Data is the new oil

There was a time in history when oil marketing companies were having the time of their lives, a
boon they owed to the advent of oil extraction technologies of the 19 th and 20th century. Entire
economies depended on this one golden resource that had found an application in virtually
everything. When the United States has fought wars over something, you know it is a big deal, and
so it was. Oil, for all its worth, was an earth mover as its supply controlled markets all over the globe.

Fast-forward to the 21st century and the same could be said about data. ‘The new oil’ as it was called
by British data scientist Clive Humby, data has been on immeasurable importance since the advent
of the last century. Imagine a world without data: with no means of data analytics and computation,
without a huge aggregate of numbers staring right back at you demanding some meaning, some
justification of their existence. Imagine running an enterprise on plain hunch: how would you decide
on what to do with the vital organs of your company, be it spending, pricing, vendor management,
customer feedback and human resource management. With no data to back your decisions, they all
fall flat just like an engine without oil. With data by your side, you have the world of digital economy
with all its benefits at your behest.

However, the comparison with oil reveals one more aspect of data. Unrefined, it is of no use. But
this is where analytics and the knowledge economy come in. Data yields information that is fed into
analytics that helps form algorithms for applications. In fact, extracting information about
customers’ brand loyalty using the supermarket loyalty scheme – Clubcard, is how Clive Humby
helped his client Tesco realise its true market potential, thus helping it become UK’s biggest
supermarket chain. Just like oil helped fuel industries during the revolution, data helps fuel the
knowledge economy, thus facilitating the digital revolution that has been ‘the’ thing of the 21 st
century.

Wealthy economies in the past century were said to be those who were blessed with a continuous
and abundant supply or reserves of oil. Wealth in the modern economy, however, resides with the
one with enormous reserves of data. Look at Amazon, Google, Facebook etc. What do they have that
gives them the edge in terms of buyer segmentation, understanding consumer behaviour and
decision-making. It is data. Data gives them the power to edge their opponents out in their
respective sectors.

The abuse, should I say, of both oil and data can also be used to draw parallels between them. Take
the 2016 oil glut for example. When US shale oil production boomed, the world was producing at a
surplus of 2 million bpd. With Iran’s sanctions on oil export being lifted by the US and Saudi Arabia’s
reluctance to cut on production just because ‘OPEC said so’, oil prices plunged to abysses deep
enough to erode entire economies of oil-dependent economies like Venezuela.

In case of data, the most notorious case of gross misconduct would be that of Cambridge Analytica.
The data analytics company based out of London, UK, who apparently had 5000 data points on 220
million individuals in the US to compile a personality data profile, which it used in due course to
influence the outcome of the 2016 presidential election: Hillary Vs Trump by physcological profiling
and segmentation of voters. This data was then sold to the client, in this case the Republican
candidate (first Ted Cruz, then Donald Trump) and then used to target voter groups. Earlier, a similar
misappropriation of data asset was done to help Nigel Farage and Leave.EU achieve their desired
outcome in the June 23rd referendum. Even Facebook has been alleged to have misused and cashed
on user’s ‘personal’ data, clearly pointing out to why unlawful mining of data influencing local
politics is a big deal.

In short, one cannot understate the importance of data in the age of computers. From controlling
markets in Dalal street to developing a new product in a laboratory, data is key. The need for data is
ubiquitous, which has led to its comparisons with oil. But the precedent set by oil is being followed
by data in its own strange, unique ways . Ensuring that these commodities are equitably used for the
good of self and the global community is an imperative to uphold for us.

Sources:

1. https://medium.com/@adeolaadesina/data-is-the-new-oil-2947ed8804f6
2. https://en.wikipedia.org/wiki/Cambridge_Analytica
3. https://business.financialpost.com/commodities/energy/the-worlds-oil-glut-is-much-worse-
than-it-looks
4. The Great Hack – a Netflix documentary