Watch this space:  A new business model in 3 easy steps

Watch this space: A new business model in 3 easy steps

If you like curly fries you are probably intelligent (1). This insight comes from the University of Cambridge. The researchers analysed the data from Facebook to show that ‘surprisingly accurate estimates of Facebook users’ race, age, IQ, sexuality, personality, substance use and political views can be inferred from the analysis of only their Facebook Likes’.

Atos Watch this space: A new business model in 3 easy stepsThe possibility to collect large amounts of data from everyday activities by people, factory processes, trains, cars, weather and just about anything else that can be measured, monitored or otherwise observed is a topic that has been discussed in our blogs many times.

Sometimes indicated as ‘The Internet of Things’ or, with a different view ‘Big Data’ or ‘Total Data’, the collection and analysis of data has been a topic for technology observations and a source of concern and a initiator for new technology opportunities.

This blog is not about the concerns, nor is it about the new technologies. Instead it is about a view introduced by a new white paper by the Atos Scientific Community called “The Economy of Internet Applications”; a paper that gives us a different, more economic, view on these new opportunities.

Let’s take a look at a car manufacturer. The car he (or she) builds will contain many sensors and the data from those sensors will support the manufacturer to enable better repairs for that one car, it can provide data from many cars for an analysis to build a better car in the future and it can show information to the user of the car (speed, mileage, gas). The driver generates the data (if a car is not driven, there is no data) and both the driver and the car manufacturer profit from the result.

Now pay attention, because something important is happening: When the car manufacturer provides the data of the driver and the car combined to an insurance company, a new business model is created. The user still puts in the data by using the car, the car manufacturer sensors in the car still collects the data, but the insurance company gets the possibility to do a better risk analysis on the driver’s behaviour and the cars safety record. This would allow the insurance company to give the driver a better deal on his insurance, or sponsor some safety equipment in the car so there is less risk for big insurance claims in health or property damage. It would allow the car manufacturer to create more value from data they already have collected and it would give the driver additional benefits in lower insurance payments or improved safeties.

What just happened is that we created a multi-sided market and it is happening everywhere.

“If you don’t pay for the product you are the product”

The white paper explains it in more detail but the bottom line is that due to new capabilities in technology, additional data can easily be collected. This data can be of value for different companies participating in such a data collection and the associated analytics platform. Based on the economic theory of multisided markets, the different participants can influence each other in a positive way, especially cross sector (the so called network effect).

So there you have it, the simple recipe for a new business model:

1) Find a place where data is generated. This could be in any business or consumer oriented environment. Understand who is generating the data and why.

2) Research how:

a. that data or the information in that data, can give your business a benefit and

b. how data that you own or generate yourself, can enrich the data from the other parties.

3) Negotiate the usage of the data by yourself or the provisioning of your data to the other parties.

In the end this is about creating multiple win scenarios that are based on bringing multiple data sources together. The manufacturer wins because it improves his product, the service provider wins because it can improve the service and the consumer wins because he is receiving both a better product and a more tailored service.

Some have said that Big Data resembles the gold rush (2) many years ago. Everybody is doing it and it seems very simple; just dig in and find the gold – it was even called ‘data-mining’.

In reality, with data nowadays, it is even better, if you create or participate in the right multi-sided market, that data, and thus the value, will be created for you.

We will let you know when the white paper is available for download

(1) http://www.cam.ac.uk/research/news/digital-records-could-expose-intimate-details-and-personality-traits-of-millions

(2) http://www.forbes.com/sites/bradpeters/2012/06/21/the-big-data-gold-rush/

Update: the white paper is available for download here.

About Paul Albada Jelgersma

Paul has over 24 years of experience in running IT and business programs; including managing large teams of IT and other professionals. Paul is a founding member of the Atos Scientific Community. In his day job, he focusses on the strategic partnership between Siemens and Atos, managing the overall innovation process. Paul likes to work with Virtual Teams in the new way of work. He dislikes email as a chat and document-management tool. He occasionally writes articles and publishes at his own blog. Paul is married and has 2 children. He lives near Amsterdam, The Netherlands. He likes to travel. In 2013 he visited Peru, Ecuador and the Galapagos Islands. Many more locations are on his bucket-list.