Experts say that personal data is the oil of the 21st century. But for all the hype surrounding big data, consumers complain about how little they matter and how badly companies misuse their data. The reason is that many are still extracting information for the purpose of streamlining business processes, and are overlooking an essential piece of the puzzle in the economics of data: the people.
As with any other design, one based on data starts with users and their needs. Instead of focusing on data as some new commodity, companies should look at data-hungry consumers as a new class of customers.
Companies’ business models often view customers as mere generators of data. This is a short-sighted view, because they are both producers and consumers of data, i.e., prosumers. To succeed in the economics of personal data, companies must understand and assimilate the implications of this duality.
Some established companies and startups are beginning to take note of the data needs of prosumers. But to fully capitalize on the economics of personal data, they need a new mindset: that of designer of experiences based on data, which differs from that of data analyst in four aspects:
- Vision: To analysts, data are basically a product of human activity. Conversely, to designers of experiences based on data, they are vital raw materials for human activity that can shape and improve our interaction with the world.
- Value: To analysts, this is linked to the ability of data to explain, predict and prescribe certain phenomena; meanwhile, designers of experiences believe that the value of data lies at the intersection between the data and the experience.
- Usage: Analysts extract those data from different sources and aggregate them to define general patterns of correlation. Designers analyze and apply the data in a specific situational context that is relevant to the customer.
- Challenges: The volume, velocity and variety of data must be managed through data infrastructures and the development of algorithms, according to analysts. As far as designers are concerned, the design of the service must ensure trust, transparency and control in the use of the data.
Start with the people
But how do you improve your business or expand into new areas through the economics of personal data? Here are some principles to guide you through this process:
- Start with the people, not the data. Put customers first when it comes to the data strategy. Think of them not as mere data producers, but as end users who benefit from the data they provide.
- Identify unmet emotional and functional needs. Being dedicated to people means understanding their needs, which include the security and privacy of their personal data.
- Design an end-to-end user experience. Remember, the primary value of data resides in its use, not its sale. It is not enough to simply incentivize data generation or produce a custom ad; you need to ask about the users’ experience with their own data .
- Create a set of tools designed using data. Most of the current tools in the field of data management are used to extract, process and aggregate them. Companies need a new set of tools that are capable of discovering needs and opportunities and allow them to deliver value directly to end users.
- Capture the value of personal data. The definition of the value-capture model is the last step in the design process—not the first, as many companies mistakenly believe. How do you extract value, whether economic or otherwise, from your range of products and services when it comes to the economics of personal data? The simplest strategy is to create enriched products thanks to the data and then sell those to customers.
The economics of personal data is extremely promising. To explore the new space, your company must cultivate and adopt a new mindset that puts clients and their daily lives at the epicenter .