New business Generation model

When thinking about the value of the data a company collects vs. the traditional value of the product it may produce, collecting and analyzing broad categories of customer + product data is becoming equally — if not more — valuable than the product itself.

And, if the data is becoming so valuable, then analyzing and mining it ought to provide incremental revenue streams beyond the traditional product-based business model. But consider going one step further: If treated right, access to enough quality data would be valuable to others outside of your enterprise too – assuming the correct federation and business models were constructed.

This accretion of value around large data sets – particularly alongside an external ecosystem – is analogous to what we’re familiar with in the product world: The Platform. Indeed, we may find that entirely new business models based on data platforms may arise from legacy product companies.

What Constitutes a Platform?

In the traditional world, the platform is a piece of core technology and/or IP that third-parties write to or build upon, frequently using APIs. The platform helps form a market with value and inertia that attracts third-parties to provide complementary solutions. In turn, the ecosystem of third-party products is made more valuable because they are associated with a platform.

In the new analogy, core data can become a platform. If there is sufficient size and uniqueness, if it’s useful enough to others, and if there are appropriate (legal, technical) methods to exchange/federate it with other data sources, it becomes the accretion point for even more new data, services and products.

The net-net is that amassing and exposing vast amounts of unique data to third-party ecosystem partners can effectively create Data-as-a-Platform.

Some business model examples

To illustrate what I’ve seen so far, here are a few snippets:

• An academic textbook renter/distributor is aggregating knowledge about which textbooks are being used by which students at which schools — much the way a commodity exchange monitors prices, demand, and volume. This company is capturing more data about this than any single publisher or distributor could. And, it is essentially disintermediating such traditional players. The value here is to understand the needs of students, academic instructors, plus demand for specific authors and content. Clearly money is to be made from the core business, but the company’s extended value may not be as much its online platform as it is the data it amasses about content, demand, and pricing. This data would be useful to anyone seeking to create derivative content products for students.