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The New Oil

By Rexy Josh Dorado, Adrian Immanuel Bonifacio, Pamela Belen and Lionel Belen

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Rexy
Adrian
Pamela
Lionel
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Rexy Josh Dorado is an entrepreneur and writer working to harness media, technology, and community networks to strengthen the global Filipino community. With several years of experience spread across corporate business development and start-up non-profits, Adrian has developed a unique blend of expertise to go hand-in-hand with a fevered passion for s... She is an entrepreneur, business development manager at Amihan Global Strategies, and an education advocate in the Philippines. She holds a bachelor's degree in Accountancy from De La Salle University... Vice President and Executive Assistant to the chairman at First Asia Venture Capital Inc.

“I work for the Philippine Long Distance Telephone Company,” said Francis Oliva, PLDT SME Nation’s head of community partnerships, “at a time when ‘long distance’ is disappearing as a business model. So we’ve realized that we have to transform.”

 

Industry leaders around the world and in the Philippines are waking up to disruption as the new norm. Look no further than the agendas of business conferences and the strategy briefs of multinational corporations; “disruption” is everywhere. So what exactly is it?

 

Disruptive innovation was defined by Harvard professor Clay Christensen as the process by which incumbent businesses are challenged by newer, more agile startups who are able to create simpler products that open up unserved or underserved markets. To the consumer, this disruption usually translates to an acceleration in technological progress as well as cheaper access to goods and services. But to an existing company or an institution, it can feel like disruption in its most violent sense, interrupting business as usual and requiring costly shifts in the way things are done -- or else.

 

“This has always happened,” said Pepe Torres, former Regional Brand Manager of Airbnb and current Head of Strategic Marketing at Banco de Oro, the Philippines’ largest bank. New industries have always destroyed old ones, the way the automobile industry eventually erased the demand for horse carriages in the 20th century. “What’s changed is the speed of disruption,” Torres said. “Whereas a soap company used to be able to just keep making slightly better soap each year, now that’s no longer the case. Disruption can now bring down companies overnight.”

 

According to a report, the lifespan of a Fortune 500 company in the United States has shrunk from 61 years in 1958 to just 18 years in 2012.1

 

Digital technology has accelerated the speed of disruption in several ways. Platform companies have circumvented or removed conventional barriers to entry especially in previously capital intensive industries like transportation (Uber), telecommunications (Viber, Facebook Messenger), and hospitality (Airbnb). Cloud computing has opened up a pay-as-you-go model that keeps infrastructure costs low for new projects, encouraging faster innovation for upstarts, large corporations, and institutions like college campuses2 alike. In energy, solar and batteries are creating challenges as individuals also become energy producers, while traditional energy distributors/providers become “the backup.”

 

Underlying this is a shift from an economy driven by ownership of physical materials -- like oil and infrastructure -- to an economy driven by information and access. At the heart of this new economy is data: the raw building blocks of information and knowledge, zipping through our wifi connections and our social media accounts at the rate of quintillions, or billions of billions, of bytes each day.3

 

 

From Black Gold to Digital Oil

 

Black gold: this is what we called oil when we first realized we could use it, not just to provide heat and light through lamps, but to power combustion engines, or as raw material in the production of plastics. Suddenly, through the advent of widespread use of fossil fuels, we unlocked new ways to produce goods, harness energy, and transform and connect the world.

 

Oil was a fundamental building block upon which our modern world has been built. In the information economy, data, specifically big data, has been called “the new oil”: a resource that will fuel innovation in business, governance and the interactive space between those two spheres.

 

When does data become big data? The distinction has as much to do with complexity as it does with size. Data scientists usually divide data between two types: structured and unstructured. Structured data, as the name suggests, is data that can be easily identified and organized seamlessly. A typical sales database is an example of structured data, where analysts can parse out information (e.g., profit margin, time of sale, customer profile) using straightforward calculations and derive their insights.

 

Unstructured data, on the other hand, is data that does not typically fit in rows and columns. For example, a video or a blog review of a company’s product counts as data -- but it doesn’t come in a neat spreadsheet or database that contains every relevant attribute. Instead, data scientists can design processes or algorithms to find trends, patterns, and insights based on attributes like tone, length, or color. Every single webpage out there contains different forms of data -- text, images, colors, and styles -- that can be crunched in different ways to produce insight. Twitter feeds, online articles, surveillance videos, user behavior logs, and transaction records are all forms of unstructured data that can, with the right mix of science and art, be analyzed for trends and patterns. Experts contend that over 80% of a company’s data may be unstructured -- and ripe with potential.

 

The amount of data available to be processed has risen exponentially -- over 90% of the data that exists today was created in the last two years alone.4 This is driven by a convergence of trends: the increasing number of digital touchpoints where our lives interact with devices that track our behavior; the expanding storage capacity of digital hardware; and the rapid advancement of data analysis, both in terms of processing power and the sophistication of tools to quickly analyze, model, and predict using unstructured information.

 

During the second industrial revolution, the discovery of oil reserves led to a transformation of the economy around it -- reshaping the lives of not only oil drillers, but the new cities they fueled and the new industries those cities spawned. In the same way, the surge of data is already making a mark on how all kinds of industries work. It created a new customer expectation.

 

For the case of Amazon, based on the data that it has on its customer, it recommends what the customer might like based on past purchases, or what his or her friends liked and bought. The customer now expects any company to know them just like Uber, Netflix or Spotify.

 

Facebook started out as a social media community for students in Ivy League schools and now has more than a billion users that stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them. Facebook tracks people’s activity when they use their services. The Facebook user base plus its huge amount of historical data is used to sell to advertisers. More and more companies are shifting ad spending from traditional channels to digital.

 

Digital technology and data has enabled the rise of platforms like Amazon, Facebook and Alibaba, which make their fortune on connecting supply and demand fluidly through data-driven customer relationships. It’s driving the price of premium services like long-distance calls all the way down to free, as companies like Facebook can offer that service at no cost in exchange for access to one’s data. It’s changing customer expectations; people feel increasingly entitled to tailored and responsive products as data-driven experiences become the new norm. And it’s speeding up competition; corporations that have spent decades investing in infrastructure are now facing a different reality where infrastructure doesn’t matter. You can be outpaced by smaller, faster, younger players who have better insights from their data.

 

It’s here where big data’s biggest contribution to the economy lies: in its ability to level the playing field and create an unprecedented set of tools through which businesses can solve people’s problems and compete with each other for a customer’s attention. Capturing a market, protecting yourself through regulatory barriers, and building the biggest distribution network is no longer enough. It’s no longer about accumulated advantages, but about knowing one’s customer and being able to act quickly on that insight -- not just once, but again and again.

 

 

Leaning into Big Data

 

Data is powerful -- but exactly what roles can big data play in driving and defining the success of a business?

 

For starters, the time-saving, cost-efficient and accurate report generation and analysis is an obvious benefit. For some, the central value of data is how it enables them to reach the right customer at the right time. Facebook and Amazon are just a couple of online platforms that allow anyone to create ads and target them to people based on their interests, buying habits, locations, whether they’ve been to your site, and thousands of other data points. Amihan Global Strategies, a digital transformation company  in the Philippines , has worked with retail brands like Penshoppe on scanning social media and measuring the efficacy of specific endorsers and marketing campaigns. This “social media listening” enables companies to focus on the most impactful leverage points, thus saving costs and maximizing sales at the same time.

 

For others, the biggest benefit of big data is in being able to create better and more efficient systems. At Meralco, the largest energy provider in the Philippines, data and automation are working together to create smart grids: systems that allow for a more efficient allocation of electricity, lowering costs for the customers and therefore broadening access to Meralco’s energy products. They are now also sharing this data to their constituents, allowing individuals to manage their energy usage better.

 

For banks like BDO, customer behavior allows them to predict risk profiles, hone in on loyal customers, and prioritize based on that knowledge. For city planners, Uber’s Movement platform for anonymized traffic data allows them to create better routes for public transport and to build new infrastructure in strategic places. Although some say the data that Uber shares isn’t enough, it’s a starting point and a groundswell of new information for city governments to extract insight from. Big data can also improve disaster response through better forecasting, smarter response and evacuation processes, and -- through the use of sensors and RFID tags -- dynamic knowledge of where relief supplies are at any given moment.

 

Data can help companies create new products. Laurence Cua, General Manager of Uber Philippines, describes how the creation of UberPool, a carpooling service, was inspired by data: “We looked at the data and saw that so many people were taking similar routes at similar times of day. So we thought of a way to make that easier and cheaper for them.” In the health sector, Dr. Albert Lo of Eli Lilly and Company described how data analytics paired with collaboration tools have sped up the process of drug discovery.

 

Gavin Barfield, Chief Technology Advisor of Meralco, described a shift in Meralco’s mission from providing electricity to “providing energy services… making people’s lives easier and helping them manage their different energy services.” Myla Untalan of Banco de Oro remembers the bank’s leadership saying: “We’re no longer a bank that does transactions. We are in the business of providing services and information.” The next decade will only bring more and more cases of businesses reimagining and reinventing themselves -- telcos becoming ad networks, fashion brands morphing into small business curators -- all in pursuit of an answer to the question: What is your role in an economy where data is king?

 

 

Making Data Work

 

“There has to be an executive order,” said Myla Untalan of BDO. “In our case, there was a strategic initiative that said ‘collect now, use later.’ So we began to collect and store as much data as we could, and discovered as we went along what to do with it.”

 

“In my years of working with companies to implement big data strategies, the biggest problems have been cultural and political, not technical,” said Jeff Markham, Technical Director of Hortonworks. He noted that companies without a top-down vision of big data are prone to working in separate silos that aren’t built to be integrated, leading to a data storage trap. Big data should seamlessly hook across an organization’s systems and beyond. This is why, Markham noted, aside from the technological perspective of using a shared platform, serious data-based projects must have executive sponsorship.

 

“The best data work I’ve done,” said Stephanie Sy, founder of Thinking Machines Data Science, “was in close partnership with the business units, who defined the metrics that we, the scientists, needed to optimize.” Partnership beyond departmental divides is crucial to making good data strategy work.

 

Beyond breaking past silos, another culture shift that will challenge incumbent companies is a change in mindset towards discovery and experimentation. “This is science,” said data scientist Reina Reyes, “and the scientific method is making a lot of hypotheses and testing them. It’s trial and error.” This can be difficult for a large public company with countless constituents and regulations to keep an eye out on. “You wouldn’t want a bank to experiment with your money,” joked BDO’s Untalan. Culture change is the biggest challenge in any organizational transformation, and the shift from a traditional enterprise to a digital, data-driven business will flourish or fall based on its ability to steer its culture.

 

Where to begin where there’s not a wealth of data to start with or a top-down initiative to align the pieces? It could mean starting small. “More important than big data is useful data,” said Stephanie Sy. For most organizations, they must look at the scale of data that would prove useful for their needs and goals. Sy cited the Philippine Center of Investigative Journalism (PCIJ), a non-profit media organization, as an excellent example of an organization that inherently knows the type of data it needs to gather and analyze, which includes unstructured data such as publicly available government documents. The secret is their ability to keep their records clean and organized: from her experience, a rare feat.

 

 

At the Frontiers of the Information Economy

 

On paper, the Philippines looks well-positioned to be a big data goldmine. Mobile internet and social media have injected themselves into Filipino life like nowhere else. Today there are more mobile connections in the Philippines than there are people, and the commercial district of Makati City holds a proud designation: the “Selfie Capital of the World” (TIME). This translates to a flood of unstructured data being generated in the form of browsing histories, angry Facebook comments, Instagram photos, and sarcastic Twitter feeds every day.

 

In addition, the country’s burgeoning business process outsourcing (BPO) sector could theoretically become a pivot point for developing the Philippines into a big data outsourcing capital. And just around the corner, the Internet of Things (IoT) -- sensors, drones, and other connected devices -- is making its way towards the Philippines, promising to multiply the amount of data being generated every day. The time is, or at least should be, ripe for the Philippines to rise up and seize the opportunity that big data brings.

 

But reality has so far lagged behind the potential of a data-driven Philippines. Culture change is slow. A drive down EDSA, the main highway that cuts through the heart of Metro Manila, is choked not only by traffic, but by the visual noise of billboards signaling an economy still yet to transition into targeted digital advertising. An encounter with routine business regulation can spiral into a whole week spent traveling between government agencies, collecting paper trails that will never once touch a digital database. Financial transactions happen mostly through cash and physical bank branches -- far from the fluid digital exchanges that leave footprints. As for the institutions that are beginning to embrace the power of data, Sy of Thinking Machines said that their relevant data is rarely in a shape to be easily processed and analyzed -- “I’ve only encountered one organization out of the dozens I’ve worked with that was doing a good job of storing their data. More often than not, I’ve had to play the role of data janitor before being able to dive into analysis.”

 

Government bureaucracy may be the most important leverage point in which to start infusing a data-driven mindset and discipline. Government agencies can take advantage of digital technology to speed up processes, minimize fraud, promote transparency, and create warmer relationships with their constituents. On the other hand, government can begin to look outwards, parsing data on social media and across the citizen web in order to understand public sentiment and craft policy agendas based on real insight.

 

There are glimmers of this future beginning to play out -- transparency platforms, smart city initiatives, and other initiatives that embrace data in the public sector -- but just like in the private sector, it will take a coordinated push before data can bring significant returns. There is a lack of alignment between the data that government agencies are collecting and the objectives they want to achieve with that data; there is a technological gap between the analysis that needs to happen and the IT infrastructure that agencies have in place; and at the end of the day, there is an inability to consistently turn data into actionable information.

 

Government, academe and industry must work together in cultivating the kind of talent that will lead the nation towards a data economy. The Philippines can look to examples around the world on how this is done. Just next door, Malaysia is considered the big data hub in Southeast Asia as they focus on growing and developing data science talent -- an initiative, in part, to hedge against the slowing growth of traditional sectors like manufacturing. In Lagos and Nairobi, Chan Zuckerberg-backed Andela has partnered with IBM to train data scientists across the African continent. And all around the world, a company called Samasource has trained low-income communities to process and organize data for companies like Google and Microsoft. As these examples show, the burden to cultivate data science talent doesn’t fall on just the government; in fact, it must be supplemented on the demand side by companies that understand the value of big data for their business.

 

One of the biggest tasks for government will be to facilitate and institutionalize new norms around data ethics. Who owns data, how can it be used, how can we keep it secure, and how do we enforce these laws? Where are the lines that we cannot cross? Already, we have seen tension between governments and corporations’ desire for more surveillance and knowledge, and groups and individuals wishing to retain their right to privacy. If big data’s usage is limited to the realms of intelligence communities and big businesses, the positive social impacts will go on unrealized. At the end of the day, while the use of big data may have vast potential, it will require a collective discussion, among citizens, among businesses, and among governments, to ensure that the purposes for which data collection and analytics are used remain for the common good and not merely as a new method of surveillance, control, and coercion.

 

Along the same lines, the ultimate responsibility for everyone -- government, business, academe and civil society alike -- will be to work together and share data in order to solve problems as a collective. The more data is out there, the more information institutions have to create better products and services, and the greater ability the everyday individual has to engage with data at the small scale. Gavin Barfield shared an example from Meralco: “We gave people the data they needed to manage their own energy usage, and we created a more reasonable payment plan for them based on data we had. And very quickly, we saw that low-income communities began cutting their costs. Instead of having to get electricity illegally, they could now afford to have their own energy plan.”

 

Government must invest in research and development in order to create a greater pool of publicly available information. Corporations can begin to explore how to share their user data without endangering user privacy or their own business advantage, the same way Uber shared anonymized traffic data on their Movement platform.

 

Telecommunications companies or, perhaps, the Philippine government must strengthen and broaden the internet infrastructure that big data hinges on. Less than half of the Philippines has internet access at home, and most business continues to be done in the cash economy rather than the digital economy. This leaves us without robust information to address the needs of communities that are off the grid. Leaders across sectors must partner to ensure that we have data to serve the needs of the everyone, and that we are able to solve the most pressing problems -- not just the problems of those who have the privilege of online access.

 

“There’s a tremendous business opportunity in financial inclusion,” said BDO’s Untalan, but one of the biggest barriers is a lack of information. Technology might soon change that; Mikko Perez of financial technology startup Ayannah shared their recent efforts to use artificial intelligence along with data on bill payment behavior to create credit profiles for low-income people who had previously been unable to access bank loans.

 

The mission of serving the nation’s most marginalized resonated across several conversations at the OCEAN Summit. For all the new paradigms that come with the digital age and the rise of big data, we end up going back the old proverb that “knowledge is power.” And the ultimate legacy of big data will be written in those timeless terms. Will the emergence of big data decentralize power so that more people can access information and act based on knowledge? Or will it cement the divides that already exist between the common people and the gated entities that can afford to place eyes and ears at all places? The answer isn’t easy -- but neither is it predestined, and the future of the information economy hinges on the work we do to deal responsibly and intelligently with data today.

 

 

footnotes
Annotations
Pamela Belen :
"Historically, organizations will manage their costs and, thus, store only a small subset of data for a certain period of time, say, six months, after which it will be archived on tape that will be nearly impossible to retrieve later on for analysis. Storing data complete with the software and hardware was in itself expensive. Therefore, the company’s fixed storage capacity will be reserved for its most valuable data points. For example, for a financial institution, they may view credit card data more important than website data, which in turn would be more important than HR data. With Hadoop technology, an open source software technology for data analysis that allows storing both structured and unstructured data into one place, it enabled companies to store as much data that they want using commodity servers. Hadoop on premise or on the cloud made data storage and processing far less costly. Having a (big) data analytics platform is a crucial step in harnessing the power of data."
Adrian Immanuel Bonifacio :
"This is generally how we like to see big data--especially those who identify as "disruptors" or innovators--but I would argue that, in some ways, big data has tilted, not leveled, the playing field in favor of the giant platforms that had just been mentioned.

I think this narrative of digital platforms disrupting old industrial behemoths is quickly fading--I don't think Amazon or Facebook can be described as" "rising" anymore. It could be argued that their literal infrastructure (see data centers) and capitalization is what keeps them far ahead of competition.

It's precisely these companies' ability to leverage and pursue "big data" that has resulted in today's digital oligopolies.The smaller and faster players are just being bought out. These large companies have accumulated advantages--in part due to big data--that are so difficult to disrupt, they simply acquire and shutdown possible competitors. For example, Facebook already owns Whatsapp and Instagram.

Google is a prime "
Adrian Immanuel Bonifacio :
"This is another topic that I believe merits more discussion within the community. There is so much emphasis on gathering data, but not enough on acting upon what we already have.

For example, we've already launched the Open Data Philippines that has a wealth of data available for every citizen. The problem lies that not a lot of people know how to act upon this information--and if this information is actionable in the first place."
Adrian Immanuel Bonifacio :
"It should be noted that the Philippines actually has been making progress in the area of data privacy--and this conversation was not sparked by the advent of big data--long before that, we've had direct marketing companies and telcos that needed oversight as they accumulated a wealth of "personal data."

Moreover, to be fair to our government, we now have a National Privacy Commission which, just last year, released the IRR of the Data Privacy Act of 2012. For example, companies that deal with data are now required to have a data protection officer.

An example of the NPC at work is when they found the COMELEC liable for the leak of voters data back in March 2016.

http://www.rappler.com/nation/157418-comelec-chair-bautista-criminally-liable-voters-data-leak

I love how Stephanie Sy put it during OCEAN, when somebody asked about what people can do in light of Facebook, Google, and the dwindling ability of people to keep their lives private:

It is too late. "
Rexy Josh Dorado :
"For those on Netflix, “Killswitch” is a great primer on open data, privacy, and net neutrality."
Citations
1
 "Creative Destruction Whips through Corporate America." Innosight. N.p., n.d. Web. 27 Feb. 2017. <https://www.innosight.com/insight/creative-destruction-whips-through-corporate-america-an-innosight-executive-briefing-on-corporate-strategy/>.
2
 "How to use Google Docs to Support Collaboration." NYU Stern. <http://w4.stern.nyu.edu/citl/tutorials/google_docs.pdf>.
3
 Sintef. "Big Data, for Better or Worse: 90% of World's Data Generated Over Last Two Years." SINTEF. N.p., n.d. Web. 27 Feb. 2017. <https://www.sintef.no/en/publications/publication/?pubid=cristin%2B1031676>.
4
 "Bringing Big Data to the Enterprise." IBM - What Is Big Data? N.p., 31 Oct. 2016. Web. 27 Feb. 2017. <https://www-01.ibm.com/software/data/bigdata/what-is-big-data.html>.
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Authors
Rexy Josh Dorado

Rexy Josh Dorado is an entrepreneur and writer working to harness media, technology, and community networks to strengthen the global Filipino community.

Adrian Immanuel Bonifacio

With several years of experience spread across corporate business development and start-up non-profits, Adrian has developed a unique blend of expertise to go hand-in-hand with a fevered passion for s...

Pamela Belen

She is an entrepreneur, business development manager at Amihan Global Strategies, and an education advocate in the Philippines. She holds a bachelor's degree in Accountancy from De La Salle University...

Lionel Belen

Vice President and Executive Assistant to the chairman at First Asia Venture Capital Inc.

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