Unblocked

by Alison McCauley

  The Blockchains Themselves Are Public Data Layers

  Blockchains by their very nature are public and auditable (with so-called “private” blockchains being accessible only to a defined community). This means that the data residing on a (public) blockchain is available to all. Different protocols will take different approaches to obscuring the data, or placing some data “on-chain” and other data “off-chain” with an encrypted link that alone renders it usable, but there is still data to be had for anyone who chooses to inspect it. This is of special interest to those looking to perform analytics on token economies, but may have other uses as well.

  At the Starting Line

  We are still in the achingly early days of developing the technology to support this fascinating but futuristic vision. Many of these data types must abide by regulation (like health data) or involve the coordination of many parties (consumers, new trusted third parties, and other businesses), presenting additional complexity to making this vision a reality. Importantly, the entire vision hinges first on consumers broadly adopting blockchain-based identities (the “vaults”). While there are easily hundreds of projects angling to serve various markets, they face an arduous journey to establish trusted relationships with consumers. Expect it also to take a long time for technical and legal issues to be worked out.

  But there are great volumes of financial and human capital pouring into the space with the goal of bringing this concept to market. Early use cases may focus on data of little consequence or with targeted and likely highly technical communities (a great deal of focus, for example, is being put into exploring some of these ideas through the lens of artificial intelligence, with its insatiable thirst for large datasets to be used in “training” machines). But over time, innovators will achieve breakthroughs that collectively move us in this direction. And there are entrepreneurs who are inching toward working proof of concepts even with sensitive data, such as health data.

  The Two-Edged Sword of the Blockchain Data Story

  This visionary shift in ownership carries a mix of consequences for the data-driven corporation. Those that depend on their stores of consumer data for competitive advantage will have to rethink how they retain their position. This includes companies that use data to lock consumers into a platform (as social media does today). On the flip side, the accuracy, the depth, and the breadth of data available could skyrocket. Corporations could also be relieved of the massive risk—and cost—of being a guardian of sensitive data. And those that are incurring a great cost to verify identities for new customers today, such as banks, could significantly reduce those costs by offloading this to reliable third parties.

  Implications: Rethinking the Rules of Competition

  Bigger, Better Data

  One of the first steps to promoting liquidity in land and commodity markets is to guarantee ownership rights so that people can safely buy and sell. Similarly, a first step toward creating more ideas and greater flow of ideas—idea liquidity—is to define ownership rights.

  Daniel “Dazza” Greenwood, Arkadiusz Stopczynski, Brian Sweatt, Thomas Hardjono, and Alex “Sandy” Pentland in “the New Deal for Data”

  Google’s research chief Peter Norvig famously said, “We don’t have better algorithms than anyone else; we just have more data.”145 And study after study has shown that more data can beat better models. It’s one of the reasons that today, power resides with those who own the most data.

  The blockchain era could change this balance.

  While there is still much work to be done—from technical development to the emergence of cross-platform standards to, importantly, broad ecosystem adoption—there is a great deal of attention and investment from technology industry heavyweights as well as smart young players. In this view of the future, the data stored in consumers’ personal vaults would be more accurate and more holistic than what is tucked away in today’s corporate silos. But the key shift for organizations is that they will no longer own it—the consumer does. Data that used to be a competitive advantage could become a commodity. What was once available to one organization could now be accessible to many. Instead, power will shift to those who can tap into the most data, and can gain insights better and faster than others.

  Those organizations that can figure out how to get to this bigger (and better) data have the potential to drive deeper insight—and finally realize the true promise of big data to advance business and society. Or, simply to build better products and do smarter marketing. Blockchain-era datasets could potentially be:

  Better quality

  In a study of over 2,000 data and analytics decision makers across 10 countries, KPMG and Forrester Consulting found that just 38% have a high level of confidence in their customer insights (and only a third seem to trust the analytics they generate from their business operations). Yet the vast majority say these insights are critical to their business decision making.146 Because the usefulness of a data vault to a consumer is higher if it is accurate, individuals will be motivated to ensure the accuracy of their data. And, because of blockchains’ unique ability to immutably validate data, organizations could have greater confidence in the integrity, accuracy, and provenance of data, whether it is coming from human or machine.

  Deeper

  If the adoption of blockchain-based identity becomes mainstream, and consumers perceive blockchains to be a secure, value-added alternative, there is no limit to the depth of data they may eventually contribute. Businesses could incent consumers to share data on psychographic characteristics or personal interests and needs. Consumers may even make personal data available they would never dream of sharing with a company today. Wearable sensor technology can now measure tone of voice, movement, gesticulation, and emotion. Once this technology breaks out of the lab and into our day-to-day lives, it could be used to understand relationships and behavior at a very intimate level. For the right incentive or mission, consumers may offer this up to organizations for their use. “People are okay about sharing data if they believe they’ll benefit from it and it’s not going to be shared further in ways they don’t understand,” explains Sandy Pentland.147 This data could be offered up in a way that contributes to the cause but holds back actual identity, protecting individual privacy.

  Broader

  Likewise, as comfort levels increase, users could contribute a greater range of data. Click and search data may be joined by social network, health, fitness, car, and home data. Blockchain technology will be coming of age in concert with the imminent mainstreaming of IoT—a synergistic pairing. As consumers awaken to the troves of data these growing volumes of devices collect, blockchain functionality could help them feel comfortable that the data won’t bring them harm. Identity systems on a blockchain could ensure a safe place for the data, and open up the possibility that it can later drive value back to the consumer whose actions created it, if they chose. As described in the “New Deal on Data,” giving “customers a stake in the new data economy . . . will bring first greater stability and then eventually greater profitability as people become more comfortable sharing data.”148

  More unified

  The unified customer profile has become a holy grail, ever-elusive, for many marketing departments. This coveted holistic view could reveal who a customer is, what they want, and when they want it with such granularity that marketers could present just the right offer at just the right time to trigger action (even if they can’t tie this profile to a specific person). That’s quite a power. In the blockchain era, some companies could get closer to this tantalizing prospect. Perhaps they attain access to massive volumes of data from the new broader, deeper data layer (and successfully use advanced analytics against them). Or, they gain such deep trust from customers that they are able to achieve access to key datasets within the personal identity vault. And these offers could operate with a more symbiotic ethos than is possible today—data could fuel the discovery of offers that customers actually want instead of being bombarded wi
th offers that just clutter their world.

  The Vision of the Data Marketplace

  As more and more individuals, machines, and organizations use blockchain-based identity systems, a kind of global data commons could surface. As more contributors and types of datasets feed this data commons, it would attract businesses seeking to access it, and data marketplaces could emerge. Whether driven by consortiums of established enterprises or newly established blockchain natives, these services will facilitate the buying and selling of data between individuals, organizations, and even machines. With transparent pricing and usage tracking, these data marketplaces could become efficient business models for data creators, and we could imagine that some businesses or consumers will discover creative ways to drive revenue from them (for example, a drone enthusiast who maintains an entire fleet to gather and sell weather and image data). This would thus attract more data sellers—and activate powerful network effects to grow the value for all parties.

  The Redefinition of Competitive Advantage

  As data becomes more of a commodity, accessible by many, it starts to tear apart our conception of what competitive advantage is in a digital world. This could trigger power transfers that we couldn’t have anticipated just a few years ago. No doubt these changes will build ever so slowly at first, but eventually, category by category, they will bubble up through enough of our institutions to reach the proverbial tipping point. And at some point it could happen: no longer will data itself be a competitive advantage.

  Where, then, is competitive advantage to be found?

  Data Science Quality Could Be More Important Than Ever

  In 2008, DJ Patil and Jeff Hammerbacher sat down for lunch in a Palo Alto cafe. The two men were struggling to build out teams that could find value in the vast amounts of data that the young companies they worked for—LinkedIn and Facebook—were throwing off. Over broccolini, DJ asked Jeff, “Hey, this thing we do—what do you call it?” Neither knew what title to give HR for their open jobs. “It wasn’t a statistician,” DJ told me, “or an economist, or a research scientist—and business analyst sounded too much like Wall Street.” By the time they finished lunch, the two had found a new candidate: data scientist. DJ and his team then ran a test: they listed the same open jobs under different titles. “We ended up hiring only the people who had applied for the data science jobs. The applicants were really cool and clever, and didn’t fit any mold—we had a rocket scientist, and a former brain surgeon,” DJ said with a laugh.149

  By 2011, in Santa Clara, California, O’Reilly Media gathered data scientists for their first industry event, the inaugural Strata Data Conference. There were 1,400 attendees. In 2012 an entry for “Data Scientist” showed up on Wikipedia, and three years later, DJ Patil became the first Chief Data Scientist of the United States.

  Over the last decade, data science has gone from an obscure practice to one of the key forces driving decisions in conference rooms across the globe, industry after industry. The best teams are able not only to answer key questions with insights found in the data, but also to take broad expeditions to discover questions in the data itself that no one has yet thought to ask.

  The blockchain-era shift away from proprietary data makes the quality of the science performed on the data more important than ever. As data becomes commoditized, the data arms race will no longer be only about who has the most. Instead, it will be about who is best able to use it. This means being so good at it that you have the ability to extract insights that others can’t see from the same vast troves of data. And it means having an ability to act effectively on those insights.

  These two dynamics have proven to be very difficult for businesses to get right. While some companies have developed admirable prowess, most have struggled. And indeed, it is exceptionally difficult.

  It of course requires hiring top data science talent. While this work and the tools to support data science have become quite sophisticated, many businesses are still scrambling to find enough people capable of doing high-quality work. But even the best insights are useless if the business can’t act on them. Actionable insights require tight collaboration between the data scientists and businesspeople across divisions. It requires working together to bring business context to the data and ensure that exploration is focused on solving fundamental business problems. And even if the organization and culture are structured to make this possible, it won’t be effective unless executives and managers have achieved at least a basic level of data literacy, or they won’t be comfortable making decisions on data over the age-old practice of experience and gut instinct. While some divisions have always been data-centric and may be predisposed to this way of thinking (finance), others have more recently made the transition (marketing), or have barely begun (human resources).

  A data advantage is thus not only about who can build the best data science teams supported by the best data science tools, but who can develop a strong data culture. The Chief Data Officer (CDO) is an emerging C-suite role that will help to increase data sophistication across the business. Gartner estimates that by 2021 the office of the CDO will be considered a mission-critical function in 75% of large enterprises.150 In the blockchain era of bigger, broader, deeper data, those who discover and mobilize around insights more effectively than competitors will be those that pull ahead.

  The Power of Relationships

  There is one angle that could give the select few access to proprietary datasets. That angle is trust.

  Today customers almost blindly trust businesses with their data. But as they become aware of the risks of doing so and the emerging blockchain-fueled alternatives, many will become more thoughtful about what they give away. In a blockchain world, businesses will have to earn customer permission to obtain data. Just as a healthy friendship builds trust and a foundation for increasingly intimate sharing over time, a brand that consistently demonstrates it is worthy of trust could be granted more intimate knowledge of a customer than competitors.

  Trust means consistently returning value to customers in exchange for what they have provided. It means making their lives easier, richer, or more efficient. It means an organization demonstrates it is a worthy steward, capable of protecting data, as a trustworthy friend would protect a secret. And it means interacting consistently and predictably over time. In return, the most trusted brands may find they can get customers to progressively divulge more of themselves directly to them.

  The Importance of Mission

  In our digital world, there are a lot of products and services that are made better through data. They may be as starkly important as the delivery of more personalized health care, or as lightly consequential as a product recommendation. New users of Goodreads, a book rating and discovery application, have been known to invest hours in cataloging and rating books in order to get targeted recommendations for what to read next. Consumers have demonstrated great willingness to share data when they know it will be used in ways that help them.151

  In the blockchain era, it will be more important than ever to develop and operate by a mission that clearly communicates value to customers.

  In the blockchain era, it will be more important than ever to develop and operate by a mission that clearly communicates value to customers. Customers will get to choose if and with whom they share data, and so convincing them of their role in achieving a mission they both understand and desire will become an important marketing skill.

  This dynamic is one of the most acute aspects of the new, more collaborative customer relationship that will be required for success in the age of blockchains. To get there, businesses need to not only deeply understand customers’ desires and needs, by segment, but also do the hard work to align their interests with those of their customers, ensuring that both parties are truly benefiting from the data that is being collected.

  For many companies, this is a difficult self-examination and challenging re-alignment. However, it has never been more urgent. Customers have become muc
h more sophisticated at spotting inconsistencies between brand claims and the experiences they have day to day with a brand—and projecting them out to the world via reviews or social media. The purity with which a business operates to its mission will be a key measurement that customers use when deciding if they are going to share data.

  Organizations focused on social good initiatives could find themselves with an advantage. Believers will, for the first time, be able to contribute data to a cause without risking privacy. What this opens up—from traffic management to disease prevention—could be staggering. As people start to see positive results from population-level data donation, one day giving data may become as standard a practice as giving cash to a favorite charity is today.

  Growing Awareness of the Value of Privacy

  While many consumers have a vague awareness of the value of privacy, few do anything to retain it. This is especially true of millennials, who came of age in a world characterized by an extreme lack of data privacy. However, we can anticipate that with all the marketing dollars that eventually will be channeled into teaching consumers about the value of protecting their data, they will have a stronger grasp over its importance. While they may end up being quite willing to hand data over for compensation, it is likely to be a much more conscious exchange than what is happening today.