Part I — Data enables decision-making … if you have the right tools

Data is the new oil

“The world’s most valuable resource is no longer oil, but data” wrote The Economist in 2017.

Indeed, like oil, data can be extracted from diverse sources. Like oil, data then needs to be stored and refined in data centers. Eventually, both serve as feedstocks for the economy. Many sectors depend on oil by-products from the kerosene that fuels airplanes to the fertilizers that nourish our soil or the soap that we use to wash our hands. Similarly, data drives services from social networks and digital marketplaces to connected devices.

In much the same way that the discovery of oil at the end of the 19th century led to the development of new machines, boosted growth, and increased the living standards of many, data will reshape our society. It holds the promise of increasing interconnectedness as well as giving us a deeper understanding of human behaviors and needs. Already today, data transform business models, change the way we interact, and powers more accurate services.

Of particular interest to us is the fundamental link that ties data with decision-making, aka information, leads to action. Unlike oil, which has an intrinsic energy content and can, therefore, be used in its raw state, data is an intangible asset with no practical use in the physical world unless it is refined or contextualized. Data can be seen as a single point in space/time; alone, it means little and is most likely not actionable. However, if you collect more data and use the right tool to interpret these data points, you will get a shape or a curve. From this shape, you will derive information, that is, a new understanding of the physical world. It is based on this newfound insight that you will make decisions which in turn will shape the real world. That’s why we believe that having the right tools to structure and analyze data is as important as having access to data itself.

Processing data today requires more than just a brain

Our brain is an incredible machine which allows us to make sense of the world that surrounds us. From the moment we wake up to the moment we fall asleep, it uses our five senses to harvest vast quantities of unstructured data such as images or sounds, which it then interprets and turns into information. We then act upon those, whether by modifying our goal or adjusting our behavior in order to get closer to our objective.

The process that investors follow to reach an investment decision is no exception. However, while our brain is more than capable of understanding when it is safe to cross a road, it struggles to handle the enormous amount of complex data involved in investment decision-making. Investors, therefore, require tools to help them collect the data, derive the relevant information, and turn them into decisions. Additionally, cognitive biases may cloud their judgment. They therefore also require tools to organize and share their thoughts, which can help them mitigate these biases.

The investment data funnel

To get a clearer understanding of the tools that investors need, we decided to break down their workflow into 3 steps which we named the investment data funnel. We believe that much like in the oil and gas industry, this funnel can be broken down into Upstream (Collecting data), Midstream (Deriving actionable insights from data), and Downstream (Turning insights into decisions). We explore these in our next article.

This is the first article of our series “How more collaboration could drive better investment decisions”. Click on the links below to continue to read.

Part 2 — Investors’ data problem: from scarcity to overload →

Part 3 — The beautiful synergy between data, collaboration, and communication →