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The new – unsustainable – consensus around personal data

Posted on: Monday 3rd of November 2014

A big shift is taking place in many companies’ stance on personal data.

Not that long ago, personal data didn’t merit the sustained attention of senior executives. To be sure, it was important that rules and regulations around data were kept to, but that could be safely delegated to compliance professionals. It was also important that data should be mined and used for maximum value, but that could be left to analytics boffins. So the issue of personal data was effectively taken care of by specialist experts, leaving senior execs free to focus on more important things.

BOLT

This approach doesn’t hold water any more, thanks to a number of factors that are combining to drive personal data up the corporate agenda. We place them in four broad buckets, summarised by the acronym ‘BOLT’.

  • Business As the variety, richness and volume of different data sources explodes, data’s ability to drive competitive edge is becoming clearer. As the commercial value of data rises so do the opportunities – and the risks of missing the boat.
  • Opinion Consumer attitudes to data are in flux. Not that long ago the prevailing attitude could be summed up as ‘ignorance is bliss’. Most consumers had very little understanding of how their data was collected or used, so few had any concerns. But in a world of apparently daily data breaches, revelations like Snowden, and constant media coverage of the money some companies are making out of personal data, the mood is changing. The more aware consumers become the more concerned they get. How brands collect and use customer data is fast becoming a litmus test of customer trust.
  • Legal Regulators are meanwhile rushing to update rules and regulations so that they catch up with rapid technological change and bring the ‘wild west’ aspects of today’s data landscape under control – to restore public trust.

Privacy versus growth?

These two powerful trends – the growing commercial value of data and the increasing importance of trust – are creating profound tensions between ‘privacy’ (which limits the collection and use of data) and innovation and ‘growth’ (which maximises its collection and use).

One, it appears, has to be sacrificed if the other is to be honoured. This tension is now driving the emergence of a new – and unfortunately, unreachable – consensus around personal data.  This unsustainable consensus as illustrated by White Paper’s like SAS’s ‘Finding the right balance between personalisation and privacy’ goes something like this.

  • Personal data issues are now too important to be left to compliance and analytics experts – who are themselves increasingly sucked into the conflict between ‘privacy’ versus ‘growth’.  As SAS’s White Paper notes, “Businesses must think of data privacy not as a back-office activity for compliance, but as a competitive differentiator that improves the customer-experience.”
  • To sustain consumer trust there must be greater transparency and consumer control. A good example of this is the proposed Consumer Engagement Principles developed by CapGemini with the Consumer Goods Forum.
  • A new ‘sweet spot’ has to be found where the ‘trade off’ between surrendering a degree of privacy to gain a return in value can be found. It has to be a ‘value exchange’.

Each of these recommendations has its merits. They are all good things when applied in the right context. But they are currently being applied to the wrong context and therefore miss the point.

A structural fault line

What the new consensus obscures is a fundamental structural flaw in today’s data set-up – a fault line that’s undermining the very foundations of today’s data operations.

The fault line is this. Most of the debate so far, including the assumptions upon which the new consensus are built – are based on a uniformly organisation-centric view of customer/personal data. This organisation-centric perspective assumes that organisations are the only entities collecting and use customer data. Under the this model organisations collect data about their customers and use this data to drive their own internal processes, resulting in actions which they do to customers (such as targeting them with advertising messages and offers).

The rise of PIMS

This is where the fourth letter in the BOLT acronym comes in – technology. The same technology revolution that enables organisations to collect and use data is also, increasingly, enabling individuals to collect and use data too.

  • It’s enabling individuals to collect information about themselves and use it for their own purposes.
  • It means individuals are now being given the chance to use information to address value gaps (such as decision support and life management) not traditionally provided by existing product and service providers.
  • It is creating new business models – the emerging market for Personal Information Management Services (PIMS).
  • It’s sparking further changes to consumer attitudes and opinions, as they begin to see personal data as a personal asset, something they can use to add value in their own lives.

On one side of the fault line lies the traditional organisation-centric agenda: information as a tool in the hands of the organisation. On the other side of the fault line lies a new consumer/customer agenda: information as a tool in the hands of the individual.

The new consensus is unsustainable because it does nothing to address or bridge the gap between these alternative models. If anything, all it does is obscure the fault line’s existence. The risk is that it lures organisations into wasting huge amounts of time, money and energy looking for an elusive, acceptable ‘trade off’ between privacy and monetisation when actually the underlying model itself is facing transformation.

Embracing the new model of information as a tool in the hands of the individual – of data as the driver of new consumer information services – is a way to build both trust and value, to deliver both privacy and growth. It’s a much bigger opportunity than searching for a ‘trade off’ that fails to address the new agenda and risks turning into a wild goose chase.