scenario where companies are extremely protective of their data, viewing it as a proprietary asset that should be guarded against competitors at all costs.

This overemphasis on data as a commodity can be problematic for several reasons. Firstly, it can stifle innovation. When companies are reluctant to share data, they limit the potential for collaborative efforts that could lead to breakthrough innovations. Secondly, it can lead to inefficiencies. Companies may spend significant resources on maintaining data that they are not fully utilizing, simply because they believe in its potential future value.

The Perceived Value of Data and the Culture of Secrecy

The perception of data as a valuable commodity has resulted in a culture of secrecy and protectionism. Companies are often unwilling to share their data, fearing that doing so could undermine their competitive position or diminish the value of their proprietary information. This reluctance to share data can create significant barriers to progress, particularly in fields where collaboration and data pooling are essential for advancement, such as healthcare.

Moreover, the fear of data breaches and misuse adds another layer of complexity. With increasing regulatory scrutiny and potential legal repercussions, companies are understandably cautious about sharing data. This cautious approach, however, can paradoxically limit the potential benefits that could be realized if data were shared more freely.

Shifting the Emphasis: From Data to Outcomes

To unlock the true potential of data, we need to shift our emphasis from the data itself to the outcomes that can be generated from it. Data, in isolation, has limited value. Its worth is realized when it is analyzed, interpreted, and applied to generate insights, solve problems, and create value. By focusing on the outcomes, we can move towards a model where the value is derived from what is done with the data, rather than the data itself.

This shift in perspective can encourage more open data sharing. When companies understand that the real value lies in the outcomes, they may be more willing to share their data, knowing that their revenue and competitive advantage will come from the innovative applications and solutions developed from that data, rather than the raw data itself. This could lead to a more collaborative environment where data is seen as a means to an end, rather than an end in itself.

A New Model: Revenue Sharing Based on Outcomes

Under this new model, companies could adopt a more collaborative approach to data sharing, where revenues are generated based on the value of the outcomes rather than the data itself. This could involve partnerships and consortia where data is pooled and shared, with the resulting insights and innovations generating shared revenues.

For example, in the rail industry, different suppliers each with niche expertise could collaborate by sharing data from braking systems, wheel bearings, track inspection to build a more holistic and contextual view for condition monitoring. The revenues generated from the savings generated could then be shared among the participating entities based on their contribution to the outcome. This model encourages collaboration, reduces duplication of efforts, and accelerates the pace of innovation.

In the tech industry, companies could share user data to improve machine learning algorithms and AI applications. The improved products and services resulting from this collaboration could lead to increased market share and revenues, which can then be distributed among the participating companies.

Conclusion

The current emphasis on the value of data itself is limiting the potential for innovation and collaboration. By shifting our focus to the outcomes that data can generate, we can create a more open and collaborative environment where data is shared more freely. This shift in perspective not only enhances innovation but also allows for new commercial models where revenues are shared based on the value of the outcomes, rather than the value of the raw data. Embracing this new paradigm can unlock the full potential of data, driving progress and creating value in ways that were previously unimaginable.