Data ethics as a competitive advantage
In the early 2000s, reporting on environmental footprint was a pretty new concept, and many companies didn’t consider being green an important objective. Almost 20 years later, things have changed. Many companies are now legally required to report their environmental footprint, and brands can gain competitive advantage by operating in an environmentally friendly way. We are currently seeing that same thing happen (but quite a bit quicker) in the world of data, and the ethics surrounding it.
Laws are changing. Privacy breaches, data hacks, and social media manipulation are becoming more common, or at least are grabbing the headlines more, and as a result, many organisations are focusing, perhaps at the exclusion of other areas of data ethics, on how to prevent data breaches and the potential downside. However, most importantly, individuals are taking action and are becoming more and more concerned about their privacy.
Whilst there are clear ethical risks of using data, organisations actually have the opportunity to do good with data and to position themselves as “data ethical” and “sustainable data users” and gain a competitive advantage from doing so. But, of course, for corporate entities, this needs to be balanced with the need to drive value from customer data.
To achieve this, businesses need to define fully what data ethics is and to understand the impact that it has on their organisation. When it comes to data, operating ethically is more than just complying with laws.
Businesses need to listen to their customers to understand the types of data they’re willing to share, what they’re willing to let businesses do with it, and what they expect in return.
Businesses need to implement clear, transparent policies for data collection, processing, and retention and
Businesses should ask themselves: is this something that we would accept as a consumer?
As a business at the front of this advance, to have any chance of using the fact that you are data ethical as a competitive advantage, you need to be clear about the data you want to collect and why you want to collect it.
This may sound obvious, but it’s the fundamental point from which everything else follows. As an example, Movvo is a Portuguese business that monitors customers’ movements around shops and then analyses data before selling it back to retailers to help them understand customer habits. As such, there are potentially significant ethical challenges about what data is captured, and whether this could be deemed intrusive.
However, the business’ policy is not to know any personally identifying information (PII) about users, and that all data is anonymised. To back this up, and to gain trust from the public, the company obtained the European Privacy Seal, a respected certification that demonstrates to that organisations take data privacy seriously and comply with EU law. This is a good example of following the principle of what the consumer would accept, and designing policies and business practices from there, while doing so in a way which still provides valuable information to the company.
The other strategic consideration is to consider the weaknesses in your planned business case or justification. It might make sense to your business, but what about from the consumer’s point of view? In a previous article, we explored the use of artificial intelligence in the police. Many police forces are using AI to predict crime levels in particular areas. From a business perspective, this is a sound idea that leads to time and money savings and improves how police forces can best deploy their resources. This is the business justification. However, from a citizen and social responsibility viewpoint, this approach could have significant concerns. Does this imply that an individual’s level of criminality can be predicted? Could someone be investigated for something they haven’t done yet? What if the training data used for this is questionable or includes a data bias that may lead to discrimination against ethnic minorities or certain groups of society?
In a more marketing-focused example, personalised experiences are driven by customer data. However, according to Eurobarometer research, only 40% of people are okay with companies using their data to tailor content and ads. So here, it is clear that to be data ethical, businesses need to tread carefully. The way that organisations use data should be both ethically and commercially driven.
At the centre of any ethical data policy is collecting data ethically in the first place. You need to gain consent from the audience whose data you’re collecting, but that’s just one consideration. You need to outline if any of the data will be PII and who it may be shared with. As consumers are becoming less likely to hand over excessive amounts of data and more inquisitive about what it will be used for, it may also be wise to, like Movvo, seek certification such as the European Privacy Seal or ISO 27001, especially if you are keen to emphasise your ethical credentials.
Once businesses are in a position where they’re collecting data ethically, the next step is to give customers control over their data. In an era where businesses are collecting more and more data, for individuals, it can feel like they have less control of their personal information (or digital identity). There has been a clear shift in control over information and customers are starting to react. This includes things like revoking tracking consent, browsing privately, and installing ad blockers. GDPR has gone some way to restoring this shift, but there is still a huge opportunity for businesses to go beyond this to build trust with customers.
Finally, by bringing these points together as an overall strategy, rather than piecemeal business activities, a business can position itself as data ethical, allowing it to build deeper trust with their customers and to stand out from their competition. Respect for privacy and customer data are fast becoming genuine ways for businesses to gain a competitive advantage. With a recent study showing that over 80% of people would only provide their data to organisations they believe they can trust, it is important for businesses to treat data ethics as both a corporate goal and as a social responsibility.