This is the sixth article in a multipart series.

As big companies explore new revenue streams and business models based on data, they quickly run into a quandary. On the one hand, combining the data they control with data from other sources significantly increases the number and value of potential available use cases. On the other, that same act of data sharing opens up issues of trust and misuse, lost value, and unrealized opportunity. In many cases, the potential risks (which tend to be more readily identifiable) appear to outweigh the prospective rewards (which are often more distant and uncertain), and the companies proceed no further. This is unfortunate, understandable, and unnecessary.

Data sharing—particularly the exchange of the exploding quantities of data generated by the Internet of Things—has emerged as an important and high-value commercial activity. It can help advance new business models, drive innovation, and tackle some of society’s most pressing challenges, such as making cities more efficient and livable. Data sharing is facilitated by data ecosystems comprising multiple parties within and outside of an individual company’s industry. These ecosystems can overcome some major barriers to data sharing, including the unclear value of data at the point of generation and the need for collective intelligence to identify and match participants with opportunities for value creation. Broadly, data ecosystems are important vehicles for aligning companies around common goals while giving them the agility needed to innovate.

For the orchestrators of data ecosystems—which can be tech companies, large industrial incumbents, or innovative startups—the stakes are high: if other companies are not willing to share their data, the ecosystem dies on the vine. Still, many companies continue to hoard their data—to their own detriment and that of the ecosystem as a whole.

Simple and effective rules of governance can help break the data gridlock. But in the face of many possible design choices, companies don’t always know where to start. A good first step is to understand that data sharing in an ecosystem is fundamentally an issue of cooperation, with rules guiding good behavior and setting the terms of engagement. BCG’s Smart Simplicity framework, which is designed to help companies make sense of organizational complexity and encourage cooperation, can help.