Data Is Like Charcoal — Here’s Why

In the early 20th century, the visionary entrepreneur Henry Ford found himself faced with a challenge that would eventually transform both his business and an entire industry. As his automobile manufacturing plants churned out vehicles, they also produced significant amounts of wood scraps and sawdust – waste materials that seemed to have no real purpose.

However, Ford's innovation and determination led to the birth of the charcoal briquette industry, an inspiring tale that holds valuable lessons for modern businesses seeking to monetize data as a by-product of their operations.

The Ford connection: From waste to value

Much like the wood scraps and sawdust that were seen as waste byproducts, data generated by companies in today's digital age can be viewed as an untapped resource. Just as Ford saw potential in turning waste into a valuable commodity, businesses can recognize the inherent value in the data they generate through their regular operations.

The concept of leveraging data as a strategic asset isn't dissimilar from the initial challenge Ford faced — finding value in the seemingly insignificant.

Creating a new industry: From idea to execution

Ford's associate, EG Kingsford, played a crucial role in turning Ford's vision into reality. He established the Ford Charcoal Company to explore the potential of turning waste into charcoal briquettes. Parallelly, modern businesses can follow suit by creating data monetization strategies. Just as Kingsford's innovative approach was essential, companies today need forward-thinking leaders who recognize the revenue potential of data by-products.

The Kingsford brand emerges: Establishing value

As the charcoal briquette industry grew, the Ford Charcoal Company transitioned to focusing on its Kingsford brand and building a separate business around charcoal. The modern parallel would be the creation of DataCo’s, which are entities created solely to house and manage the business of a large company’s data assets.

Examples include airline mileage companies that hold and manage customer data. This is similar to a real estate holding company that houses a large enterprise's real estate assets separately from the primary company’s balance sheet creating a separate line of business.

Modern parallels: Monetizing data

Today, data generated by companies is often treated as an afterthought, much like the wood scraps and sawdust of Ford's time. However, the lessons from Kingsford Charcoal's journey provide a roadmap for businesses looking to generate value from an asset that is created as a by-product of their regular business operations.

Value can be created in multiple ways including monetizing data as a high-margin revenue source or using data as collateral for a loan.

By understanding the parallels between Henry Ford's charcoal briquette revolution and modern data monetization strategies, businesses can unlock the potential of their data by-products. Viewing data as a valuable resource rather than a mere byproduct can lead to new revenue streams, innovative products, and a competitive edge in today's data-driven landscape.

As history has shown, the ability to recognize hidden value within waste can truly transform industries and shape the future of business.

About the Authors:

Nathan Whigham is the Managing Director of Lending & Capital Markets for Gulp Data, a unique fintech company providing data valuation, monetization services and lending against Data as an Asset. He has been in the capital markets and finance industry since 2006 and has been involved in over $1B of transactions up and down the capital stack across a variety of transaction types in corporate credit, commercial real estate, renewable energy and other market segments. He holds a graduate certificate in Space Law through the Law School at the University of Mississippi, an MBA from the Marshall School of Business at the University of Southern California and a BS in Systems Engineering from the University of Arizona.

Doug Laney is the Data & Analytics Strategy Innovation Fellow at West Monroe where he consults to business, data, and analytics leaders on developing new value streams from their data assets. He originated the field of infonomics and authored the bestselling book, “Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage.” Laney is a three-time Gartner annual Thought Leadership Award recipient, co-chairs the annual MITCDOIQ Symposium, and is also a visiting professor at the University of Illinois Gies College of Business and the Carnegie Mellon University Heinz College. Follow and connect with Doug on Twitter and LinkedIn.