Musings on the Nature and Value of Information: The Exponential Power of Context

Information has value. We all know it intuitively. I have begun exploring on this blog some ways to describe that value in terms of the work that information can do, and dubbed this unit of potential the iJoule.

But the secret sauce to making information more powerful-- increasing its potential for work-- is context. Information is made more valuable by connecting it to more and more other units of information. All this other information is potential context. And information put in context is information made more powerful.

Most folks in technology are familar with Moore's Law- articulated by Gordon Moore- the idea that the the power of microprocessors will double about every 18-24 months . There's a similar concept called the network effect, described by Robert Metcalfe, which says that the value of a product is increased by the number of other owners or users of that product. He used it first to articulate the value of an Ethernet network, in that the network was made exponentially more useful with every user added to it.

Information itself behaves the same way. I propose that every unit of information is made exponentially more valuable by every other unit of information that can be connected to it. Said differently, this exponential value is the result of the increasing number of contexts into which that information can be placed, creating new contexts, new insights, and increased power to do work.

I am a marketer, so I'll use a marketing example. Assume you ran a company that sold life insurance. Provided with a list of phone numbers and no other context, I could do work-- I could call those numbers and try and sell life insurance to whomever answered the phone. I may have some success, but would obviously meet with a lot of failure and frustration as I knew nothing about who was answering, what their situation was, or what might interest in Lets call that one iJoule worth of work for now. Then imagine I had that same list of phone numbers, but now also the names of the head of household behind each of those numbers.

I would argue that those two pieces of information are easily twice as valuable as either alone. Each now has a context that lets it do far more work. So now I can do two iJoules worth of work. I would be able to ask by name for the right person and not wind up trying to sell life insurance to the babysitter who happened to be there for the evening. But I would still have a lot of frustration, I suspect. Now let's add one more piece of information-- the number of children that head of household has. I would propose that those three units of information together don't give us three iJoules worth of work but something far greater-- after all, now I have the information (the context) to make a much more compelling case for life insurance. And every additional unit of information (age of children, family income, life goals) that I add to this context has exponentially greater value, since each unit of information adds work potential to each other unit of information. The information system I have created now around that telemarketing list has its own network effect, adding massive potential to the work I can do.

if a classic Joule is the amount of work needed to move one kilogram of mass one meter, then how many iJoules are needed to do the work of selling one person a life insurance policy? That's an intriguing question-- but one I suspect could be answered with some degree of accuracy. And knowing the answer (even just roughly) would now tell me and my company how much potential work our current database can do...and how much added work potential we'd get by adding one more unit of information.

Now to me, the information added only adds value to the work at hand if it adds to the relevant context (as one commenter pointed out on a previous post). But don't be deceived-- the more macro the information system becomes-- meaning how many units of information can be connected and how many potential contexts they can be applied to-- the more potential value ANY unit of information has in an information system.

So here's my version of the network effect-- the value of any unit of information is a function of the square of the number of other units of information to which it can be connected. If you want to make information exponentially more valuable, focus on increased the connections.

Next post-- the iJoule and the Murder Mystery

Comments

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Posted by: speech writing | August 05, 2009 at 01:10 AM