Insights Are the Currency of the Knowledge Economy

What are Insights?

A historic definition of an insight relates to a deep knowledge or understanding of something, but in the modern context an insight represents something novel or non-obvious that is illuminated through observation or analysis of data. It is not an innovation (a novel solution to a problem), but insights (along with imagination) are the critical ingredients of innovation — the ability to create value.

Insights in turn, are fed by data. Data is the collection of information in a raw or unprocessed form. Data can be both quantitative (dealing with numbers and things you measure objectively) and qualitative (things that are observed subjectively like smells, tastes and feelings).

The world is now awash in data. Everything from our doorbells to our vehicles to our mobile devices are all part of a massive interconnected machine we are building that is generating an incredible 2.5 quintillion bytes of data each day — and that pace continues to increase!

Analysis is the process of organizing and understanding data. Historically, this process has been dependent on people, but computers provide the ability to process and organize data with unprecedented speed, scale and accuracy. This combination of generating, organizing and analyzing data at scale is what is driving the transformation of our economy because it opens the door for limitless insights and innovation.

Computers Can’t Create Insights On Their Own

The concepts of AI and machine learning tools conjure images from the Terminator, the Matrix or The Avengers where a kind of digital super intelligence is trying to extinguish mankind. The conceptual leap each of these movies is making centers on the idea of an artificial intelligence having an imagination — the ability to think about a future state and apply value to that future state. We are at least several decades away from that reality, and some have argued that it is much further.

It is people’s ability to imagine that separates us from most if not all living organisms. Author Yuval Noah Harari talks about human imagination extensively in his book Sapiens, a Brief History of Humankind. Not only articulating imagination as an ability to create social constructs like money, law and religion (the foundation of all modern economies) but also highlights these are uniquely human with the point, “You could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.”

This same unique ability that has enabled people to build modern society is also a key requirement for creating an insight — the ability to imagine a future state that can be different in some way based on the observation of data. We can develop AI tools that can mimic some of these elements and appear to offer insights, but in truth these are just recognition of patterns in data.

For several years computer scientists and musicians have teamed up to test the abilities of artificial intelligence tools to analyze and compose music. Last month an orchestra in Austria performed an unfinished symphony by Gustov Mahler, a 19th century classical composer, and added six minutes to the symphony composed by software program. A local musician familiar with Mahler’s work commented, “It all sounds like music, there are emotions, but someone who really knows Mahler will notice immediately that it is not Mahler,”.

Jesse Wolfersberger, the chief data officer at Whistle Systems put it this way, “There are numerous efforts to train AI to create art or music. They have been extremely successful in replicating the styles they have been trained on, but we have never had an AI #1 hit.” There is not an assignment of value outside of what is already specifically programmed. No imagination.

In fact, the growth of AI and machine learning tools makes people more important in this next chapter of our economy. As we continue to automate simple tasks more human energy and effort can be applied to creative tasks, thinking and exploration of data resulting in more insights and innovation. Avia, a leading company working on software for composing music envisions a future where man and machine will collaborate to fulfill their creative potential, rather than replace one another.

Organizations that will survive and thrive in the future are the ones focused on their people — the source of insights, creativity and imagination.

If Data Is the New Oil…

As the big tech companies have displaced oil companies as the most profitable (the top 5 tech companies generated over $138b in net profit last year) several authors have noted this displacement as an important milestone in the evolution of our economy. The comparison of oil to data is interesting, in that both are a raw ingredient that fuel the industrial and knowledge economies respectively, and both must be processed into products that create value. Data is only valuable when organized or observed. Oil when refined into a product. Data and oil have the potential for value, but more work must be done to realize value.

However, the potential and impact of data is infinitely greater than oil. Data (when appropriately organized and processed into insights) can change literally every aspect of every product, process, and experience. In other words, the breadth of its impact is far greater than oil.

There is also no limit to the amount of data that can be created, there is no “peak oil” equivalent in data. As data is limitless, so is the unlimited potential to create insights, innovation and value from that data. It is a limitless source of value.

Data can be extracted from any source. Every action, feeling and change is a data point with the potential for value. It’s not to say every data point has equal value or obvious value, many data points must be combined with many others to create an insight. But it is likely some new combination of data points will create a new insight.

Data can be combined, even from sources that would appear to have no obvious connection to form completely new insights. Data scientists working with HSBC organized a very broad range of customer data types to match the right incentive to the right person. By combining a broad range of sources all sorts of new insights were created, for example, a person most likely to be motivated by a travel experience is someone who rides public transportation.

The agrarian economy was limited by the amount of productive land and labor, the industrial economies (there were several) were limited by raw materials (oil, steel, wood, etc…) and labor. The service economy is limited by the labor pool. The knowledge economy (at least for several decades) will also be limited by people but only for a period of time as software removes the limitation of people and accelerates beyond our biological capacity.

Why This Matters to You

This matters to you because the next few decades will deliver a tsunami of insights and innovation that will transform (even more) how you experience life. This change also creates great opportunity to learn and evolve your professional experience, in fact it will be required. A recent study suggested that as much as 80% of the jobs people will hold in 2030 have not yet been invented. Even if this estimate is off by half, it is still a remarkable amount of change in what will feel like a very short period of time.

What is equally exciting (and relevant to you) is that every person has an imagination and access to massive amounts of data, therefor everyone has the ability to discover insights and innovate. The barriers to people creating value will continue to lower (you don’t need a farm or factory to create value in this economy) allowing more people to participate in more significant ways. Creativity is not limited to a certain class of people or cultural background. And the tools to organize and analyze data continue to become easier to use.

Over the last ten years over $16b was invested to develop new HR technologies to better support people in the workplace. This is a fraction of the investment going into AI and automation — again supporting the increasing importance of people in creating value for the business.

The companies and people that recognize this change, that are creating time to discover insights, to expose themselves to creative acts, that make time to innovate — will be in a position to prosper through this phase of the knowledge economy and imagine the next chapter of our human experience. Insights are the currency that will enable this success.