Trust (not greed) is good.
100 years ago, Wall Street was an unregulated bonanza, where regular folks got rich, the rich got richer, and swindlers gorged themselves on the mania that made the era roar. A few financial crises later, and The Wall Street Journal are only half-joking in referring to big banks as “regulated utilities,” in light of the heavy regulatory burden shackling them today. The post-crisis Dodd-Frank law imposed a raft of regulations that has banks howling at more than $24 billion in final rule costs and 61 million paperwork burden hours. Before that, Sarbanes-Oxley made public markets so hostile to IPO’s that America’s share of new issues fell from 67% to 16%. And those are just the laws passed since 2000. So while it’s not fashionable to sympathize with Wall Street, there’s also no denying their handcuffs.
Banks did this to themselves, pushing limits instead of treading lightly. Today, tech companies — which really means all companies — are playing with the same fire that burned Wall Street by gorging on our personal data in ways that are opaque and sometimes careless. They’d be wise to tread lighter, while they still breathe freely. A public turned against them would legislate them to death.
This inflection point is a great time to watch this Harvard Business Review webinar featuring innovation guru Tim Morey. He argues convincingly for trust as a competitive advantage. Morey’s research shows that while consumers are largely pleased to exchange their data for a free Internet, they don’t know what that means—the true extent to which they’re being monitored, tracked, evaluated and sold. When presented with that reality, the emotion elicited is almost universally fear. And as Morey notes, history is unkind to cultural phenomena that elicit ignorance and fear.
Morey sees opportunity here. By building trust using these three principles, a company can not only continue to leverage data smartly but also emerge a leader:
- Deliver in-kind value. You’re taking something, so give something back — and unlike others in the industry, Morey doesn’t recommend actual cash micro-payments in exchange for data. Give value in the context of your product. So if you’re a navigation app using my search-history data to advertise specific restaurants along my drive to work, then tell me you’re giving me 10 ad-free days on your app, if I take your suggestion and stop at KFC.
- Give control. Consumers don’t understand data exchange — a risky ignorance that you can fix simply by providing a tidy dashboard or preference center that reveals exactly which of their data you have, in a way they can edit. This concept in action: Morey recounts how his own research firm gave test subjects under study the option to review highly personal information the firm possessed about them (in this case, photos taken in their homes for research), inviting the subjects to take back that information, denying it to the firm. Result? The subjects so deeply appreciated being asked the question that they almost universally granted the firm permission to the photos.
- Actively educate. In a world where companies beg forgiveness rather than ask permission — like Wall Street did — Morey suggests candor. He points to the hilarious Channel 4 “Viewer Promise” video that explains the What and Why of data collection. Key lines: “You control any personal information you give us.” “We won’t sell your personal information.” “We won’t email you clutter.” “We’ll wipe your data from our system at your request.” “Yes, data attracts advertisers, but you’re in control.” After watching the video, 0.01% of viewers still had doubts about their data, and a whopping 80% actually volunteered additional information to the organization.
Early signs of our Wall Street moment are already here: use of ad blockers is up 30%. The data noose is tightening in Europe. Established political order is turned on its head. And while data collection, usage and sale by private companies remains largely a free-for-all, it’s the industry’s responsibility to bring order to the feeding frenzy. And it’s your opportunity to make trust your competitive advantage.