This week I am in Las Vegas, speaking at the Multifamily Executive Conference, on a panel about big data and its relevance to the multifamily industry.  In preparation for the session, I began to search around for definitions of big and small data, and it got me thinking about some of the unique challenges of the multifamily sector.

An interesting Harvard Business Review piece made a particularly salient point about small data: very few companies know how to exploit the data already in their operating systems.  It’s a broad observation about industry in general, but its sub-text – don’t get hung up on “big” data when you already have so much low-hanging fruit within grasp – is well-applied to the multifamily industry.

Readers of this blog will be familiar with our views on multifamily benchmarking.  There is no shortage of data sources and products that are designed to help us with it, but none of them enables apples to apples comparison of performance.  Other industries that have adopted revenue management have all adopted a standard industry revenue metric. The benefits are obvious – revenue drives the industry fundamentals, you can’t understand performance unless you can know your competitors’ revenue, therefore you should benchmark revenue performance against your comps.

For multifamily companies to benchmark revenue performance, the data of many companies must be pooled and distributed among participants.  The data that is exchanged is confidential, which means that an independent third-party (i.e. not one of the companies providing/benefiting from the data) must be in charge of collecting and distributing data.  That third party is responsible for setting the rules of the exchange and making sure that those rules are always applied.  In other words, they perform the role of the curator.

The importance of data curatorship cannot be under-estimated.  Not only is it a pre-requisite for any exchange of information among competitors, curatorship is the mechanism that manages risk and assures the consistency and integrity of the information that is being exchanged.  Let’s look at each of those core functions in turn.

When competitors exchange information there is always some risk that that information can be used for anti-competitive activities. And because multiple companies are involved in an exchange, the nefarious activities of one participant could expose the other competitors to risk. This risk is avoided when somebody is responsible for setting and upholding rules that prevent foul play.  But it’s not quite as simple as simply declaring a set of rules and sticking to them. The development of those rules is itself a collaborative process, as the concerns and views of the parties exchanging data must be understood in order to do the right thing by the participants.

Data consistency and integrity is also the responsibility of the curator.  First, we must process data consistently so that we can benchmark performance on an apples-to-apples basis.  That means one way of calculating net effective rents, for example.  But beyond that, client data must be monitored.  What happens, for example, when a participant contributes data that contains inaccuracies or anomalies?  An incomplete lease history from one property, for example could compromise the integrity of the metrics being used by its competitors.  That would be unacceptable, so the curator must design and operate the checks and balances that stop it from happening.

Curatorship entails considerable responsibility, effort, and consistency which is why we at the multifamily data exchange (MDX) take it so seriously.  When done well – and for an example of curatorship done well one need look no further than Smith Travel Research in the hotel business – it can change the way that industries work.  For multifamily, it is the key that can unlock enormous value from data that is already sitting in our property systems.  That – as the HBR article suggested – is an exciting and highly achievable objective.