The World We Live In

In 1597 Francis Bacon observed, “Knowledge is power. At the start of the third millennium, we are faced with an explosion in data, and in methods of for using it. From house prices to traffic flows to family trees to betting odds to economic models to the human genome, information exists in unprecedented quantity and much of it is widely available. It has never been clearer that information is value.

The question is: how to realize that value?

Two Evolving Worlds

Traditionally, corporations have exploited their information by keeping it to themselves. Oil companies’ most tightly guarded possessions are their seismic analyses of prospective drilling sites. Pharmaceutical companies guard their formulae, as do soft drink corporations. Tobacco companies try to guard their data on the relationship between smoking and health. Governments have often tried to keep information to themselves. In the US, the Intelligence Reform and Terrorism Prevention Act of 2004 includes a regulation that bars most public access to birth and death certificates for 70 to 100 years: in much of the country, these records have long been used by activists, lawyers, and reporters to uncover patterns of illness and pollution that officials miss or ignore. There is plenty of evidence to suggest that this traditional model of information retention may still flourish and that a world which we call Information is Power will develop.

In Information is Power, the fear of terrorism, concerns about privacy, and worries about crime and pornography on the internet result in the imposition of wide-ranging restrictions on the availability of data. Privacy laws ensure that the State has sole access to sensitive data. Intellectual Capital laws are strengthened and extended to algorithms, enabling the inventors of new methods of processing and analysing data to exploit their work. And software companies protect and exploit their own proprietary standards.

There is, however, another way to realize the value of information. The academic world has, over the last two centuries, developed a system in which information itself is a currency. Promotion for academics depends on papers written. Battles over priority are intense. The result is a tremendous flourishing of academic journals, physical and virtual, that contain huge amounts of information of varying quality. There are many recent examples to suggest that the commercial world is moving towards this model, to use information as a currency or at least to exploit the value of information in ways that involve giving free access to it. The Arctic Monkeys initially gave much of their music away. Creative Commons, a non-profit US corporation founded in 2001, is based on the notion that some people may not want to exercise all of the intellectual property rights the law affords them; and in 2006 a Dutch court ruled that photos posted onto a photo-sharing site under a Creative Commons licence should not have been reproduced by a gossip magazine without the permission of the poster. Motley Fool, a financial advice company, uses the vast amount of free information on its website as a platform to generate commercial activity. Betfair, a betting company, shares information on betting patterns. And IBM intends to give away 500 patents in 2006.

We call the world that evolves in this way Open Source. The Open Source Initiative is a current non-profit corporation dedicated to the idea that “when programmers can read, redistribute, and modify the source code for a piece of software, the software evolves. People improve it, people adapt it, people fix bugs. And this can happen at a speed that, if one is used to the slow pace of conventional software development, seems astonishing.” When IBM in effect joins the open source movement we can be sure that the world of Open Source is no chimera. In Open Source, Intellectual Capital and Privacy laws are relaxed, and industry-wide standards such as XML and SOAP replace proprietary standards, enabling the rapid evolution of software. Following in the footsteps of pioneers like the Arctic Monkeys, Motley Fool, and Betfair, companies will, in Open Source, need to learn new ways of exploiting the value embedded in the information they hold.

Business Opportunities in the Two Worlds

Companies such as Google and Autonomy have shown the commercial possibilities of using mathematical techniques to handle information. Bayesian approaches, genetic algorithms, and support vector machines are some examples of how mathematics can be used to work through, to make sense of, or to organize huge sets of data. In both Information is Power and Open Source many more such opportunities are bound to arise. In Information is Power, companies and governments will need new technologies to process and analyse data better than their competitors. Open Source companies will also want ever more ingenious ways of analyzing and displaying data, and will find increasingly imaginative ways to exploit this commercially. Either way, the next few years offers rich rewards for people with mathematical ideas who are able to bring them to market.

Some analysts estimate that the amount of data available for processing is doubling every three months. Not surprisingly, numerous companies have sprung up and become highly successful by finding clever ways of turning all this data into commercially useful information. Autonomy, for example, which focuses specifically on “processing unstructured information” has grown to become part of London’s FTSE-250 index of shares. Hometrak uses newly-available data on UK house purchases to provide valuations for prospective buyers and sellers. And dunnhumby provides “relevance marketing”, using masses of data to help its clients focus their marketing resources in the most effective way. The common thread is the ingenious use of mathematical ideas to help convert bewildering data into useful information. Mathematical Capital is here to help people with ideas become tomorrow’s Autonomy, Hometrak, and dunnhumby.