Understanding what is paid for in established marketplaces is very clear. However, when it comes to the digital economy, the things that can be traded are much less clear.
The underlying value creation can be described as turning data into information. This information is exchanged between a provider and consumer for money or other value instrument. Traditionally, publications were the means of providing this value. This relied on the individuals to research the subject and provide the information in a format that would be of value to the reader. However, with the advent of the internet, access to vast amounts of data and sophisticated algorithms, creating new information will be more complex.
The process of converting data to information is in many ways similar to the manufacturing process. Raw materials go through multiple stages or organiations of processing to eventually produce finished good that the consumers pay for. In the same way, raw data goes through multiple processing stages till it eventually becomes valuable information.
This process can consist of many stages and involve one or more organisations. However, we can imagine there will be 4 main stages:
- Acquiring the data (capturing and storing the raw data for a range of sources e.g. Enterprise, Sensors, Public data, Social media etc..)
- Validation or cleansing the data (consolidating the information from the various sources and removing anomolies or incosistencies)
- Analysing the data (applying algorithms to the data to identify patterns, distil meaning, anomalies etc.)
- Translating the data – for the results of the analysis to be valuable, they need to be translated into a form that the consumer can readily use. The consumers context needs to be taken into account here.
Each of these stages can be further decomposed and in future blogs I hope to expand this further.
This flow gives us some import clues into the economic structure of the value chain(s) of the digitial economy. Organisations or individuals can understand where they fit in the value chain and esablish the partnerships or contractual agreements to make theis business sustainable.
Do these four stages make sense? Should they be decomposes further at this level? Are there examples of exisiting businesses that fit within this model?
- Australian Success in the Digital Economy (australia30.com.au)
- Digital economy ‘offers jobs boom’ (manchestereveningnews.co.uk)
- Digital economy needs 750,000 workers (telegraph.co.uk)
- Orange Releases Report On New Role Of Enterprises In A Distributed Digital Economy (eurasiareview.com)