oil pump sunsetData is the new oil.

The line has been repeated and referenced myriad times lately–and this is totally understandable. After all, you can mine both data and oil. A closer look at it, though, reveals that it’s only partially true.

On one hand, both are incredibly valuable resources. Foolish is the organization or individual that doesn’t recognize the tremendous value in data these days. It’s no coincidence that Big-Data companies like Amazon, Apple, Facebook, Google, Netflix, and others are worth billions of dollars.

Second, consumption of both and data are on the rise, a point that I underscore in Too Big to Ignore. Consider China for a moment. Charts like the one below from The Guardian explain why its government is considering new incentives to slow skyrocketing gasoline consumption.

This leads to the third similarity: the extensive consumption of data and oil both produce unintended negative consequences. With oil, the chief side effects are pollution, spills, and geopolitical issues far beyond the scope of this post. On the data side, privacy and security concerns run the gamut. As I write this post, eBay announced that it has been hacked.

An Incomplete Metaphor

On the other hand, data is certainly not the new oil. Twenty years ago there were no legitimate alternatives to gasoline. If you wanted to drive, then you bought a gas-powered car. Period. (For more on this, see the excellent 2006 documentary Who Killed the Electric Car?.)

You just can’t say the same today. Although they remain relatively expensive, electric cars are making significant inroads these days. Tesla may be the highest-profile company in this realm, but it’s hardly the only one.

Let’s return to the chart above. Can China or any industrialized nation curtail its use of oil and other valuable natural resources? In the short term, perhaps not. But in the long term, who knows? Perhaps the country will adopt bike sharing programs like we have in the United States. The point here is that the country is actively seeing alternatives to oil. The same cannot be said about data.

Simon Says

Ultimately, the data-oil metaphor is only partially correct. I’m no geologist, but the supply of petroleum is finite. Just like land, they aren’t making any more oil. With data, though, the opposite is true. Understand the limitations of the metaphor and you’re more likely to move your organization’s needle.

All of these actions collectively mean one thing: more data. The data/oil analogy is certainly clever but only partially true.


What say you?

Author profile

Phil Simon is a frequent keynote speaker and recognized technology authority. He is the award-winning author of six management books, most recently The Visual Organization: Data Visualization, Big Data, and the Quest for Better Decisions. He consults organizations on matters related to strategy, data, and technology. His contributions have been featured on The Harvard Business Review, CNN, Wired, NBC, CNBC, Inc. Magazine, BusinessWeek, The Huffington Post, Fast Company, The New York Times, ReadWriteWeb, and many other sites.