The one who owns the data is the one who controls
ORTEC went to Lent, on the outskirts of Nijmegen. Founded by the Romans and onetime seat of Emperor Charles the Great (Carolus Magnus), Nijmegen is Holland’s oldest town, a cradle of Dutch civilization and, with its famous university and affiliated institutions, still a stronghold of academic and intellectual traditions. No town has had to adapt to change so often as Nijmegen and so there is no better setting for meeting Peter Sprenger, founder and CEO of Techonomy, and thought leader on the digital economy.
We discussed a revolution that is already underway but whose magnitude is yet to be fully acknowledged: the rise of a new digital world. Peter also explained the aim of Techonomy: to help organizations understand the principles for success in this age of change, and adapt to the new digital world.
Techonomy foresees an irrevocable digitalization of the world. According to Peter, there is currently a lack of knowledge within Dutch companies of this digitalization, even though it will change forever business models, strategies and marketing.
Irrevocable digitalization of the world
“Managers have been living in a safe world for a long time, but strategic cycles are today becoming shorter and shorter due to new technologies. In the 80s and early 90s, companies worked with a strategic horizon of 15 years. Since the rise of the internet this has become 18 months. So companies must adapt quickly to these changes or they may lose their market share or even cease to exist.
To avoid this, companies must not only care about IT. They have to become agile and make digitalization part of their DNA. They have to transform into truly digitized companies in all their processes, including their commercial, R&D, marketing and decision-making units.
“Look, for example, at what happened to the music industry. When was the last time you visited a record store? With the arrival of streaming music, iTunes and file sharing networks, a complete industry is struggling for survival and in the process alienating their customers. Enterprises can’t stick rigidly to their business plans. Techonomy was founded to bring this awareness to Dutch companies and help them rebuild their business models.”
In addition, Techonomy has created an MBA program and publishes books, such as “iPad economie” (“the iPad economy”) to share these developments. Techonomy has also bought shares in companies they feel can make a change in the age of digitalization.
Digitalization the key to success
Today, the main key to company success is based on digitalization, and the amount of data and its use. In B2C (business-to-consumer) industries, you see an almost complete transparency thanks to social media: customers and competitors know in real-time what is going on in your company. They learn about your market share and your strategy. In the world of B2B (business-to-business) this trend is often underestimated. But clients nowadays have so much freely available information that before having had any direct contact with a company, they have already completed 60% of their purchasing process.
Shift in the information power balance
There is a shift in the information power balance from suppliers to buyers. Your customer knows more about you and your business than you do. This is one of the reasons companies have to change their minds about the kind of data they are looking for. Currently, most CEOs look to their IT systems for data, while in fact data is everywhere: there is Open Data from governments; largely unstructured social data that can be very useful, even for small companies, if the enterprise knows what it’s looking for; and Real Time Data, generated by planning and ERP systems. A good example is “ZipCar”, the car sharing company that uses Real Time Data to track their cars, thus maximizing utilization rates and so helping the company optimize its performance. Then again there is TomTom, a Route Planning company building technology instead of new services.
Google is a good example of a company that understands the power of data. They know their customers by owning their data. In this way, they can later use that power to persuade companies to collaborate with them in exchange for market share (This strategy is already being applied by Google Insurance, who can show consumers their best insurance options).
“The one who owns the data is the one who controls.”
“The one who owns the data is the one who controls.” By investing in digitalization, enterprises generate data, and so can analyze the market, predict trends, plan ahead against threats, find solutions and seize opportunities.
Both Governments and companies must quickly adapt to this new world. The current economic crisis is the turning point in an economic cycle: we are entering a new digital world. Unfortunately, this change is also not yet fully understood by society. And there are still many weak spots.
One major problem in the Netherlands is a lack of skilled people with knowledge of digitalization and Big Data, while 80% of future high skilled jobs will be based on these very areas. In the short-term, the biggest problem Dutch companies face is that only some 20% of them fully understand this digital revolution. A good first step could be to appoint a Chief Digital Officer instead of a CIO (Chief Information Officer).
Both politicians and businesses must take action. Governments should create special programs in schools around Mathematics and Big Data, but even more importantly make companies and people aware of these changes. While private companies need to get an outside perspective to help them analyze their strategies.
In conclusion, the current economic crisis shows that the world is entering a new cycle, one based on digitalization. Data and its appropriate use will therefore have an enormous impact on the economy, both for companies and governments. The pace with which the world does business is becoming faster and faster. And if they do not take special measures to fall in step with this new rhythm, societies are facing bankruptcy.