Message to Mobile Operators: Monetize Personal Data

As the exchange of personal data becomes a lynchpin of the modern business model, mobile operators are confronted with new challenges and opportunities. At frog, we’re working with mobile operators on the challenges and opportunities in a world where a richer personal data stream is opening unprecedented possibilities for creating value.  This article explores the why behind the market’s development and how operators can use Leverage, Risk, Scale, and Tangibility to evaluate opportunities to create value from personal data. 

Personal data is the root of the next-gen business model

Twenty years ago, nobody imagined creating revenue from personal data. But a number of factors—the rise of the Internet, globalization of workforces, heightened access to capital, and a strong entrepreneurial spirit—changed all that by opening the way to rapid social and technological growth.  Enter Google, Facebook, Twitter, and a whole new era in the sharing and consumption of information (read: data).  All of these business models were predicated on the notion that if you can create a service cheaply and then offer it for free to establish a large user base, value would follow. And it has, mostly in the form of personal data monetization.

Now, by the time you read this, a huge trail of data will have been generated. Nearly everything we do in our daily routes—from checking email to buying coffee or driving to work—leaves distinct trails of data exhaust that describe who we are, what we do, and how we spend our resources. Today, your morning coffee not only gives you a buzz but also generates a rich personal data stream that can be logged, tracked, shared, and monetized.

As we continue to advance technologically and behaviorally, the opportunities to create value from personal data have become ever more real and exciting.  These include embedded computing, the cloud, streaming service delivery models, location-based services, and multi-screen modes of online access in combination with mobile-centricity, hyper-sharing, and rising demands around the quality and cost of technology. With all these technological and behavioral forces taking shape, more and more businesses are taking strides to get in on the data monetization game.  

Mobility and a growing dependence on connectivity put mobile operators in an advantageous position in this changing market. After all, operators provide the backbone of a consumer’s digital life and they have high levels of trust concerning sensitive personal data, such as home addresses, billing information, location, calling and texting histories.

Yet it won’t be easy for a mobile operator to create new forms of value from this personal data, mobile or otherwise.  Operators must be willing to explore fundamental changes to the existing business framework, from new and different revenue models to new partnerships and customer segments (including B2B models). This will require more agility in responding to market dynamics.

Insights 

Over the last few years, we have collaborated with mobile operators on adapting to these new market dynamics and the growing importance of personal data monetization. Our experience has led to a number of observations about the personal data value chain.
Personal data is not consistent enough in purpose and origin to ever constitute a unified dataset, nor should that be our goal. Andas the amount of data grows – from medical and social security records to transactional data – this fragmentation will only increase. Not all of this is equally accessible, because of necessary regulatory and privacy reasons and because companies will want to maintain control over their excusive customer base.
While the future will be driven by advances in the unseen systems that surround us, the objects that we touch and feel and interact with in our daily lives receive the bulk of our attention, love and loyalty. Operators must embrace these objects – our homes, cars and media centers – and the companies that manufacture them, to facilitate new services that will create value for consumes.

Strategy: How Operators Can Respond
These observations suggest that mobile operators should selectively pursue opportunities to cross industries or domains to create specific value for the consumer.  One issue we see with clients in this regard: they sometimes assume you can do nearly anything if you just collect some data.  But when pressed on what specifically can be done, there are often few concrete ideas.
To be actionable you must understand the needs of the end consumer and work from there.  Place the consumer at the center of your ecosystem and imagine which specific combinations of services would provide the most value to them. Once these have been identified, focus on the following factors: a strong operator presence with considerable leverage; low risk; scalability and tangibility.

Leverage
Having leverage is key to any successful business model.  Relative to other types of stakeholders, operators have a lot of leverage when:

· Adding cellular connectivity to an existing service will create new value. One operator we’re working with is already taking steps to team with auto insurance providers in this way. Using cellular networks to tap into sensors in the car (acceleration and braking speeds, impacts, etc.), operators and carriers together can improve insurance underwriting, which can benefit drivers and providers alike.

· The reliability of the network connection matters. Another operator we’ve encountered is working with healthcare providers on connecting heart monitoring devices via the cellular network. Operators have leverage in this model because their powerful networks can guarantee the level of performance needed for this critical function where other networks cannot.

· Adding contextual information from the mobile will create new value.  For example, operators have an aggregate view of consumer behavior on the mobile. Operators can determine where a customer was located when they did X, who they called after they did Y, and what apps they use in conjunction. This information could be used (with great caution) to create enhanced service experiences for the consumer.

· An existing service can piggyback on the recurring billing relationship that operators have with the customer.  For example, partner service providers could add their bus or taxi fare to the operator’s phone bill and reconcile transactions on the back end to avoid building out consumer billing infrastructure and lower consumer barriers to use.

Identify additional levers that you have as an operator (relative to potential competitors that are not operators).  Then identify your levers as a business relative to other operators. These together will help you find points of leverage that will provide sustainable advantages.

Risk
In the example opportunities described above (i.e. connecting cars and heart monitors), the challenge for these operators will be to command value beyond just providing the pipe.  Providing the pipe is an easy foot in the door, but going beyond this to create new forms of value introduces greater risk. For an operator to begin to monetize the usage (data) on the network rather than just access to the network, a certain amount of risk is unavoidable. This is because the fundamental levers of an operator’s business model today (focused on monetizing network access) are quite different from the levers that drive the monetization of data:

The challenge for operators is to find opportunities that allow you to pursue elements of the data monetizer’s business model without undermining the core purpose of the business.

Maintaining a sustainable position in the market requires that all the activities your business undertakes have a high degree of consistency. For example, if the mechanics of your company’s business model are based on keeping your costs low internally in order to provide a value-based alternative to competitors, would the pursuit of the new opportunity be consistent with this model?  Would it reinforce it? Spend time articulating the core purpose of your business and identifying the principles of your strategy that should not be compromised, then evaluate the new opportunities for their fit within this to minimize your risk.

Scale
If you’re going to pursue opportunities to cross industries and monetize customer data, identify the levers that will create scale within an opportunity.  One of the curses of belonging to a multi-billion dollar organization is that opportunities worth (just) a billion may not move the needle enough to get behind.  Don’t lose months to detailed business cases, but do the back-of-the-napkin version to make sure the upshot is worth it to your business.  Don’t constrain measures of scale to just total available market; attach rates and pull-through for other (and potentially much larger) sources of revenue could be key levers in the modern operator’s business model.

Tangibility
Operators will be much better positioned to create new levels of value for consumers if they play a substantial role in the tangible products people use. Easy to say, but this represents a significant obstacle for operators, who traditionally haven’t focused on making tangible consumer goods. So how can operators respond to this phenomenon in a way that adheres to its core purpose?

Becoming more tangible doesn’t necessarily require that other core businesses that are unseen go away, but if a brand is to elevate its status, gain deep consumer loyalty, and earn the opportunity to generate greater and greater value for a consumer, it needs to remain as close to tangible as possible to ensure that users attribute their experience to that brand.  For operators, just one step removed from the consumer’s device, this leap may simply be a matter of revisiting positioning and branding strategies to shift consumer focus away from “five nines” and pipes, toward world class experiences that evoke strong emotion and loyalty, in order to gain the required mindshare.

Conclusion 
At frog, we’ve learned that one of the most effective ways to prove a concept is to just do it. Market conditions change rapidly, and the timeline of the innovation lifecycle is shorter today than ever before. As the flow of personal data increases exponentially, mobile operators are in an advantageous position to seize the opportunity to monetize personal data and create value.  They can use their widespread connectivity and a broad consumer base to create, leverage and scale up new services.
To do that, operators must look beyond existing business models and frameworks to seek new partnerships, revenue sources and consumer segments.  They must be open to crossing industries and domains, and most of all, focusing on the needs of the end consumer and what services and experiences would be of value to them.

As frog’s vice president of innovation strategy, Theo Forbath helps clients transform their products and services, key business systems, and applications into competitive global solutions. 

Published with permission from Design Mind