In our fast-paced, ever-changing, technology-driven world, big data has become the Holy Grail. Tracking and understanding customer behaviors, preferences, and purchasing decisions is now serious business.
Just ask Facebook, which paid $19 billion for WhatsApp’s 450 million instant messaging users and all of their precious metadata, or Google, who has agreed to purchase intelligent thermostat company Nest for $3.2 billion to gain insight into consumers’ behavior in their homes.
Big data has its benefits and drawbacks. Critics shrill against privacy issues, but once collected, data can be analyzed and used to track trends, enhance the performance of products and systems, improve resource efficiencies, modify behavior, and help us make better decisions in response to our changing climate.
While it’s generally accepted that big data offers more advantages than downsides, the industry has put Wall Street in a panic. Traditional investors and analysts are beside themselves, engaged in a desperate struggle trying to figure out how to value big data companies.
The days of valuing companies based on their product/service output are over. Today, corporate valuation is determined not by how much a company produces, but rather by how extensive and qualified of a digital network that company has developed. Value is measured in networks and metadata, even if a company doesn’t have a profitable model to monetize their customers’ activities.
According to the London Financial Times, “if a company that has designed a single successful mobile phone game (‘Candy Crush’) can be worth $5 billion, anything can be worth anything, and we live in a world without financial rules.”
And it’s no wonder that conventional companies are feeling neglected while the big data companies dominate the headlines week after week. We’ve entered into a paradigm shift of colossal proportions, one which will throw the old industrial order on its head. While a factory-based economy—powered by companies that produce things—will always be a cornerstone of our system, we are, for the first time, witnessing its eclipse by a creative economy that is driven by relationships and intangible digital assets.
In the world of big data, digital networks, collaboration, and crowdsourcing reign supreme. There are no growth constraints from material shortages or distribution concerns—growth in the digital world is instant and, for better or worse, can conceivably be limitless.
So, how can global markets keep up with the quickly evolving digital world’s pacesetters and their escalating valuations? By paying attention to the unique qualities of intangible assets, valuing them at their best use basis, and capturing their full enterprise potential.
It’s clear that big data companies will be driving valuations and innovation in the foreseeable future. Fortunately, big data isn’t just about leveraging consumer behavior insights to sell products and advertising—it has the potential to play a significant role in sustainability.
Companies are analyzing metadata through intelligent technologies and developing insights that will enable the products and systems all around us to become more efficient, safer, and better. For example, the tankless water heater company trutankless collects data from its systems while they are in use, and then analyzes the information to develop software upgrades that enhance the performance of the units. These updates are remotely uploaded to the unit, increasing system performance in a way that is completely seamless to the homeowner.
Another example of big data championing sustainability is the partnership developed recently between some of the sector’s leading companies, including Google, Microsoft, and Intel, and the White House to launch the Climate Data Initiative, an effort to collect climate science and environmental data, and then convert that information into useful tools that can be used by the public and private sectors to make informed planning and strategic development decisions. Currently, the datasets focus primarily on Costal flooding and sea level rise, but the plan is to expand the records to include information about energy infrastructure, water risk, human health, food supply, and other climate-related topics.
Hopefully, the data collected by independent companies and collaborations like the Climate Data Initiative will help shift the debate from whether the climate is changing to determining the most informed and strategic way to respond to those changes. In this light, I have high hopes that big data will help us develop better solutions to mitigate the risks and effects of climate change and deliver us to a more sustainable future.
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