Towards a Data Industry Complex
Great industries aren’t born. They grow.
[The following, with minor editorial changes, is from a monthly newsletter I publish. Subscribe here.]
It’s time to rethink a popular cliche.
When tech pundits say “data is the new oil,” they mean it’s core to the Information Age, the way oil was at the center of the Industrial Revolution. The problem is that this theory misses a more intriguing parallel that illuminates where things are headed.
The oil business first got big providing kerosene for lighting. Then, new uses were found for previously cast off byproducts. Oil was good for electric power generation. Diesel fuel was good in railroad engines (replacing coal, which replaced wood fires — energy density, portability, and cleanliness were key factors in both transitions). After considerable experimentation, aided by supplies like the famous gusher pictured left, gasoline became the preferred fuel for automobiles. While gasoline became critical to the business, kerosene outsold gasoline for the first 60 years of the industry.
As the technological and economic utility of the business grew, it found more applications. It could be associated with different industries, particularly as standardized extraction and distribution lowered prices. People in those other businesses, like transportation, utilities, or manufacturing, either adjusted to the new source or were mortally challenged.
Clearly, digital data has a long way to go before it has the same impact on the world as the oil industry, but there are already intriguing parallels.
Digital data started out as an efficient way to record transactions. Think VisiCalc, the first computer spreadsheet program. Digital databases and data warehouses followed that path, creating new ways to store and gain insight into financials, consumer tastes, and more. Digital data prompted new modes of information storage (like CDs), creation (like sensors and mobile devices), and interaction (like social media).
Much the way industries were changed by the increasing applications and distribution of oil, businesses of all kinds have adjusted for decades to take advantage of new forms and types of data. And, while digital information is unlikely to transform into a remarkably different substance — the way oil begat petrochemicals — it has already created new practices like advanced encryption and data science, and businesses like cloud-based storage.
Vast and diverse amounts of data in cloud systems is the chief reason for today’s Artificial Intelligence boom. Particularly interesting in this regard is the creation, capture, and use of unstructured data, something essentially unusable a few decades back. To carry the analogy farther, clouds are something like a system of data collection, refining, and distribution (happily, in the case of my employer, in a carbon-neutral way).
Technological revolutions realign the way we work, which is a profound change. In the case of oil, dense and portable energy meant engines could go more places. Tasks could be remade, and entirely new professions were created. Without cars alone, there wouldn’t be networks of gas stations, there wouldn’t be suburbs, and there wouldn’t be fast food as we know it (I’ve been waiting to write that sentence for years). People themselves became more mobile, giving companies access to a much broader talent pool.
Will data cause such fundamental changes in the way we live and work? Already, the flood of digital data has begun to accelerate product cycles, make teams more responsive, and deepen customer interactions (increasingly though the products themselves, or digital chatbots). These changes require individuals and companies to design for high-velocity, constantly shifting work conditions, which in turn call for rethinking the skills we seek and the goals we set.
To return to the analogy, we aren’t just witnessing the next Industrial Revolution, but rather moving from the discrete steps of a petroleum-powered factory to the fluid workflows of a cloud computing system. Leaders seeking to get ahead of the next revolution should think beyond its source — data, or oil — but rather the new systems and paradigms it creates.
To make this email more valuable, let me know what you’re reading, what new trends and practices you’re seeing wherever you are, and what questions you’d like answered, either by me or by the other readers of this email.
