Many organizations fail to make good decisions about their data monetization strategies because their leaders lack a shared understanding of how to discuss them. This confusion can impede efforts to derive more value from the company's data assets through improvements or innovation. This article shares a simple, practical matrix approach that can help remove friction from discussions about monetizing data and identify areas of business opportunity, now and in the future.

Every organization can-and should-generate more revenue from its data than it invests in producing and managing it. Yet the idea of turning data into money is often associated with sneaky tactics or 'going too far' with unacceptable privacy violations. As a result, some organizations, especially non-commercial ones, have very little appetite for the term 'data monetization.' The authors say it's time to embrace the concept. They present three approaches to monetizing data: Selling, which entails the exchange of data for money; Improving, which uses data to create efficiencies for cheaper or faster operations; and Wrapping, which uses data to enhance products such that customers want to buy more. In the end they show that, if you will limit what you view as data monetization opportunities, you leave money on the table. Often, a lot of money.

From their research on digital initiatives at 30 organizations, the authors have identified four key practice areas that businesses should focus on to advance their strategic data-sharing capabilities. Using specific examples from Schneider Electric, Elevance Health, and other companies they studied, they describe how strategic data-sharing practices can help businesses better cocreate with customers, engage in novel partnerships, and pursue opportunities in digital ecosystems.

Unlike traditional company assets that will deteriorate or be depleted over time, data can be reused and recombined freely without degradation. Increasing the liquidity the ease of data asset reuse and recombination of strategic data is the first step to data monetization. The authors describe how the efforts of a financial services firm and three other organizations to facilitate the recurring reuse and recombination of strategic data assets are paying off.

Companies looking for ways to stand out from their competition can offer customers data products that enhance the product or service the customer originally came looking for. This data wrapping technique is an innovative option to increase a product's value to the customer and maximize its profitability.

This is an MIT Sloan Management Review article. Companies can monetize their data by improving internal business processes and decisions, wrapping information around core products and services, and selling information offerings to new and existing markets. Adopting any of these approaches, however, requires management commitment to specific organizational changes and targeted technology and data management upgrades.