Responsibility & Opportunity in the Digital Economy
Through the technology of information, real people are now creating data. Companies generating the disruption have a new type of responsibility, and opportunity, here.
DIGITAL. The technology of information (digital) allows for the creation of new data by disrupters; information that incumbents do not have, and will never create. But what is this new data, really? And, who has really created it? The answers, at least in my mind, define barriers (business model, legal, psychological) that those who are seen to exact rents (incumbents) will have difficulty crossing.
DIGITAL IN HEALTH. In the context of health. Rare and/or chronic disease. This new data represents all of the understanding(s) that incumbents (the scientific & medical communities, payors, regulators) do not have about a diagnosed family, the implications of their condition, the day-to-day reality of it all. The inconvenient stuff. Inconvenient because many practitioners will tell you - privately - that in rare disease, the patients and caregivers, the real people, are more knowledgeable in many ways. Not all, but enough.
The data is quality of life, it is environmental in nature (nutrition, behavior-based). It can be characterized primarily by the fact that creating clinical evidence to provide understanding, scripts, reimbursement, is likely not to happen; there are no incentives. What incumbent is going to spend clinical money on an environmental intervention that requires behavioral changes? Disrupters. If done properly, they can help turn this new data, essentially anecdotes, into wisdom. First, re-perform the patient-derived anecdotes using scientifically valid methodologies and standards that are actionable by incumbents, and publicize. Second, convince incumbents of the potential importance of this new data. Once that acceptance happens, then we have wisdom.
Wisdom then is not 'of the crowd' per se. It does derive from there, sure. Importantly, what I call the new source of wisdom is this process - enabled by digital disruption - of how the voice of real people is integrated into consensus guidelines, into R01 proposals, policy discussions.
DIGITAL IN FINANCE. We can talk about perceived lack of good investment opportunities (investing in SWAG, where the 'w' is for wine for example - John Authers, FT), the looming capital shortfalls, dire lending rates to small businesses. If you are not an incumbent, the current system of financing the small business that employ the vast majority of the citizenry is not working well. Traditional sources of capital have moved up-market.
While the co-operatives, credit unions of both Europe and the Americas have functioned to promote opportunity for those that can not participate in the existing financial system, their impact has been limited to the definition of their own purpose. Through alternative finance, peer-to-peer lending, crowdfunding, etc. real people have the right to participate in a way that has not existed for generations. This digital-enabled wave of disruption has an opportunity to do more. While nascent, the disrupters are attempting to make an impact.
As of May 16, 2016 the US joined the rest of the industrialized world and allowed non-accredited real people to invest in privately held securities (this sector has not done itself any favors, but that is a topic for another day). Think DIY retirement allocations. Participation society ala finance. In digital health we have the patient-derived anecdote, does relationship lending fill the same space in finance? No. In digital finance there is a void of information that is not being filled by real people. OK, sure. Market acceptance is a surrogate. What about the start-up? Two years in and the family and friends, the bootstraps have run their course. The kind of data that the incumbent financial folks need to recommend this start-up is just not there, even if the size of the investment was big enough to justify their involvement in the first place.
FinTech disrupters have an opportunity here, but it is different than those in the healthcare arena. Let me ask you a question. Have you ever read a 409a opinion? Do you really know what Dunn & Bradstreet provides for private enterprises with 2 years of historical financials and maybe a checking account with $10,000? The patients know what they need. Here, real people need to follow the lead of the credit union movement and begin to get to know the small businesses in their area. It's a start.
I have some definitive thoughts. It's an issue though. For another day. I will say that achieving wisdom in finance is going to be different than wisdom in health. A circular process - eg a value chain defined by a marketplace? In some form, yes.
REGULATORY. Governments have rightly created various regimes to protect real people by informing incumbents of their responsibilities. There exists a significant history that SEC, FINRA, FDA, HHS, etc. have with those who make a living under their guidances. The personal and legal relationships define the generation of data that we all use today. By enabling real people to create useful data, digital is forcing changes the business models of incumbents and the guidances of regulators. For the most part this is simple, and I do not feel the slightest bit sorry for them. They have time and money from rents. This is not the hard part.
RESPONSIBILITY. Disrupters on the other hand. They have a responsibility to real people in a way that incumbents do not. It's different. Through disrupters, real people are now creating data, their own data. A collective voice that heretofore has only been heard filtered through layers of incumbents, or via revolution is now speaking. These voices are now being listened to, unfiltered. Being heard, well. That will take some doing. The disrupter's responsibility is to ensure that the voice of real people be heard. In practical ways. Disrupters are going to have to meet existing hurdles of data integrity, security, reliability, etc. while protecting against fraud and malfeasance. But then, in this new participation economy, real people's role also needs to be integrated in a way that has not been done before. THIS is the hard part, as it requires interaction with and cooperation from all stakeholders including those who do not necessarily want to feel the repercussions of these changes. And therein lies the opportunity.