Understanding Data: Facts Every Leader Should Know

In the age of AI and digital transformation, data is frequently discussed as the new oil, but many leaders still struggle to grasp its fundamental nature and unique economic properties. Understanding what data is, and what it is not, is the first step toward building a successful organisation that leverages its information assets strategically.

Drawing on expertise in data strategy, analytics, and AI for major organisations, here are essential facts about data that every leader should be aware of.

Facts About Data: The Essentials

Data is a fundamental concept underpinning all digital initiatives, and it has specific characteristics that differ from other organisational inputs:

• Data has to be created; it does not simply exist.
• It takes knowledge to create data in the first place.
• Different types of data have different needs, such as in terms of security or quality standards.

These facts underscore that data is not a passive resource but an active creation requiring expertise and management.

Data vs. Information: The Role of Context and Meaning

A common error is confusing data with information. For leaders, distinguishing between the two is vital for effective decision-making:

• Data represents facts about the world.
• Information is 'data in context'.

The difference lies in meaning. While data is an interpretation of the objects it represents, it is also an object that must be interpreted. Therefore, context is critical to make data meaningful. Without the right context, raw data offers little value to the business.

Data as an Asset: Unique Properties and Economic Value

For a long-term plan (or strategy) to manage an organisation's information assets effectively, leaders must treat data as an asset. Data is an asset that can and should have economic value. This value is directly related to the benefits of high-quality data and the cost of low-quality data.

However, data does not behave like traditional assets:

Traditional assets are tangible or durable while data is not tangible, yet not durable.

Traditional assets wear out or degrade with use while data does not wear out, though its value can change with age.

Traditional asset values are typically fixed per unit while data gets better the more you use it, and in many cases, data begets data.

Traditional assets are difficult to duplicate/transport without loss while data is easy to copy & transport, meaning it can be stolen without being gone.

Traditional assets are generally single-purpose or single-user while data is dynamic and can be used for multiple purposes. It can be used by multiple people at the same time.

Traditional assets can be reproduced if lost (e.g., equipment replaced) while is not easy to reproduce data if it is lost or destroyed.

The Leadership Takeaway

Recognising data as a unique, non-wearable, dynamic, and context-dependent asset is foundational for any successful strategy. A strategy should be a long-term plan defining the technology, processes, people, and rules required to manage these information assets.

As data is dynamic and improves with use, investing in its quality and context (turning it into information) is an investment that compounds. Conversely, ignoring its unique nature, the ease with which it can be copied or the difficulty of reproducing it if lost, can lead to significant challenges, including reputational risk and lost opportunity.

In essence, data is like a raw, multifaceted diamond: it is valuable, but its true economic potential is only unlocked when expert knowledge (context) is applied to cut, polish, and set it into a meaningful piece (information). Until then, it's just a rock that requires careful management and protection.

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