With Data Comes New Jobs, New Companies, New Possibilities

September 22, 2015

Takeaways

Data will spawn an entire new industry of companies that could be worth $20 billion by the end of the decade.
Done right, the use of data can supercharge the country’s innovation, growth and competitiveness.

 

This essay is part of a series of articles relating to the Internet of Everything project. Read more at uschamberfoundation.org/ioe


 

By John Raidt

The enormous amount of data generated today is driving the creation of new jobs, new companies and new possibilities. Just a decade ago, the world’s sharpest data experts were only beginning to forecast a coming Internet of Everything (IoE), vast cloud computing and storage, and mobile devices that outnumber human beings. Today, journalists from the national news to the local press write about the companies that are building these 21st century realities.

Whether we will bring to full blossom the metamorphic potential of these new realities remains in question. Done right, we can supercharge the country’s innovation, growth and competitiveness. If not, we may well squander an opportunity to usher in what could be the most promising epochs of human prosperity and advancement. 

The stark difference between the two alternative futures imparts great urgency on a national “to-do” list—a campaign requiring America’s signature energy and focus to accomplish. The stakes are enormous. A recent McKinsey report estimates that improved use of open data alone could generate $3 trillion in additional value each year in seven industries. Of this, $1.3 trillion per year would benefit the United States. In a report titled “the Next Great Growth Cycle,” The American Enterprise Institute says, “Big Data analytics and services, nonexistent just a few years ago, is already a $3 billion industry and will be $20 billion in a half-decade. Cloud-centric services will drive productivity, and thus, collaterally, job growth across all sectors.”

Seizing this monumental opportunity will help secure America’s competitiveness and leadership for many decades to come.  If we are to succeed, the data tell us we better get busy setting the table. Here are the requirements for unsealing the promise and potential of the data revolution.

Greater Public Awareness and Advocacy 

Preparing for the competitive demands of a global, data-driven economy will require galvanizing the energy of our people, polity, and institutions. We need a vigorous public dialogue about the historic opportunities that data-driven innovation presents, not just the obstacles and potential downsides. Widely publicizing the competitive stakes—and the opportunities quantified by McKinsey and countless other experts—would set a foundation of support for the action needed to succeed. Such a campaign could begin with the enlistment of a National Data-Driven Innovation (DDI) Council composed of prominent leaders drawn from government, business, academia, and NGOs. Such a body could galvanize the national dialogue and marshal the strategic effort recommended next.

Bona Fide National DDI Strategy

As Sun Tzu noted, “Tactics without strategy is the noise before defeat.” The United States lacks a bona fide strategy to prepare our systems (economic, social, educational, financial, commercial, and legal) for competing to win in a global data-driven economy. Neither government policymaking nor market dynamics alone will sufficiently pave the way. Preparing the nation’s institutions and developing the holistic framework required to thrive demands a purposeful and coordinated whole-of-society effort. A disciplined strategy-setting process will force us to anticipate needs and take the actions, some long-lead, to meet them.  Developing critical workforce skillsets, building mission-critical infrastructure, and establishing the proper legal frameworks and collaborative mechanisms—the list goes on—takes thought, strategy, and, above all, determined action.

A STEM-Excellent Workforce

Nothing is more important to the DDI enterprise than human intellectual capital in the form of a prepared workforce well-grounded in the disciplines of science, technology, engineering, and math (STEM). Our student body still lags behind international peers on standardized tests in technical skills. Too few high school graduates pursue higher education in STEM. The number of U.S. students seeking doctorates in these fields remains appallingly slim. It’s time for an all-out campaign to motivate students to train in the technical disciplines. Making this transformation will take inspirational leadership at home, in the classroom, on the playground, behind the pulpit, and from the public dais. Without it, we can’t hope to make the IoE, the data-driven economy, and our future all that it can be.  

Proper Credentialing Systems

Technical professions and specialties we can only dream of now, and many we can’t yet imagine, will proliferate across the DDI/IoE landscape. Qualified institutions will be needed to set proper professional competency standards for practitioners in many specialized niches.  Getting our standards, certifications, and best practices right will put our firms and DDI/IoE system out ahead of competitors abroad where such competency-based credentialing may be lax or non-existent. 

Effective Data Governance and Legal Structures

Market forces and free enterprise will do most of the heavy lifting in creating value in the data-driven economy; however, the success of our business system requires good governance and proper codes of conduct. Sensible rules can help stimulate competition and innovation. They are needed to foster market efficiency, assure responsible behavior, and de-conflict legitimate competing interests. In pursuing these objectives, however, public and private policymakers must draw lessons from regulatory failure today. Whether promulgated by government or industry, demanded by customers, regulators, or courts, standards and rules must be:

  • Clear, to promote compliance;
  • Consistent, to foster planning and investment;
  • Properly scoped, to avoid unnecessary cost; and
  • Performance-based rather than prescriptive, to achieve their intended objective.

These requirements apply whether policymaking on cybersecurity, privacy protection, the technical standards, or any of the many other aspects of a prosperous data-driven economy. Prerequisite for success is social license, which means that all stakeholders must have a seat at the policy table where their interests and needs are respected and transparently factored into decision making.  

Preventing Databuse

In today’s enterprises, everyone holds a key stake in preventing “databuse”—defined by the Brookings Institution’s Benjamin Wittes and Wells C. Bennett as the “use of a person’s data in a fashion adverse to that person’s interests and in the absence of that person’s knowing consent.”

Wittes and Bennett argue that databuse is a more definitive, substantive, and actionable concept than privacy, which they find amorphous and poorly defined. They proffer a set of principles to prevent databuse, which can be boiled down to five main areas:

  • Integrity in the use of data
  • Transparency in how it is used
  • Security in how it is handled
  • Sovereignty of consumers in making decisions that apply to them
  • Reliability in fulfilling commitments made to those whose personal data one holds

At its core, the transfer and custody of personal data is a transaction based on trust.  When this trust is broken, consumers and enterprises are injured. At scale, such injuries will constipate the flow of data undermining DDI and shorting its benefits. 

In structuring measures and policies to prevent databuse, society would do well to observe the principles Wittes and Bennett carefully describe. In applying them we must remain keenly vigilant of the costs, benefits, and net effects of the protections prescribed. Failing to tease out the second- and third-order effects—or consider unintended consequences—of well-meaning action could harm the very people that laws, regulations, and standards aim to protect. That would be the case if excessive, unbalanced, and poorly structured means of databuse prevention unduly constricts the data flows necessary to unlock great mysteries that yield life-improving innovations and advance the human condition.

Preventing databuse, including the breach of personal information, is mandatory for DDI to thrive. It is also a major commercial opportunity. As the data revolution gathers steam worldwide, the demand for databuse prevention solutions will grow exponentially. The United States should be the global thought leader and solution supplier in this domain, as it entails two skills at which America shines: protecting rights and meeting market demand. 

Cybersecurity

The data-driven economy can’t flourish if the data supply chain is vulnerable and unreliable. The United States continues to lag many competitors in protecting critical cyber systems. America’s cybersecurity framework remains balkanized and undeveloped. The Department of Homeland Security is responsible for protecting the .gov component. The Department of Defense is responsible for security of .mil. Protection of the .com world is the responsibility of the private sector. Yet, these different domains are integrated circuits of a comprehensive system. Vulnerability in any of these artificially compartmentalized components places the whole at risk.

The need to stay ahead of the hackers, e-thieves, and cyber spies is a shared one. There is no one-size-fits-all cybersecurity solution, but many best practices and standards of care are universal. We need stronger mechanisms for vigorous private and public sector coordination to drive best practices and fill jurisdictional gaps. The process of strengthening U.S. cybersecurity law, regulation, and best practice must be agile and evolutionary to protect the flow of data supply chains and the innovation they spawn.

Coherent Data Property Rights and Intellectual Property Doctrine

Who owns data? What rights do data holders have in relation to those from whom the data was derived, knowingly or unknowingly? What are the intellectual property rights associated with those who cull, process, algorithm-ize data?  How are these various rights to be established and protected?

Vesting individuals with compensable rights to the data they help create seems fair and reasonable. It can incentivize data generation and sharing. But if the system for assigning and securing these rights becomes too complex, burdensome, or snarled in litigation, it could also become an enormous impediment to data flow. Likewise, conferring intellectual property (IP) rights on innovators who turn data into useful insight will incentivize progress. But if IP rights are excessively scoped or patents and copyrights protection become a legal tangle, then innovation will be the victim.

The cost and benefits of chosen legal and commercial doctrine on data ownership and IP rights must be carefully weighed and balanced. Rather than passively letting ad hoc events and a patchwork of court decisions shape policy based on 20th century legal doctrines and structures, the country would be better off defining rights and addressing the attendant policy challenges purposefully and strategically with an eye to the future. 

DDI Critical Infrastructure

Like the intricate supply chain responsible for moving goods from field and factory to the consumer, the data supply chain is also a complex network. It starts with billions of electronic production points. The digital goods are stored in container packets and whisked across wired and wireless transportation routes to storage and processing facilities, from where value-added data products move to consumers. This symphony, like its agricultural and industrial analogues, requires an elaborate network of critical infrastructure to perform.

A country intending to lead the global data-driven economy requires world-class infrastructure to keep the DDI system strong and ahead of the competition. Last century, the United States could never have become a great industrial power without the interstate highway system and a world-leading transportation network to efficiently move our goods across the value chain and to the market.

In this century, we can’t remain a great data power without the fastest, most capable digital transportation network in the world. This presents the mission-critical challenge of increasing the accessibility, speed and capacity of America’s Internet pipelines and wireless broadband systems. It requires greater ingenuity in managing the electromagnetic spectrum (EMS)— the indispensable medium for mobile communication and the IoE. Spectrum is a finite resource, requiring that we use it wisely and efficiently. New tools and technologies must be devised to maximize its utility—an imperative requiring R&D investment and intense cross-sector collaboration. 

These initiatives must be matched with efforts to modernize our aging and oversubscribed electric grid—a necessity to keep zeros and ones reliably on the move. Also needed is a larger complex of supercomputers to handle the skyrocketing demand for high-level analytical capacity. Significant private and public investments will be needed. In a time of budget constraints, making these investments isn’t a simple proposition, but they are imperative for turning slow growth and fiscal constraint into prosperity and abundance.  

Research, Development, and Deployment

The need to invest more generously in research and development (R&D) can’t be overstated. As the Council on Competitiveness warns, America must “innovate or abdicate.” The United States has the greatest innovation system known. Our national labs are the envy of the world. Our technology hubs and clusters are innovation dynamos that create prolific synergy between universities, federal research institutions, and private companies. But that top tier status is not guaranteed. Our international competitors are making their own massive investments to outpace us.

Empowering our research and development ecosystem to keep raising the bar on data excellence demands extraordinary energy and ingenuity. The federal government has created fruitful agencies that conduct advanced research in defense, energy, and intelligence. Perhaps it’s time for a similar institution devoted to excellence in data analytics.

A big part of unlocking innovation is overhauling America’s tax and regulatory policy to foster greater private investment in R&D and to encourage the formation of venture capital to fund start-ups. Without generous funding for R&D and muscular incentives to spawn start-up enterprises, the performance of our DDI system will falter. What’s clear is that we must innovate to innovate, collaborate to lead, and compete to win.         

Business Incubation

Public-private collaboration in research and development should be paralleled by strong teaming to help DDI businesses incubate and entrepreneurs develop core competencies. Businesspeople and investors will be the job creators of the data-driven economy. The more our systems can help incubate enterprises in new niches, establish novel business models, and share DDI skills with entrepreneurs and investors, the stronger our economy and better our future. 

International Protocols

The trade-based global economy requires that America compete and collaborate across international borders. Frameworks to facilitate mutually beneficial trade are as critical for data as they are for any other good or service. In fact, as the Brookings Institute's Joshua Meltzer writes, “data flows are the fastest growing portion of world trade.” The greater volume of data available, the faster innovation can move.

We must beware protectionism by those bent on slowing down the American data juggernaut. Vigorous trade in data must be established in major trade pacts that the United States and partners in Europe and Asia-Pacific are currently negotiating. Securing a robust global data flow requires coherent international norms on privacy protection, cybersecurity, and personal data property rights. Before we can compete at our best, we must collaborate at the highest level to eradicate international obstacles.

Fertile Business Environment

The business of data is no different than any other industry—enterprise requires a fertile business environment to flourish. The U.S. Chamber of Commerce Foundation has written extensively on the dynamics of a fertile business system and the mix of tax, regulatory, governance, security, and innovation policies that incentivize investment, productivity, and growth. Such reform is needed to catalyze DDI every bit as much as to expand the economy at large. Perhaps data will play an important role in the case for how best to produce and sustain growth, helping turn truth into action.   

Conclusion

The data-driven economy is rife with possibilities. Hopeful and exciting as it may be, the word “potential” is rather meaningless unless nurtured and brought to fruition. Bringing data-driven innovation to full blossom is a future-defining challenge that requires an American business system and government at their best.

Our competitive success and leadership is not self-fulfilling. It will be the product of visionary commitment, wise choices, coherent strategy, and ample investment. As one scholar recently noted, “The future is still in our hands— if we don’t sit on them.”

 

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John Raidt is a U.S. Chamber of Commerce Foundation Scholar.

The views expressed here are those of the author and do not necessarily reflect those of the U.S. Chamber of Commerce Foundation, U.S. Chamber of Commerce, or their affiliates.