DATA-DRIVEN INNOVATIONDefinitions, Opportunities and Challenges

Christian.Reimsbach-Kounatze@oecd.org Twitter: @chreko

Stordata og offentlige tjenester3 May 2017

OECD - Organisation for Economic Co-operation and Development

• Like-minded• Economic and social

development • Policy standard setter• Inter-governmental• Multi-stakeholder

Inter-governmental organisation with 34 membersAustraliaAustria Belgium Canada Czech Republic ChileDenmark Estonia Finland France Germany Greece Hungary Iceland Ireland IsraelItaly Japan

KoreaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak republicSloveniaSpainSwedenSwitzerlandTurkeyUnited KingdomUnited States

+ European Union2

3

OECD report on Data-driven Innovation

Find out more about our work at http://oe.cd/bigdata

• Ch.1 The Phenomenon of data-driven innovation• Ch.2 Mapping the global data ecosystem and its

points of control• Ch.3 How data now drive innovation

• Ch.4 Drawing value from data as an infrastructure• Ch.5 Building trust for data-driven innovation• Ch.6 Skills and employment for a data-driven

economy

• Ch.7 Promoting data-driven scientific research• Ch.8 The evolution of health care in a data-rich

environment• Ch.9 Cities as hubs of data-driven innovation• Ch.10 Governments leading by example with

public sector data

WHAT IS DDI AND WHY IS IT IMPORTANT?

WHAT ARE KEY DATA GOVERNANCE CHALLENGES?

WHAT ARE THE KEY ENABLING FACTORS FOR DDI?

HOW READY ARE COUNTRIES AND WHAT ARE POLICY OPTIONS ?

Data is the “new R&D” for innovation across the economy

HealthPublic

AdministrationRetail

TransportationAgriculture

Science and Education 5

6

… thereby enabling the next production revolution (“Industrie 4.0”)

• Managing the effects of climate change and natural disasters

• Addressing complex diseases such as dementia and Ebola

• Fostering development and inclusive growth

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… and helping to address global challenges

DDI refers to the use of data and analytics

to improve or foster new products,

processes, organisational methods and

markets

8

What is data-driven innovation (DDI)?

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DDI is not only about big data, it is about the data value cycle

WHAT IS DDI AND WHY IS IT IMPORTANT?

WHAT ARE KEY DATA GOVERNANCE CHALLENGES?

WHAT ARE THE KEY ENABLING FACTORS FOR DDI?

HOW READY ARE COUNTRIES AND WHAT ARE POLICY OPTIONS ?

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Data is not oil, but an infrastructure with large spill-overs

• Data is non-rivalrous (but excludable) Data re-use and non-discriminatory access can maximize its value Data enables multi-sided markets

• Data is a capital with increasing returns Data can be re-used as input for further production Data linkage is a key source for super-additive insights

• Data is a general purpose input with no intrinsic value Data are an input for multiple purposes Its value depends on complementary factors related to

the capacity to extract information (e.g. skills, software)

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Max. data value max. data reuse

Enhance data access

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Max. data value max. data reuse

Economic benefits of enhanced data access:

• Facilitation of joint production or co-operation

• Support of value-creating activities by users (customers);

• Maximisation of the option value of data and data-related products

• (Cross-)subsidising the production of public and social goods

Open PermID enables Thomson Reuters’ client to better link their own data and thereby to contribute to enhancing the quality and value of Thomson Reuters’ own data

Prevent loss of profit

data portability

Policy dilemma: Striking the right balance between “openness” and “closeness”

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Close(ness) Openness

individuals

organisations

Prevent social and economic

harm

Enablespill-over effects

multi-purpose reuse

data sharing

open standards

open APIs

privacy

confidentiality

user lock-in

walled garden

open data

free flow of data

digital security

IPRs (e.g. trade secrets) Algorithmic transparency

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Data openness is not a binary concept, but spans a continuum

Degrees of enhancing access to data

Data portability Open dataData markets

Data sharing within PPPs

Governments leading by example with open data

Source: 2014 OECD Survey on Open Government Data.

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

Data availability Data accessibility Government support to re-use

No national O

GD

portal

The Open-Useful-Reusable (OUR) Government data index

• For OECD countries, the PSI market is estimated to be USD 111 billion by 2010=> aggregate impact of USD 700 billion in 2010 (overall 1.5% of GDP; OECD, 2015b).

• For the United Kingdom, the PSI market is estimated to be GBP 1.8 billion per year=> aggregate impact of GBP 5 billion per year (overall 0.5% of GDP; Shakespeare review, 2013).

• For G20 countries, open data policies could increase output by around USD 13 trillion over the next five years (overall 1% of GDP; Omidyar Network, 2014).

• Including public and private sector data, McKinsey Global Institute estimates that the reuse of open data in seven areas of the global economy could help create value worth USD 3 trillion a year worldwide (4% of GDP; MGI, 2013)

• Mobile number portability (MNP) can encourage switching, and as a result can reduce average prices in telecommunication services (by 6% to up to 12%).

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Macroeconomic impact assessment studies on enhanced data access

WHAT IS DDI AND WHY IS IT IMPORTANT?

WHAT ARE KEY DATA GOVERNANCE CHALLENGES?

WHAT ARE KEY ENABLING FACTORS FOR DDI?

HOW READY ARE COUNTRIES AND WHAT ARE POLICY OPTIONS ?

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There are new business opportunities for analytic services and entrepreneurs

The data ecosystem as layers of key roles of actors

0

20

40

60

80

100

Broadband Website SocialMedia

E-purchases

ERP CRM CloudComputing

E-sales Supplychain mngt.

(ADE)

Big Data RFID

%

Gap 1st and 3rd quartiles Average Lowest Highest

Poor adoption of advanced ICTs in firms

The diffusion of selected ICT tools and activities in enterprises, 2016Percentage of enterprises with ten or more persons employed

Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD, ICT Database; Eurostat, Information Society Statistics and national sources, March 2017.

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… with SMEs lagging behind

Use of cloud computing as a percentage of enterprises, by size, 2016

21

Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD, ICT Database; Eurostat, Information Society Statistics and national sources, March 2017.

… in particular in regards to big data

Use of big data analytics as a percentage of enterprises, by size, 2016

22

Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD, ICT Database; Eurostat, Information Society Statistics and national sources, March 2017.

The data source used can differ significantly across industries

23Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD, ICT Database; Eurostat, Information Society Statistics and national sources, March 2017.

Use of big data source as a percentage of big data using enterprises, 2016

Digital security risks is a major barrier to adoption in some countries

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Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD, ICT Database; Eurostat, Information Society Statistics and national sources, March 2017.

Reasons of businesses for not using cloud computing, 2014

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.82013 2012 2011

%

25

The lack of data specialists may be a more pertinent barrier

Data specialists as a share of total employment in selected OECD countries

Source: OECD based on data from Eurostat, Statistics Canada, Australian Bureau of Statistics Labour Force Surveys and US Current Population Survey March Supplement, February 2015.

0

1

2

3

4

5

6%

2014 2011

26

… the lack of ICT specialists as well

Share of employed individuals using programming languages daily at work

Source: OECD, based on PIAAC Database and national labour force surveys, December 2015.

27

Businesses in some countries face difficulties recruiting ICT specialists …Enterprises that reported hard-to-fill vacancies for ICT specialists

61 59 51 53 53 58 61 57 53 52 34 50 63 66 51 55 41 43 31 17 32 47 28 31 31 21

0123456789%

2016 2012

As a percentage of all enterprises looking for an ICT specialist

Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD, ICT Database; Eurostat, Information Society Statistics and national sources, March 2017.

Still a large majority of workers lack the most basic ICT skills

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Source: OECD based on OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills (PIAAC), OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264204256-en.

10080604020

020406080

100

Level 1 or below Level 2 Level 3

No ICT skills or basic skills to fullfilsimple tasks

More advanced ICT and cognitive skills to evaluate

problems and solutions

Adult population by level of proficiency in problem solving in technology-rich environments, 2012

WHAT IS DDI AND WHY IS IT IMPORTANT?

WHAT ARE KEY DATA GOVERNANCE CHALLENGES?

WHAT ARE KEY ENABLING FACTORS FOR DDI?

HOW READY ARE COUNTRIES ANDWHAT ARE POLICY OPTIONS?

How ready are countries?

Note: Index in relative terms to unweighted OECD average. Index value is set to 200 where it exceeds that value.30

Demand Supply

DDI-related indicators: Mexico

31Note: Index in relative terms to unweighted OECD average. Index value is set to 200 where it exceeds that value.

0

50

100

150

200Wireless broadband

Online purchase

Apps

Local content hosted

OECD site hosted

Open government databreadth

RFID diffusion

Net ICT business growth

Export in ICT services

Data specialists skills

Investments in economiccompetencies

Investments in data andsoftware

Germany OECD average

DDI-related indicators: Germany

32Note: Index in relative terms to unweighted OECD average. Index value is set to 200 where it exceeds that value.

DDI-related indicators: The Netherlands

33Note: Index in relative terms to unweighted OECD average. Index value is set to 200 where it exceeds that value.

DDI-related indicators: United States

34Note: Index in relative terms to unweighted OECD average. Index value is set to 200 where it exceeds that value.

0

50

100

150

200Wireless broadband

Online purchase

Apps

Local content hosted

OECD site hosted

Open government databreadth

RFID diffusion

Net ICT business growth

Export in ICT services

Data specialists skills

Investments in economiccompetencies

Investments in data andsoftware

Norway OECD average

DDI-related indicators: Norway

35Note: Index in relative terms to unweighted OECD average. Index value is set to 200 where it exceeds that value.

Policies for facilitating data reuse across organisations and sectors are popular

36Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD Digital Economy Outlook Policy Database, March 2017.

Governments are focusing on becoming more efficient through use of ICT

37Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD Digital Economy Outlook Policy Database, March 2017.

Governments still tend to lack attention to data and business model innovation

38Source: Based on OECD Digital Economy Outlook 2017 (forthcoming),OECD Digital Economy Outlook Policy Database, March 2017.

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Thank you for your interest!

Find out more about our work at http://oe.cd/bigdataChristian.Reimsbach-Kounatze@oecd.org / @chreko / @OECDinnovation

• Ch.1 The Phenomenon of data-driven innovation• Ch.2 Mapping the global data ecosystem and its

points of control• Ch.3 How data now drive innovation

• Ch.4 Drawing value from data as an infrastructure• Ch.5 Building trust for data-driven innovation• Ch.6 Skills and employment for a data-driven

economy

• Ch.7 Promoting data-driven scientific research• Ch.8 The evolution of health care in a data-rich

environment• Ch.9 Cities as hubs of data-driven innovation• Ch.10 Governments leading by example with

public sector data