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WEF report: why data is now a strategic issue

Posted on: Friday 1st of March 2013

As part of its Rethinking Personal Data project the World Economic Forum has just published its latest paper Unlocking the Value of Personal Data: From Collection to Usage.

One of the key passages reads as follows:

From passive consent to engaged individuals

“Organizations (the operations of which depend on a relationship of positive engagement with their customers) need to understand and accommodate the changing role of the individual by engaging with and empowering them. The individual was historically seen as a “data subject” – a passive consumer of products and services who was tracked for customer relationship management purposes only and needed to be notified about how data about them is being used and consent to that use. However, increasingly individuals are being understood to act as both producers and consumers of data. The current model of notice and consent at the point of collection has not led to a level of engagement by individuals in terms of how data about them is used; nor is it necessarily commensurate with the value that the assets provide.

Given the sheer volume of data and the various ways that data is collected and used today, it is, as a practical matter, physically impossible for an individual to consent to all the different data uses. Rather than relying on yes-or-no consent at the point of collection, individuals need new ways to exercise more effective choice and control when data is being used in a way that impacts them. As part of this, organizations must be clear to individuals about the value exchange that is taking place for data, in terms of monetary and other benefits, so that those individuals can make truly informed choices between different options based on what they consider fair.”

This pretty much sums up what we’ve been saying for a while, including the point about the flaws in informed consent.

Rethinking privacy

The big question now is how organisations should respond. One essential step is to recognise that privacy is a personal setting. Only the individual knows what information he or she feels comfortable sharing with who, for what purposes, under what contexts. Recognising this shifts the focus from the content of a privacy notice (a top down, one-size fits all, take it or leave it process) to a process by which individuals can set, and change, options (a bottom up,  customised,  option and choice-driven process).

As the WEF paper puts it:

“Individuals should be provided with access to simple tools that enable them to either understand or set the policy to be applied to the use of data, and be able to change that selection over time.”

For many companies this is a big step, though it is a journey. Opt-in/out-out tick box mechanisms required by European law are the beginning of that journey. It can continue in many ways with new options introduced, new explanations made, new value exchanges suggested. It can become a relationship and trust building tool.

Rethinking value

Value exchange is another key point emphasised by WEF. Value in exchange for data comes in many forms such as service (you can’t deliver an item if you don’t have an address to deliver to) or incentives (organisations paying for access or use of data no longer seems an outlandish idea). But it doesn’t stop there.

Organisations can add value by releasing data back to customers as per the UK’s midata programme (a trend WEF recognises and refers to). They can also add value by looking at the information and data they hold (not just personal data but all the knowledge, data and information they’ve accumulated over the years) with fresh eyes. The traditional perspective is ‘how can we use this data and information to add value for our organisation’. The new question is ‘how can we use this data and information to add value for our customers, including providing them with new insights, new information services, and so on’.

Seen from this perspective, the real rich value exchange may not revolve around traditional rewards and incentives, but the evolution of a new information sharing relationship with customers – including all the new services and applications this makes possible.

Rethinking control

Another critical dimension of the new landscape highlighted by WEF is the issue of control. As the report points out with the exponential growth of new data sources, and the increasing ease with which it’s shared between second, third and fourth parties beyond the view of the customer, it’s getting harder and harder for individuals to exercise effective control over the collection and use of their data.

“While the transfer of data creates leverage with each additional use, it also renders the challenges of accounting for and monitoring the use of the data more complex. As more and more data is combined and commingled, the insights, discoveries, value and potential risks increase, particularly if this activity is performed by parties not directly known or necessary to the underlying transactors.”

However, the report also points out that new technologies and business models may be creating new ways to address these challenges. This includes the rise of consumer ‘agents’. Here’s what the report says:

“Given the complexity of choices, there is also potential for the development of “agency type” services to be offered to help individuals. In such a scenario, parties would assist others (often for a commission or other fee) in a variety of complex settings. Financial advisers, real estate agents, bankers, insurance brokers and other similar “agency” roles are familiar examples of situations when one party exercises choice and control for another party via intermediary arrangements. Just as individuals have banks and financial advisers to leverage their financial assets and take care of their interests for them, the same type of “on behalf of” services are already starting to be offered with respect to data.”

The obvious example is Personal Data Store (or Lockers, or Vaults) where, WEF notes, “there has been significant momentum over the past twelve months” (a development we predicted in our report on PDSs year ago).

Bringing it all together

New processes to manage data sharing, new ways of generating value, new ways of exercising control – it’s clear that those responsible for managing data relationships with customers have a lot to think about.

But framing it like that risks missing the point. The ‘data relationship’ with customers is increasingly becoming the relationship. That’s because every customer facing process – from prospective customers finding out and checking out your products and services, through paying, accessing customer service and managing an ongoing relationship – is increasingly moving through online data-enabled and data-generating channels.

That’s the real message of this WEF report. For many years in many organisations personal data issues have been ghettoised. If a personal data issue cropped up, the knee jerk reaction was ‘hand it to the data protection/privacy officer’, the underlying assumption being that data is a just technical issue. Now it’s becoming clear: data – and data sharing relationships – are becoming critical strategic issues; the crucible where all things customer converge and happen.

Smart companies are beginning to realise this. If they can get their information relationship with their customers right, pretty much all else follows.