Data: The New Gold

Today, data is the new gold. Organisations are fighting each other over the rights to new and more valuable seams of data. We have created a whole new industry which mines, manages, processes, measures, stores, analyses, leverages and categorises data. For many organisations, the mere possession of data is more important than the application of it in the development of the business.

Let me tell you a true but all too familiar story. A few years ago, I undertook a due diligence project on behalf of a very large European transport and logistics company. They were seeking to buy a controlling interest in a large Chinese logistics company based in Shanghai. My first task was to understand the structure of the organisation, starting with the head office function. The company was housed in an office building comprising of four floors set out in a rather traditional format, operations on the ground floor, sales and marketing on the first, administration on the second, finance and HR on the third and executives on the top floor.

After a few days I found myself in a vast cavernous room on the second floor which housed the administration department. This department collated vast amounts of data from the company’s operations across China. I counted 40 people all hunched over their desks, which were heaving with piles of completed documents. Periodically, a supervisor gathered the piles from each desk and transferred them to a table which ran the length of the room. Here, he carefully sorted the various documents into neat piles which followed some colour coded system. I asked my guide, a senior clerk in the department, what had happened to the documents and with a broad smile and a shrug he pointed to the ceiling and simply said, “Up”.

Intrigued, the following day I decided to follow this paper trail to the third floor, the home of Finance and HR, which had an almost identical layout. Each desk had the now familiar piles of documents which were ever-growing. A senior clerk gathered the piles and just like the day before, transferred them onto a long table. This time however, the documents were carefully hole punched and placed into bright red ring binders. I turned to my department guide and enquired about the next destination for these now very important looking files. “Ahhh” he said raised his eyes to the ceiling and said respectfully “top floor”. My chance to visit the top floor came when the CEO invited me for a chat over some hot sweet tea to discuss my progress. The conversation soon got around to the role and function of each of the departments under his control and in particular, the gathering of information. “Do you analyse the data files processed through Admin and Finance I said innocently?” “No time, too busy?” he said brusquely “More tea ?” I really didn’t have the heart to tell my friends downstairs what really happens to all their hard work!

Whilst this may seem a rather extreme example, in my view, having the ability to gather vast amounts of data in real time is one thing, but to fully exploit that data is another.

At MTM we have access to a huge amount of real time data and undertake a range of research projects on behalf of our clients. To quote our Research Director, James Leggett “We know an awful lot about an awful lot of things”. The key is what we do with that information as data has very little value if you don’t exploit it to your advantage. To use an analogy, a nugget of gold found in a river bed has no value but turn that nugget into an object of beauty and its value can increase tenfold.

For me, the gathering of data is simply the start of the process. I like to think of a data set, no matter how large or small, as being dynamic, almost alive. If we don’t constantly update and refresh a data set, it has a very short shelf life and quickly becomes redundant. Keeping a data set alive and healthy is a key success driver.

Today, we have the systems and programmes to “play” with the data and make it work for us in many different ways. One technique I am familiar with, and which I encourage our clients to use, is scenario planning. Once we have produced a base line set of market data for a client, we can then run any number of hypothetical constrained and unconstrained scenarios. This technique allows our clients to see the impact of major changes in the market or changes they are considering in their schools’ strategic direction. Underpin this with dynamic financial modelling and our clients have an extremely powerful tool to manage and control their organisations. That is data at it’s very best!