Time Dependency, Data Flow, and Competitive Advantage
22 Pages Posted: 27 Apr 2021
Date Written: February 15, 2021
Data is fundamental to machine learning-based products and services and is considered strategic due to its externalities for businesses, governments, non-profits, and more generally for society. It is renowned that the value of organizations (businesses, government agencies and programs, and even industries) scales with the volume of available data. What is often less appreciated is that the data value in making useful organizational predictions will range widely and is prominently a function of data characteristics and underlying algorithms.
In this research, our goal is to study how the value of data changes over time and how this change varies across contexts and business areas (e.g. next word prediction in the context of history, sports, politics). We focus on data from Reddit.com and compare the value’s time-dependency across various Reddit topics (Subreddits). We make this comparison by measuring the rate at which user-generated text data loses its relevance to the algorithmic prediction of conversations. We show that different subreddits have different rates of relevance decline over time.
Relating the text topics to various business areas of interest, we argue that competing in a business area in which data value decays rapidly alters strategies to acquire competitive advantage. When data value decays rapidly, access to a continuous flow of data will be more valuable than access to a fixed stock of data. In this kind of setting, improving user engagement and increasing user-base help creating and maintaining a competitive advantage.
Keywords: Economics of AI; Value of data; Perishability; Time dependency; Flow of data; Competitive advantage; Data strategy
Suggested Citation: Suggested Citation