Why we are waking up to the value our our own data

It’s no secret that we’re producing more data than ever before.

Companies are getting to know their online clients better, with the latter creating many things that are valuable to organisations.
Companies are getting to know their online clients better, with the latter creating many things that are valuable to organisations.

And we now have more processing power than ever to analyse it – and do pretty cool things with it too. In principle, we should be in a space where brands are interacting with customers in all kinds of meaningful ways and using this data to create all kinds of wonderful experiences.

But are they?

We still get stalked across the internet for once having a sneak peek at a pair of socks we have no intention of buying. And what about random communications from organisations that should know a lot about us but can’t seem to demonstrate that. Why can’t they get it right?

Let’s take a closer look. Every interaction leaves a data footprint – and organisations make no secret of the fact they want to get their hands on as much of it as they can. Why? Because there is a notion that this data is valuable to organisations. It helps run their business, and tells them a few things about their customers. In some instances, this data is the only asset they have. An asset implies a value, so what’s the value of data? This seems like a pretty important question to ask.

Our current (Industrial Age) accounting principles are very good at valuing tangible assets (machines, tables, chairs etc.), but quite poor at valuing intangible assets like data. So much so that data has no place on the balance sheet. There’s an elusive heading of “goodwill” that you could slot data under, but that’s all the recognition it gets.

Why is this important? If we can’t value data, why should we invest in it? If we tried to value it, what would that be based on – how clean or complete the data is? Or why we need it, or what we intend to achieve by using it? Or when should we value it? Surely data would have a different value if we’re at the point of selling or buying a company rather than looking at data to become more operationally efficient as a company?

So how can we evolve from these Industrial Age principles?

Further evidence that we are no longer in Kansas is that brands are struggling to understand how or where value is created in their relationship with customers.

In the “good old days”, things were nice and simple. Come up with an idea, make it as cheaply as we can (one design, one colour) and push it out to customers, maybe spend some money on advertising – and you buy the product (or a dream) and the company makes money. Boom! Behold the value chain in full swing.

Are things so straightforward these days? Is the brand the producer? And the customer the consumer? Could the customer be the producer? Whatever happened to the value chain? Who creates the value in the data-driven economy and how? When you say value, is it only transactional? Money in return for goods and services, nothing more?

The customer now creates many things that are valuable to an organisation – which could be content or even data – but what does the customer receive for their contribution? If the customer is creating value, why are they not getting recognised as a co-creator/partner and thus being rewarded?

It’s heart-warming that there are ongoing conversations about the Universal Basic Income being funded based on a fee for sharing your personal data.

Even in our darkest hour, scandals like Cambridge Analytica are educating customers about how their data is used and is allowing us all to question the value we are receiving in return for the services we use. We need to consider, introspectively: does this align with our values? How much are we willing to compromise or not?

Brands can no longer get away with sitting on the fence. Last year, we witnessed a controversial Nike campaign where we saw the brand taking a clear political stance. Today, other brands are following suit. Some think this is alienating many customers, but equally it’s giving a voice to those customers who share these values and strengthening their connection to the brand.

Brands which are unable to define who they are, what they are about and what they stand for, will struggle in the future.

Significantly, “values” have finally moved to the centre stage of the “value” conversation. GDPR was a wonderful moment, not only for setting a minimum acceptable standard for the way organisations use customer data, but also for giving brands the opportunity to establish long-lasting relationships with customers, by becoming more transparent and rebuilding trust.

GDPR is only the first step. We’re heading into a future powered by Artificial Intelligence, where our lives will be run by algorithms. When things go right, they will go wonderfully right, and when things go wrong, they will look like something out of TV’s Black Mirror.

What that means in real terms is that if we are incorrectly profiled by an algorithm, we could lose access to products, services and at times even our freedom. It becomes ever more important to think about our values as individuals, organisations and societies to ensure we’re putting down the right ethical foundations for future generations.

I’m leading a very exciting initiative called the Value of Data. Scotland is experiencing a data renaissance, and it’s powering ambitious economic growth. The Value of Data campaign has been created to help elevate and champion the role of data from classroom to boardroom – and help organisations across the UK responsibly deliver value to their customers. We’re working closely with academia, government, and the public and private sectors to introduce bold, innovative, data-led approaches to customer engagement, underpinned by solid ethical frameworks.

This project aims to ask difficult questions about where the value of data really lies. In the data? Its quality, its quantity? Or in the way we use it to create better outcomes for customers? By having better values, could organisations deliver better outcomes to their business, their customers, and society at large?

Hopefully, soon, we’ll have answers to some of these questions.

Firas Khnaisser is the chair of Data and Marketing Association Scotland

For more information, visit https://dma.org.uk/