Data Democracy and shared value creation— Adding sustainable value to our society
If you are familiar with business management strategy or had the chance to attend an MBA program in your life, you most certainly already have encountered the concept of CSV — Creating Shared Value.
Originally introduced by Michael E. Porter and Mark Kramer in a 2011 Harvard Business review article, CSV in essence describes societal influence as a new frontier of competitive advantages.
Simply put, the core message of CSV is the interpretation for companies to focus on adding value to all relevant stakeholders within the extended economic system of their operations and actions, as the most sustainable way for long term profits. Not only that, but the authors argue that companies can achieve distinctive competitive advantages by following this path. The theory of increasing and securing your own long-term returns by investing or supporting others and contributing to society is an appealing concept where in the end, everybody wins.
Let’s talk about one thing: What is the purpose of a standard private-sector company? Economically speaking there is only one purpose, and that is to make money. Companies are economic entities within the larger domestic or global macro-economy. Non-profit organizations might seem like an exception as they are bound to respective laws in terms of not being allowed to realize net-profit and retain earnings. But even NPOs focus on maximizing the value they create as a company, so it is in their respective interest to realize growth; which again breaks down to making more money (revenue) to pursue their founding mission. To evaluate the applicability of CSV to each and every company, the question might also be: What does the company leadership (or in the case of listed companies the shareholders ) really imply as it’s fundamental target.
Creating Shared Value and Data Democracy
Even though there may be companies which are not interested in pursuing long-term success, willingly focusing on making big bucks for only a short period of time, however this is not the case for the vast majority. As far as companies are founded on timeless core values, the idea of each business is to operate an infinite amount of time, as long as it can provide the demanded, profitable value within society. Companies today also rely heavily on data to achieve sustainability (coined into the term of digital transformation), as failing to achieve a transition to data driven operations and decision making will heavily impact its competitiveness.
So how does Data Democracy fit into the picture of promoting sustainable value creation?
Companies that operate on the idea of creating a Data Democracy are inherently taking the approach to the timeless core value of fairness in respect to the treatment of data as an economic value between several parties, and long-term sustainability of interactions as a part of the economic system.
The philosophic question about how we build a fair future for our data is an integral part of Data Democracy, so shouldn’t the goal of establishing an ecosystem as a whole be to pursue creation and improvement based on the concept of CSV itself? We are looking at an ecosystem of companies that realize value in this single context and environment, based on the same core value and principles, and in the same way as each single, data-focused businesses embraces them as their own.
In coherence to CSV as a business decision paradigm based on social needs, Data Democracy proposes fairness in data development as a societal need, one that has to be invested in, but lays the ground for a growing ecosystem of business opportunities that derive from the prosperity of an abundant data exchange.
If we look at the micro-economy perspective of a company that can participate in Data Democracy based on the theory of CSV sustainability, the promise of sustainability applies not only for the businesses engaging in decisions based on the paradigm, but also includes users who are sharing their data as stakeholders.
An inclusive data economy platform
The idea of a data ecosystem where consumers have the choice and option to trade their personal and meta-data to receive services should be seen as the core component to enable shared value. A reward system in the form of monetary value, nowadays efficiently achievable by cryptocurrencies or tokens, is the most simple and straightforward form of incentive to participate in such an ecosystem. With a data marketplace as the core component of the ecosystem, a supply-and-demand-adjusted market for information is established between consumers and service providers. Users will see these incentives only as reasonable if the added value from services is justified by the security concepts of the infrastructure it is based on — If people feel safe to use there data and get rewards for using services, they will certainly opt in.
Just as CSV is focused on the creation of value that benefits anyone, Data Democracy is aiming to achieve a decentralized infrastructure that adds sustainability to digital services and the data cyberspace or internet. Sustainable business growth can be achieved by a positively reinforcing cycle of more user data and more services, but with our current central services, where the user is the product rather than the customer, the expansion of user data value capture is restricted. Let’s break out of the existing cycle and create a new reinforcing, positive cycle of value creation!