# The Value of Analytics By:: [[Ross Jackson]] 2024-02-24 Determining value is an essential component of economic transactions. The basis of exchange is knowing what something is worth (i.e., its value). This is most obvious under a barter economy or when children trade toys. There is some assessment of the relative value between items and that joint valuation between the two individuals forms the basis of exchange. One might trade 20 chickens for one dog or 50 Lego for a G.I. Joe figure. Bartering is highly specific. It forms the basis of exchange between two individuals with unique needs and wants at a particular point in time in the form of specific items. Money allows the exchange to become less specific. For example, one chicken is worth $5, a dog $100, 1 Lego is worth $0.05, and a G.I. Joe figure is worth $2.50. This allows one to exchange money for any of the four items (or more) without having to deal specifically with the wants and desires of any specific individual. The exchange can occur because money can be exchanged, and money can be used to buy whatever one wants through the exchange market. This is known as the exchange value. Under exchange value, analytics is either the salary of analysts, compared to other labor types, or the value charged for analytic products (e.g., reports). Currently, the exchange value of analytics is high. There is another way of determining value, and that is its use value. When value is determined based on its use, valuations come out differently. Essentials like water, food, and clothing are valued higher than nonessentials. Something like a pocket knife would likely be valued highly as it is a handy, useful tool. Use-value and exchange-value could align, but they probably don't in a consumer-driven, status-based society. What is useful in a real, direct way and what is useful as a means of deriving status are likely absurdly disconnected. This is potentially the case with analytics. As previously indicated, the exchange value of analytics is currently high. There is a status to being an analyst, and organizations have analytics departments that produce analytic reports. But what of the use-value of analytics? This is likely low. Part of this is that those in the upper echelon do not fully grasp how to use analytics effectively. This can be overcome with training and experience. Part of this is because those in the upper echelon do not want to be constrained by analytics. This will not be overcome. The disconnect between the exchange and use value of analytics does not bode well for its long-term survival within organizations. For it to endure organizationally, analytics will need to produce value. Real use value, not just symbolic, rhetorical value. Analytics can't do this; only analysts can. The use value of analytics resides in the person creating and communicating it, not in the product. Analytics is likely doomed not because it lacks potential but because so few analysts understand this dynamic. #### Related Items [[Analytics]] [[Organization]] [[Value]] [[Economics]] [[Profession]] [[Understanding]] [[Communication]] [[Creative]]