INFORMATION SOCIETY TREND 03

IST03 New Data-Driven Economy          

Real-time and predictive data have become valuable resources driving growth and innovation. Exploiting the benefits of data through analysis and application will generate new value. This will transform the frameworks of industries and competition, prompting new business models.

The Arrival of a Data-Driven Economy

In today’s social economy, digital data has become the source of value and competitive advantage as well as an important resource for creating innovations. Leading internet companies that monopolize customer information (data) to build a dominant competitive position are being rewarded with high market capitalizations. Some platforms recognized the value of data early and actively collected data based on the multi-sided platform model1 . Aggregation of customer information and continuous updates of algorithms improve both analytical accuracy and the speed in which customers can find information. This in turn increases customer satisfaction. The combined data can be used not only for customer analysis, but also for macro economy, stock market trends, election results, and the status and prediction of fashion. In addition, targeted advertising, which provides information to a specific group of customers at optimal locations and times, improves the conversion-to-sales rates. Because of the network effect, huge platforms will continue to accumulate customer information, quite possibly becoming even stronger in the future. Other companies are also starting to recognize the high value of data.

1 A business model that creates added value by connecting two independent customer groups

Using Healthcare Data

In the medical and healthcare field, information is now measured on a daily basis. Influenced by growth in the healthy living trend, more healthcare data is being generated outside of healthcare institutions from home healthcare equipment, wearable devices and smartphones as well as genetic tests for general consumers. Although some data may be low in accuracy, rapid diagnoses and changes in measurements cause a person to alter behavior or seek medical attention, leading to a shift from treatment to preventive medicine. Since patients spend an overwhelming amount of time away from healthcare institutions, information about their behaviors between medical visits is extremely useful to healthcare organizations. Detection of slight variations in health information could lead to a determination of the cause of pathogenesis as well as prevention of further disease development.

AI-based data analysis has started to be used in the development of new treatments, improvements in the drug discovery process and individualized treatments based on genetic information. Genetic information collected by biobanks is expected to accelerate the development of treatments for intractable diseases and many life-threatening illnesses. Clinical data is also being accumulated in studies of new treatments such as regenerative medicine using a patient’s own stem cells, and integrated therapy including both regenerative medicine and gene therapy.

While successful results are expected from the use of information in the medical and healthcare fields, such data is highly sensitive. As a result, protection of personal information is a critical issue. One concept being considered is called a personal data store, in which all personal information, including medical and healthcare data, is managed and used based on the individual’s intention. For example, one of the ideas under review is partial disclosure of personal information with consent to be used toward the solution of specific social issues. In this way, both privacy rights and the public interest can be balanced appropriately.

The Growth of Ride-Hailing Services

The automotive industry is facing a disruptive change where multiple technological and social renovations are developing in parallel. The boom of the sharing economy is proof that the source of product value resides in its function and not its ownership. For example, the popularization of ride-hailing services is evidence that the essential value of automobiles is as a means of transportation. As a result, some automobile manufacturers are entering the service industry by starting ride-hailing services or partnering with business operators to offer such a service. Effective matching of transportation needs and means helps to shorten travel distances and improve operating rates, leading to better efficiency and protection of the environment. In the future, even more convenient transportation services will likely be offered as all vehicles such as cars, buses and taxis operate on a shared and on demand basis. If sharing extends to the logistics area, it would reduce costs and encourage the integration of transportation and logistics. Service demand is expected to be leveled through the application of dynamic pricing, in which fees fluctuate based on demand.

A Move Toward Autonomous Driving

In the field of autonomous driving, the vehicle collects and analyzes real-time location information and controls itself based on an autonomous assessment of the situation. Automobile manufacturers and IT companies are competing against each other to develop this technology. The accumulation of driving data is indispensable to further technology improvement. The year 2017 saw a significant increase in travel distance for unmanned vehicles and the start of public road trials under specific conditions. Technologically, a completely autonomous vehicle might appear over the next several years.

Autonomous cars may eliminate the need for public parking spaces in cities, which in turn might necessitate a review of urban planning. In addition, it will impact car insurance, transportation/logistics, travel and other related industries. Fast food restaurants will also undergo changes and delivery may become the most common business model for restaurants. Although a review of the current legal system to include autonomous vehicles has begun, it will take time for the issues of safety and the protection of collected information to be solved. Streets, where unmanned and manned cars might coexist, are particularly dangerous and the liability from accidents remain a major challenge. If these problems are resolved, autonomous driving on public roads will progress, beginning in the logistics and the ride-hailing fields. In addition, new services will be formed due to the abundance of commuter time during which no driving is required.

A Shift to Electric Vehicles

As European countries and China regulate the sale of gasoline and diesel-fuel vehicles, a shift to electric vehicles is in progress. Electric vehicles, which have simpler structures and fewer components, will also trigger a transformation in the pyramid structure of the automobile industry. The automobile industry faces an issue of creating superior customer value versus electric appliance manufacturers and venture companies that are already entering this market. Companies are working on efficient ways to provide electrical charges, which consider the type of EV, driving habit, travel distance, electric prices and weather conditions. In addition, vehicles must factor in contingencies for traffic jams and emergencies and the use of travel data for car insurance purposes. Creation of unique value with connected cars, which are capable of two-way internet communication, is also anticipated.

The Most Important Resource of the 21st Century

Data is considered to be the most important resource of the 21st century and a source of innovation and growth. However, accumulating data in itself does not create value. A study of 22 countries worldwide revealed that only 15% of the accumulated data has been indexed in a usable way; and 33% has been indexed but is unusable due to redundancy, triviality and obsolescence, and the remaining 52% is not in a format conducive to indexing2 . Progress in the recognition of the importance of data will likely encourage better processes for the accumulation of data, creating greater value.

As society fully understands the significance of data, some are concerned that a data monopoly by huge companies may undermine the interest of consumers. Others argue that the data itself belongs in the public domain. In the interim, the European Union established the General Data Protection Regulation (GDPR) to strengthen and establish the basic right of protecting personal information. In the future, when challenges related to data are resolved, it will enable the creation of new opportunities and provide solutions to difficult social issues.

2 Global Databerg Report by Veritas Technologies, March 2016: https://www.veritas.com/news-releases/2016-03-15-veritas-global-databerg-report-finds-85-percent-of-stored-data

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