Data is like oxygen for a corporation. Just like we’re surrounded by the atmosphere, corporations live and breathe data. Likewise, as social, economic, and other spheres continue to produce data, it grows and moves and changes every second of every day.
As the breadth and depth of this corporate-owned intel vastly increases with technological advances, a pressing question facing the world of business is how to best leverage this huge, ubiquitous asset known as Big Data.
To realize the opportunity of Big Data, corporations must, at the outset, recognize that it has substantial value and acknowledge that there is such a thing as “data equity.” Some companies have figured this out better than others. Facebook, for instance, recognized the data equity in WhatsApp to the tune of $19 billion.
Data equity is similar to brand equity. The term “brand equity” has become an everyday part of the business lexicon — so much so that leading brand consultancy Interbrand publishes an annual list of companies ranked by brand equity called Best Global Brands. But if you ask people to articulate the essence of brand equity, they may give you a non-business–sounding answer that brand equity represents the soul of the company or what the company stands for.
While brand equity can last for decades, data equity is dynamic. It’s the encapsulation of human experience in bits and bytes along with the ability to get more and more of it. The equity comes from converting data into value. This process requires data science and advanced analytics.
Essentially, data equity is an intangible asset trapped within a corporation, which hasn't yet seen financial life, whose value depends on how it’s used. It’s a part of the company that has previously not been given adequate notice but that promises to be the next frontier in business.
Data equity is so important right now because companies can utilize this information in a very forensic way to be able to provide different services, different profit-making opportunities, and different ways of creating value in completely unprecedented ways. Again, this is now Facebook’s challenge with its WhatsApp purchase: figuring out how to convert the tremendous power of WhatsApp’s data into something that will financially perform.
For any corporation to unlock the value of its data equity, it must identify Signals. Signals are key patterns and correlations within the data that have proven to be valuable for solving a particular problem. Once the Signals are recognized, a company can leverage them for improved efficiency and competitive advantage.
When Signals are utilized correctly, the results are remarkable. For example, oil and gas companies have a ton of seismic data. They can use Signals within that data to determine where to drill and reduce costs of discovery. Consumer marketing companies can use their data’s Signals to better inform demand forecasting. Financial services companies can use Signals to better manage risk across their portfolios.
For every corporation with Big Data, Signals point the way to do what they're doing in a significantly better way. No matter the type of company, where it’s located, or which industry, each has its own particular signature around how it can capitalize upon this under-tapped resource to drive big success.
This article first appeared on Wired Innovation Insights.This post was updated May 21, 2014.
Arnab Gupta is the founder and executive chairman of Opera Solutions. He is a frequent speaker at industry events, including SXSW Interactive, Strata, and Structure:Data. Arnab earned an MBA from Harvard Business School.