The Data Cold War
Jim Harris in Books, Data Quality, Debates, Social Media tagged Best of 2011, Data Governance, Facebook, Google, Master Data Management, Twitter Monday, August 29, 2011 at 3:00AM 
One of the many things I love about Twitter is its ability to spark ideas via real-time conversations. For example, while live-tweeting during last week’s episode of DM Radio, the topic of which was how to get started with data governance, I tweeted about the data silo challenges and corporate cultural obstacles being discussed.
I tweeted that data is an asset only if it is a shared asset, across the silos, across the corporate culture, and that, in order to be successful with data governance, organizations must replace the mantra “my private knowledge is my power” with “our shared knowledge empowers us all.”
“That’s very socialist thinking,” Mark Madsen responded. “Soon we’ll be having arguments about capitalizing over socializing our data.”
To which I responded that the more socialized data is, the more capitalized data can become . . . just ask Google.
“Oh no,” Mark humorously replied, “decades of political rhetoric about socialism to be ruined by a discussion of data!” And I quipped that discussions about data have been accused of worse, and decades of data rhetoric certainly hasn’t proven very helpful in corporate politics.
Later, while ruminating on this light-hearted exchange, I wondered if we actually are in the midst of the Data Cold War.
The Data Cold War
The Cold War, which lasted approximately from 1946 to 1991, was the political, military, and economic competition between the Communist World, primarily the former Soviet Union, and the Western world, primarily the United States. One of the major tenets of the Cold War was the conflicting ideologies of socialism and capitalism.
In enterprise data management, one of the most debated ideologies is whether or not data should be viewed as a corporate asset, especially by the for-profit corporations of capitalism, which is (even before the Cold War began), and will likely forever remain, the world’s dominant economic model.
My earlier remark that data is an asset only if it is a shared asset, across the silos, across the corporate culture, is indicative of the bounded socialist view of enterprise data. In other words, almost no one in the enterprise data management space is suggesting that data should be shared beyond the boundary of the organization. In this sense, advocates, including myself, of data governance are advocating socializing data within the enterprise so that data can be better capitalized as a true corporate asset.
This mindset makes sense because sharing data with the world, especially for free, couldn’t possibly be profitable — or could it?
The Master Data Management Magic Trick
The genius (and some justifiably ponder if it’s evil genius) of companies like Google and Facebook is they realized how to make money in a free world — by which I mean the world of Free: The Future of a Radical Price, the 2009 book by Chris Anderson.
By encouraging their users to freely share their own personal data, Google and Facebook ingeniously answer what David Loshin calls the most dangerous question in data management: What is the definition of customer?
How do Google and Facebook answer the most dangerous question?
A customer is a product.
This is the first step that begins what I call the Master Data Management Magic Trick.
Instead of trying to manage the troublesome master data domain of customer and link it, through sales transaction data, to the master data domain of product (products, by the way, have always been undeniably accepted as a corporate asset even though product data has not been), Google and Facebook simply eliminate the need for customers (and, by extension, eliminate the need for customer service because, since their product is free, it has no customers) by transforming what would otherwise be customers into the very product that they sell — and, in fact, the only “real” product that they have.
And since what their users perceive as their product is virtual (i.e., entirely Internet-based), it’s not really a product, but instead a free service, which can be discontinued at any time. And if it was, who would you complain to? And on what basis?
After all, you never paid for anything.
This is the second step that completes the Master Data Management Magic Trick — a product is a free service.
Therefore, Google and Facebook magically make both their customers and their products (i.e., master data) disappear, while simultaneously making billions of dollars (i.e., transaction data) appear in their corporate bank accounts.
(Yes, the personal data of their users is master data. However, because it is used in an anonymized and aggregated format, it is not, nor does it need to be, managed like the master data we talk about in the enterprise data management industry.)
Google and Facebook have Capitalized Socialism
By “empowering” us with free services, Google and Facebook use the power of our own personal data against us — by selling it.
However, it’s important to note that they indirectly sell our personal data as anonymized and aggregated demographic data.
Although they do not directly sell our individually identifiable information (because, truthfully, it has very limited, and mostly no legal, value, i.e., that would be identity theft), Google and Facebook do occasionally get sued (mostly outside the United States) for violating data privacy and data protection laws.
However, it’s precisely because we freely give our personal data to them, that until, or if, laws are changed to protect us from ourselves, it’s almost impossible to prove they are doing anything illegal (again, their undeniable genius is arguably evil genius).
Google and Facebook are the exact same kind of company — they are both Internet advertising agencies.
They both sell online advertising space to other companies, which are looking to demographically target prospective customers because those companies actually do view people as potential real customers for their own real products.
The irony is that if all of their users stopped using their free service, then not only would our personal data be more private and more secure, but the new revenue streams of Google and Facebook would eventually dry up because, specifically by design, they have neither real customers nor real products. More precisely, their only real customers (other companies) would stop buying advertising from them because no one would ever see and (albeit, even now, only occasionally) click on their ads.
Essentially, companies like Google and Facebook are winning the Data Cold War because they have capitalized socialism.
In other words, the bottom line is Google and Facebook have socialized data in order to capitalize data as a true corporate asset.
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Reader Comments (7)
Maybe there is a third way.
My home country Denmark is by some American politicians often described as a socialist country even though we belonged to the capitalist block under the Cold War.
This confusion is due to the status of being a welfare state. Many enterprises may also adopt a welfare model for master data that may include that funding is not based on departmental “what’s in it for me” but the welfare of the entire enterprise.
Thanks for your insightful comment, Henrik.
I like the idea of a welfare model for master data, but, as you noted, there is an American bias against using either socialist or welfare as a metaphor for convincing an organization, especially an American one, to accept that data should be viewed as a corporate asset, even though both models, and metaphors, could help organizations capitalize the value of their data.
Best Regards,
Jim
Hmmm . . . This will come across as a little confusing for non-Americans who don’t equate socialism with communism, which (in Europe at least) was the other participant in the Cold War. During that period, many NATO countries had socialist governments, and they still do. Ah, if only we could find definitions for words that we could all agree on . . . ;-)
Thanks for your excellent comment, Graham.
Yes, I did misleadingly equate socialism with communism, which I have to admit I did knowingly simply because it worked better with my blog post title, and made the analogy work better so that I could play with the pun of “socializing data within the enterprise so that data can be better capitalized as a true corporate asset.” As a word, communism doesn’t provide as many variations and puns as socialism, so I was taking some blogger’s poetic (and political) license :-)
Best Regards,
Jim
From the LinkedIn Group for IAIDQ Information/Data Quality Professional Open Community, Patrick Chan commented:
“Good Read, liked it!
To me, the key takeaway is about dissolving the boundaries of socialist vs. capitalist (using your analogy) to make it a business model that can be monetized.
The Cold War ended when the Soviet-bloc countries just couldn't sustain themselves and had to opt for a more open social-economic model. It's the same way with the Web; companies start off offering free services and eventually must monetize by either going to a subscription or advertising-driven revenue model.
Forward-thinking companies have internally begun this movement by creating horizontals with goals towards sharing, consolidation and reconciliation because it creates value and lowers the cost. Just like the fall of the Iron Curtain, there are major challenges getting the incumbent political machine to gracefully transition to a more open model without creating a vacuum that enables anarchy to erupt.”
And I responded:
Thanks for your insightful comment, Patrick.
I like your excellent extrapolation of the Cold War analogy. Dissolving the boundaries within the enterprise, moving from vertical divisions to horizontal unity, and encouraging horizontal collaboration across vertical silos will require some vertical sacrifices for the horizontal greater good. I call this becoming horizontally vertical.
This cross-functional alignment isn’t easy to achieve and, as you noted, will be resisted by the status quo, but, as you also noted, forward-thinking companies have already begun this transition.
And Maxine Fletcher commented:
“Hear, Hear, I couldn't agree more! Everyday I see people maintaining and viewing the same data in different formats within different silos. What makes it worse is the resistance to seamless interfacing using common, global data and metadata, where each field has a unique and specific use and, most importantly, has been given a definition upon which all parties are agreed. They'd rather do it manually and have to manipulate the data to get it into the format that their boss wants to see.
I realize that this has little to do with the Cold War analogy. Perhaps it dates further back to the times where each county had a king who ruled according to his own set of laws?”
And I responded:
Thanks for your excellent comment, Maxine.
Yes, today’s data silos are akin to medieval fiefdoms, where different business units within an organization can sometimes resemble different fiefdoms within the same kingdom, or at other times resemble different kingdoms altogether.
I wrote about this in a blog post called: Are you Building Bridges or Digging Moats?
Bob Lambert wrote an excellent follow-up blog post called Abstracting and recombining all the way to the bank, which explains that what I called the Master Data Management Magic Trick used by Google and Facebook is really just an ingenious data modeling abstraction.
A clever comparison Jim!
The silo mentality is actually my strongest answer to the question you posted in your peanut buttered cat post. An astute (though self-serving) steward actually has an incentive to pay lip service to a data governance programme, and encourage other stewards to break down their own silos while maintaining their own. This could only really happen in a "toast-up" scenario however; if the programme has executive sponsorship (i.e. cats on top, where they belong), there would be no political benefit to any steward not playing nicely in the sandpit.
I enjoyed your extension of the argument to Google and Facebook too. I expressed a similar sentiment in a blog post several weeks ago after hearing a comment by Eric Schmidt that “Facebook isn’t a social success, it’s an identity success.”