Sunday, 19 May 2013

the internet economy Part III and the new gold rush; economic production in an information economy

[This is a re-post (originally posted on 12 Nov 2012) with minor edits, deleted the original posts by mistake]

Part II suggests that the definition of Economics may be redefined.

In the age of information, human capabilities must become even more significant.  {A note to the purist - while information has been around ever since civilisation, the term information age is used here to delineate from the more obvious industrial age and to emphasize economies now increasingly based on information.}  Gary Hamel, one of the great theorists of modern management suggested that historically there has been two basic ways to ‘aggregate and amplify human capabilities’.  They were bureaucracy and markets.  Now we have a third – networks that helps us work together on complex tasks more easily.  The global internet{, another engine of the information age} has been well documented to magnify this process as Wikipedia shows.  Wikipedia with only a few full time employees is ten times bigger than Encyclopedia Britainica and is roughly the same in accuracy from a study by Nature.   The internet industry abounds with many similar cases.  There is much to learn of this observable fact.  Indeed, these are all new models of production based on the community that by collaboration in unprecedented and surprising ways (for us dinosaurs!) is changing the very definition of economic theory and in doing so raises global productivity.

Economically speaking an underused resource, the homemakers, a large percentage in any economy, can enter the workforce more easily.  To a smaller degree, retirees and the handicap are able to as well, all working from home because they now can, with good broadband connections.  I think some new generation Call Centres or online temp agencies such as oDesk do not even realise a worker thousands of miles away is a handicap.  The internet model equalises.  The internet economy would be good socially and economically for any country.

Human capability thus amplified by the network effect and the internet in general will help with productivity and also drive the next phase in socio-economic development.  While crowdsourcing becomes the factory of the information age and we humans as the factory workers willingly and unwittingly, the raw material is data.  [I like to compare the massive productivity gains the world saw when Henry Ford invented the assembly lines to crowdsourcing.]  One aspect, termed Big Data, a general term used to describe the voluminous amount of unstructured and semi-structured data we create mostly by using the internet, will be significant.  They can be transformed into informational products or used to sell physical ones.  They provide the data for which information can be derived and better information improves productivity of white collar workers.  As the service economy continues to increase globally, statisticians of productivity become a happier lot!

To understand how Big Data works, think of yourself going through a typical day.  For me, I drive to work, send some emails, respond to a comment in LinkedIn, maybe search and then buy a cinema ticket online and when I get home, Skype my daughter, Amanda in Sydney.  Taken alone, this is disjointed, plain data. To a data analyst, it makes up your digital character, your online activity trial, turning data into potentially valuable information.  It is all about mining this commodity of data and making sense of it to make predictions, analyse our behaviour, improve service, sell more products, sell more ads.

The world’s starting to get all manner of information; products, prices, locations, human intent, behaviour and anything that can be coerced out of us.  eCommerce, search, social media, blogs and a hundred more new internet companies will generate Big Data.  Google knows we want to buy a car when we search for car deals fervently.   Pinterest knows our interest when we pin items of interest, such as photos or links to an online volunteer group into boards.  Like tin and iron ore mining was to Kinta Valley and economic success it bred for the City of Ipoh (once the tin mining capital of the world) in Malaysia, there is a lot of value in mining it.

The perception for a long while is that general data has little value.  Yahoo and Google are the early successful plays to show otherwise.  This has to do with new business models, one of which is the internet business model.  Over this century, many will monetise this commodity called ‘data’, applying internet business rules.  We are witnessing this new ‘gold’ rush now.  Others will use it to serve the public good such as Wikipedia (encyclopaedia), Quora (expertise database) or educational material online (eg. MIT). Thousands of other start-ups each claiming they have the superior model will vie to extract the best possible data from us for commercial purposes. { Like looking for a pin in the haystack, Pinterest is one rare first-rate model. } Big Data looks set to become a sub-industry on its own.  How else can information be mined?  A later column would ink some thoughts, highlighting and analysing projects such as the London DataStore, a potentially iconic early Big Data initiative at a municipal level. 

This initiative, allowing open access to public data, is worth watching.  It could one day show the way and the importance of building an online economy, an online government and modern mining.  It might sire a new class of information entrepreneurs; commercial and social.  It may be a new way for governments to enable society and generate opportunities for economic production.  It could raise public service to a new level.  It is a probable glimpse of the future of an information economy in action.

Part IV- the beginnings of the sharing economy in.{It seems certain that this and other interesting information-based projects commercially would breed a new generation of social and commercial entrepreneurs.}

©Chen Thet Ngian, (2012, 2013).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chen Thet Ngian and with appropriate and specific direction to the original content.