The idea in one sentence
At a macro level, we should strive for an equilibrium in the exchange of identity and data, its value and its risk, between individuals, private organizations and public organizations, and we should count what the exchange costs or gives everyone else: the externalities.
Three parties, the same needs
Individuals, private organizations and public organizations each want the same four things from identity and data:
- Value creation
- Insight
- Operational efficiency and effectiveness
- Safety and security
Where any two meet, there is value exchange: a person and a retailer, a retailer and a regulator, a citizen and an agency. Where all three meet is the Identity Nexus™, and it sits inside the community commons, the shared space that every exchange draws on and affects.
Equilibrium, not extraction
Each party carries both value and risk in every exchange. When one party takes the value and pushes the risk onto another, the exchange is out of balance: people stop sharing, organizations lose trust, and the commons bears the cost. The Identity Nexus is the point where the value each party gains is in proportion to the risk it bears, and where the exchange adds to the commons rather than drawing it down.
The equation (2022)
The Identity Nexus = iVR Σ (Value / Risk) + eVR Σ (Value / Risk) + piVR Σ (Value / Risk) + (sg Σ − ex Σ)
- iVR, eVR, piVR: the individual, enterprise (private organization) and public-institution value ratios: the value each party gains, set against the risk it carries.
- sg: social good, the value the exchange creates for the commons.
- ex: externalities, the costs the exchange pushes onto people outside it.
The equation is a way to think, not a formula to compute: it asks whether every party’s value is in proportion to its risk, and whether the social good outweighs the externalities. It follows the tradition of transaction cost economics (Williamson, 1985) and the governance of the commons (Ostrom, 1990).
Use it
For any product, policy or data program, ask:
- What value does each party gain, and what risk does each carry?
- Who is taking the value, and who is left with the risk?
- What does the exchange give to, or take from, the community commons?
- What would it take to bring the three into balance?
Where it fits
The Identity Nexus is the identity and data part of The Relational Nexus™, and it is where the Identity & Data Meeting of the Waters is heading: organization-centric and people-centric approaches finding a balance they can share.
References
Ostrom, E. (1990). Governing the commons: The evolution of institutions for collective action. Cambridge University Press.
Williamson, O. E. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. Free Press.