New Report From McKinsey Institute: “Open Data: Unlocking Innovation and Performance with Liquid Information”
Released earlier this week by the McKinsey Global Institute.
Open data—machine-readable information, particularly government data, that’s made available to others—has generated a great deal of excitement around the world for its potential to empower citizens, change how government works, and improve the delivery of public services. It may also generate significant economic value, according to a new McKinsey report.1 Our research suggests that seven sectors alone could generate more than $3 trillion a year in additional value as a result of open data, which is already giving rise to hundreds of entrepreneurial businesses and helping established companies to segment markets, define new products and services, and improve the efficiency and effectiveness of operations.
Our research sought to quantify the potential value of open data by examining applications in seven fields of the global economy: education, transportation, consumer products, electricity, oil and gas, health care, and consumer finance (exhibit). For each of these, we identified ways that open data may create economic value, explored potential barriers to adoption, and considered which actions would be required for capturing value with open data. In fact, we found numerous ways it could drive growth and innovation across industries and sectors. In summary, the use of open data:
- has a large potential economic value from its benefits, including increased efficiency, new products and services, and a consumer surplus (cost savings, convenience, better products)
- enhances big data’s impact by creating transparency, exposing variability, and enabling experimentation; helping companies to segment populations and thus to customize actions directed at them; replacing or supporting human decision making; and spurring innovative business models, products, and services
- creates multiple business opportunities, such as the potential to raise productivity, to improve new products and services, and to enable entirely novel lines of business for both established companies and entrants
- benefits consumers even more than businesses, by creating price and product transparency as well as new channels to provide feedback that improves the quality of goods and services (including public ones)
- entails business risks, including reputational issues related to the potential release of negative information; the potential consumer backlash from aggressive open-data use (for instance, in ads that target online consumers by following social-media activity); and the inadvertent release of confidential information, such as benchmarking data
- requires governments to play a central role by developing and implementing policies to mitigate consumer and business concerns about the misuse of open data and to help set standards that will allow the potential economic and social benefits to materialize
- faces barriers, including privacy concerns and the need for legal and regulatory frameworks
About Gary Price
Gary Price (firstname.lastname@example.org) is a librarian, writer, consultant, and frequent conference speaker based in the Washington D.C. metro area. He earned his MLIS degree from Wayne State University in Detroit. Price has won several awards including the SLA Innovations in Technology Award and Alumnus of the Year from the Wayne St. University Library and Information Science Program. From 2006-2009 he was Director of Online Information Services at Ask.com. Gary is also the co-founder of infoDJ an innovation research consultancy supporting corporate product and business model teams with just-in-time fact and insight finding.