If not ‘monetisation’, what then?
A new resource with transformational potential; an order-of-magnitude reduction in the cost of making this resource available. What happens when these two things come together? Answer: the ways economies and societies work are reconfigured. And peoples’ daily lives are transformed.
Many people instinctively recognise the power of a transformational resource. Once iron smelting was invented, the strength and versatility of iron would change the ways a million and one things were done, including making many new things possible. Likewise with electricity. And data.
But fewer people instinctively see the crucial second half of the change equation: the importance of order-of-magnitude cost reductions. No matter how transformational a resource’s potential is, if it remains hugely expensive to access it, only a tiny few people will use it, to do only a very small range of things.
The first internal combustion engine was created by Étienne Lenoir in 1859. But it wasn’t until 50 years later, when Henry Ford invented the moving assembly line, that the motor car started to become a mass market. Until then, it was just a marginal plaything of the very rich.
Motor car making would have been impossible without another order-of-magnitude cost reduction: that of energy, in particular electricity. It was a thousand-fold fall in the cost of making and providing energy that ushered the industrial revolution in, making all the things we take for granted today — ubiquitous at-the-flick-of-a-switch lighting, heating, and electrically powered machines and appliances possible.
It’s hard to underestimate the impact of order-of-magnitude cost reductions.
The first thing they do is to democratise previously elite, luxury products. The motor car is a case in point. Likewise, the mobile phone. And energy. Back in the middle ages, it would have cost you £35,500 a year to use candle light to read for two and a half hours a day. Today, it would cost you just £3. That’s a twelve-thousand fold cost reduction (and that calculation was done before the introduction of LED).
Order-of-magnitude cost reductions don’t only democratise usage. In the process, they dramatically extend it. The more people can use the resource, the more they do it, massively expanding the market as they do so. Think of how much people travelled before mass produced motor cars; or how much people read.
Along the way, order-of-magnitude cost reductions also improve and enrich the experience, making it both cheaper and better. Reading by electric light is much easier than it is by candle. Driving a motor car in winter is far more comfortable than riding a horse.
And there’s more: the same cost reductions make completely new things possible, pollinating further innovation. Take just one example. People have known about the potential qualities of ‘alum’ for thousands of years. But making aluminium (a highly durable, versatile and lightweight material) requires huge amounts of energy. So the aluminium industry couldn’t take off until the costs of electricity fell. Once it did take off it made further new things possible, in turn. Today’s aviation industry wouldn’t exist without it, for example.
Finally, when a new resource becomes ubiquitously available, existing ways of doing things get reconfigured. The classic example of this is the shift from steam to electricity. When steam was introduced, factories were organised so that the machines with the most intensive use of energy were located closest to the power source. When electricity made it possible to provide energy at any location, production facilities were reorganised around the logic of more efficient production — creating a new productivity boost.
So all of these things — Democratisation, Expansion, Enrichment, Pollination and Reconfiguration (DEEPR) — are made possible by order-of-magnitude cost reductions of a key resource. Let’s sum it up in a slogan: Order-of-magnitude cost reductions make ‘DEEPR’ social and economic transformation possible.
Personal data and DEEP transformation
Here is where our argument gets more controversial. In our view, when it comes to personal data, we’re in the equivalent of the pre-Ford days of the motor car. Personal data is so expensive to collect and use that only the very rich — the biggest, largest organisations in the world (including public sector institutions) — can afford to do it at any scale. And in doing so, they are making themselves even richer and even more powerful.
As yet, personal data hasn’t been made available the people whose data it is. It hasn’t yet been democratised (though new regulations about data portability could help change that). That in turn, means that both uses and users of personal data remain restricted — to the organisations that collect and use the data and the purposes they want to pursue. Which means that all the knock-on reconfigurations and innovations that could follow are stifled. For example, using personal data to transform the way social and public services are delivered (at greatly reduced cost); or the development of an entirely new industry of Personal Information Management Services (PIMS).
Verified Attributes are just one of many, many examples where these opportunities are being stifled right now — and they are just one form of personal data across a broad spectrum (activities, behaviours, preferences, opinions, inferred, conferred, etc, etc).
Monetisation and liberation
What has all this got to do with the quest for monetisation? Our answer is quite simple. Today’s all-pervading quest to ‘monetise’ personal data creates an agenda, a focus, a set of priorities that take us away from rather than towards the order-of-magnitude cost reductions that are needed to unleash the full personal, social and economic potential of personal data. It’s a cost-plus model that stifles opportunity, rather than a cost-out model that unleashes potential.
That is why we at Mydex are focused intensively on cost-out rather than cost-plus.
Before Henry Ford introduced the moving assembly line nobody realised just how wasteful and inefficient existing ways of making motor cars were. The waste was institutionalised. Embedded into ‘how things are done’. Taken for granted as the starting point. Built upon and embellished open, not questioned as a false foundation.
The alternative to the monetisation of personal data is sharing the benefits of waste reduction (including the financial benefits) made possible by reducing the unnecessary work and re-work.
When we look at the processes used to collect and use personal data today, we see institutionalised waste everywhere. Waste created by unnecessary duplication of work and effort, of excessive and unnecessary complexity, of poor quality (which generates ongoing and endless reparative work), of poor alignment. In turn, this endemic waste stifles opportunities to automate and generates huge opportunity costs — the opportunities squandered because people have to invest precious time and effort doing one thing when they could and should be doing other things that are much more productive.
Providing every citizen with a Personal Data Store opens opens the door to truly deep transformation by de-duplicating, standardising, improving quality, aligning activities and processes, enabling automation and reducing opportunity costs. Our next blog teases out how and why.